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The Private Equity Secondary Market

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    Accredited Investor Declaration
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    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms represents and warrants that:

    • It has the knowledge and experience in financial and business matters required to receive and use services to be made available by THE ELEPHANT as described in its website, as amended from time to time, and as such it is capable of evaluating the merits and risks involved with them.
    • The purpose of this declaration is to enable THE ELEPHANT and its affiliates to discharge its responsibilities under such exemptions and that THE ELEPHANT will rely upon the information contained herein, and therefore, the representations herein are complete, accurate and binding, and may be relied upon by THE ELEPHANT and its affiliates.
    • Although THE ELEPHANT will use their best efforts to keep this declaration strictly confidential, they may present this declaration and any other information which the undersigned has provided to them to such parties as they deem advisable if called upon to establish the availability under the Securities Laws of an exemption from registration of the offer and sale of securities or any other service to be made available by THE ELEPHANT, as amended from time to time, or if the contents thereof are relevant to any issue in any action, suit or proceeding to which THE ELEPHANT or its affiliates is a party or by which they or it are or may be bound.
    • Any offer or services that may be made available to the undersigned by THE ELEPHANT or its affiliates (i) will not constitute a violation of any laws or regulations, including the Securities Laws and investment advice laws, of any applicable jurisdiction; (ii) will be permissible under all applicable Securities Laws and shall not trigger any licensing, registration, or other requirements.
    • It shall not transmit or otherwise send any information to which THE ELEPHANT will give it access to, to any person in any jurisdiction in which the distribution of such information and/or the offering or services are not authorized, or to whom such offer or invitation may be unlawful.

     

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is a “sophisticated investor” or a “professional investor” and a “wholesale client” (and not a “retail client”) as defined under the Corporations Act (Cth) 2001

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that:

    In respect of the transaction made in connection with these offering and services, it has not obtained any access to the relevant transaction information in a press release, conference, advertisement, announcement, professional or trade publication or marketing materials within the People’s Republic of China.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it has made appropriate enquiries and has full knowledge of the nature, rights and obligations arising out of the offering or the services made available by The Elephant, as described in its website, as changed from time to time, and obligations applicable to it under the laws of the Arab Republic of Egypt, and will not make any offerings, disposals, investments or otherwise transact with regard to offering or the services made available by The Elephant in case such offering, disposal, investment or other transaction is in contravention to the laws, regulations, governmental circulars and decrees of the Arab Republic of Egypt.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is located or resident in the European Economic Area (the “EEA”), it is a “qualified investor” within the meaning of the law in any member state of the EEA which has implemented the Directive 2003/71/EC, and amendments thereto, including Directive 2010/73/EC (the “Prospectus Directive”), implementing Article 2(1)(e)(i), (ii) or (iii) of the Prospectus Directive.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is a “qualified investor” within the meaning of Directive 2003/71/EC, as amended, and it professionally or commercially purchases or sells securities or investment products (Vermögensanlagen) within the meaning of the German Investment Product Act (Vermögensanlagengesetz) for its own account or for the account of others.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is a “qualified investor” as such term is defined in the Prospectuses Act 2005 of Gibraltar (as amended) and in Directive 2003/71/EC. It is a “professional client” as such term is defined in the Financial Services (Markets in Financial Instruments) Act 2006 of Gibraltar; and that it has not requested “non-professional treatment” within the meaning of Schedule 2 of the Financial Services (Markets in Financial Instruments) Act 2006 of Gibraltar.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is a professional investor (as such term is defined in Part 1 of Schedule 1 to the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong and Cap. 571D Securities and Futures (Professional Investor) Rules).

    Individuals

    (1) An individual specified for the purposes of section 3(b) is an individual having a portfolio of not less than $8 million at the relevant date or as ascertained in accordance with section 8, when any one or more of the following are taken into account— (a) a portfolio on the individual’s own account; (b)a portfolio on a joint account with the individual’s associate; (c)the individual’s share of a portfolio on a joint account with one or more persons other than the individual’s associate; (d)a portfolio of a corporation which, at the relevant date, has as its principal business the holding of investments and is wholly owned by the individual.

    (2) For the purposes of subsection (1)(c), an individual’s share of a portfolio on a joint account with one or more persons other than the individual’s associate is— (a)the individual’s share of the portfolio as specified in a written agreement among the account holders; or (b)in the absence of an agreement referred to in paragraph (a), an equal share of the portfolio.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE WILL BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms, represents, and give his written consent that he is:

    1. An Investor to which at least one of the categories set forth in the First Schedule to the Israeli Securities Law, 1968 (the “Securities Law”) and as listed below apply (a “Sophisticated Investor”); and
    2. Aware of the meaning of the fact that he is an investor included in this Schedule and consents thereto.

    The categories are:

    1. A Joint Investment Trust Fund, within its meaning in the Joint Investments Trust Law, 5754-1994, or a company for management of said fund;
    2. A Provident Fund or a Management Company as defined in the Control of Financial Services Law (Provident Funds), 5765-2005;
    3. An Insurer, within its meaning in the Supervision of Insurance Law 5741- 1981;
    4. A Banking Corporation or an Auxiliary Body Corporation, within their meaning in the Banking (Licensing) Law 5741-1981, exclusive of a joint services company, which acquire for themselves or for customers who are investors enumerated in section 15A(b) to the Securities Law;
    5. A Portfolio Manager, within its meaning in Section 8(b) of the Regulation of Investment Counseling and Portfolio Management Law 5755-1995, who are acquires for himself or for customers who are investors enumerated in section 15A(b) to the Securities Law;
    6. An Investment Counselor or an Investment Marketer, within their meaning in section 7(c) of the Regulation of Investment Counseling and Portfolio Management Law 5755-1995, who acquires for himself;
    7. A Stock Exchange member who acquires for himself or for customers who are investors enumerated in section 15A(b) to the Securities Law;
    8. An Underwriter who meets the qualifications under section 56(c) who buys for himself;
    9. A Risk Capital Fund; for this purpose, a “Risk Capital Fund” – a body corporate, the main activity of which is investment in bodies corporate whose main activity – at the time of the investment – is research and development or the production of innovative and knowhow intensive products or processes, investment in which involves greater risk than is common with other investments;
    10. A body corporate wholly owned by investors enumerated in section 15A(b);
    11. A body corporate, other than a body corporate formed for the acquisition of securities from a certain offer – with an equity capital in excess of NS 50 million;
    12. An individual, for whom one of the following holds true:
      1. The total value of the liquid assets he owns exceeds 8,095,444 million new shekels.
      2. His income in each of the last two years exceeds 1,214,317 million new shekels or the income of the family cell to which he belongs exceeds 1,821,475 million new shekels.
      3. The total value of the liquid assets he owns exceeds 5,059,652 million new shekels and his income in each of the last two years exceeds 607,158 new shekels or the income of the family cell to which he belongs exceeds 910,737 new shekels; The total value of the liquid assets he owns exceeds 5,059,652 million new shekels and his income in each of the last two years exceeds 607,158 new shekels or the income of the family cell to which he belongs exceeds 910,737 new shekels;

    For the purposes of this item − “liquid assets” – cash, deposits, financial assets as defined in the Consulting and Securities Listed on the Stock Exchange Law;

    “Family cell” – an individual and his family living with him or if the livelihood of one depends on the other;

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

     

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is a “wholesale investor” as that term is defined in clauses 3(2)(a), (c) or (d) of Schedule 1 to the Financial Markets Conduct Act 2013 of New Zealand (“FMC Act”),

    A person is a wholesale investor if;

    1. the person is an investment business (seeclause 37); or
    2. the person meets the investment activity criteria specified in clause 38; or
    3. the person is large (seeclause 39); or
    4. the person is a government agency (seeclause 40).

    In each case as defined in Schedule 1 to the FMC Act, the undersigned understands the consequences of certifying itself to be a wholesale investor.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is an “institutional investor” as defined under the Decree-Law 1 of 1999 and Accord 1 of 2001, both as amended, in relation to whom the registration of the securities to be offered and sold is not required. Pursuant to the foregoing, the undersigned (i) is a legal entity, validly formed and in existence, (ii) has participated, on a regular basis, in at least the previous two years, in the administration of investments substantially similar to those described in The Elephant’s website, (iii) has a net worth of at least one million dollars, (iv) has key executives or, a majority of its directors and officers, that have at least two years of experience in the regular administration of investments and (v) does not require the protection of the provisions set forth in the securities laws of the Republic of Panama.

    The undersigned acknowledges that the securities have not been registered under the Panamanian securities laws and regulations and may not be offered or sold within Panama except pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Panamanian securities laws and regulations.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is a “qualified investor” within the meaning of the Federal Law of the Russian Federation “On Securities Market” No. 39-FZ dated April 22, 1996, as amended, (ii) the execution and performance of the offering and services to be made available by The Elephant, as described in its website and associated commercial terms, as changed from time to time, do not violate applicable laws of the Russian Federation and (iii) in making any payments in connection with offering and services, it has complied or will comply with the requirements of all applicable laws of the Russian Federation, including with respect to foreign currency transactions. The undersigned acknowledges that the The Elephant is relying in part upon the truth and accuracy of, and the undersigned’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of the undersigned set forth herein in order to determine its eligibility to gain access to The Elephant’s services, as changed from time to time and the undersigned is aware of the legal consequences of the foregoing.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE WILL BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is either an “institutional investor” as defined under Section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”) or a “relevant person” as defined under Section 275(2) of the SFA (including an “accredited investor” as defined under Section 4A(1) of the SFA).

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is an “investment professional” within the meaning of Article 11(1) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act of South Korea.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is a “qualified investor” within the meaning of the Swiss Collective Investment Schemes Act of June 23, 2006, as amended, its implementing ordinance and regulatory guidance.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is located or resident in the United Kingdom, it is a person of a kind described in Articles 19 and/or 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), or that the offering or the services made available by The Elephant, as described in its website and associated commercial terms, as changed from time to time, may otherwise be lawfully distributed to it pursuant another applicable exemption under the Order.

     

    The undersigned acknowledges that these offering and services are only directed at (i) persons who have professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Order, (ii) high net worth entities (including companies and unincorporated associations of high net worth and trusts of high value) or other persons falling within Article 49(2)(a) to (d) of the Order, and (iii) persons to whom such offering and services may otherwise be lawfully distributed.

     

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms and represents that it is an “accredited investor” (an “Accredited Investor”) as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, for one or more of the reasons specified below:

    1. Where the undersigned is a natural person:
      1. He or she has an individual net worth, or joint net worth with my spouse (determined by (i) subtracting total liabilities from total assets, and (ii) excluding the value of my primary residence), in excess of $1,000,000; and/or
      2. He or she had an individual income in excess of $200,000 (or a joint income together with my spouse in excess of $300,000) in each of the two most recently completed calendar years, and reasonably expects to have an individual income in excess of $200,000 (or a joint income together with my spouse in excess of $300,000) in the current calendar year.
    2. Where the undersigned is or acting on behalf of:
      1. a corporation, partnership, limited liability company or similar business trust or organization described in Section 501(c)(3) of the Internal Revenue Code not formed for the specific purpose of acquiring the securities that has total assets are in excess of $5,000,000;
      2. a bank as defined in Section 3(a)(2) of the Securities Act, a savings and loan association, or other institution defined in Section 3(a)(5)(A) of the Securities Act acting in either its individual or fiduciary capacity (this includes a trust for which a bank acts as trustee and exercises investment discretion with respect to the trust’s decision to invest in the securities);
      3. a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended;
      4. an insurance company as defined in Section 2(13) of the Securities Act;
      5. an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), or a business development company as defined in Section 2(a)(48) of the Investment Company Act;
      6. a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;
      7. a plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions, for the benefit of employees, having total assets in excess of $5,000,000;
      8. an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (a) for which the investment decision to acquire the securities is being made by a plan fiduciary, as defined in Section 3(21) of ERISA, that is either a bank, savings and loan association, insurance company, or registered investment adviser, (b) which has total assets in excess of $5,000,000, or (c) which is self-directed, with the investment decisions made solely by persons who are Accredited Investors;
      9. a private business development company defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended;
      10. a trust not formed for the specific purpose of acquiring the securities with total assets in excess of $5,000,000 and directed by a person who has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of investing in the securities;
      11. a revocable trust (including a revocable trust formed for the specific purpose of acquiring the securities) and the grantor or settlor of such trust is an Accredited Investor; and/or
      12. an entity in which each equity owner is an Accredited Investor.

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

    By filling in this form and selecting the ‘I confirm’ button below, the undersigned hereby confirms represents and warrants that:

    • It has the knowledge and experience in financial and business matters required to receive and use services to be made available by THE ELEPHANT as described in its website, as amended from time to time, and as such it is capable of evaluating the merits and risks involved with them.
    • The purpose of this declaration is to enable THE ELEPHANT and its affiliates to discharge its responsibilities under such exemptions and that THE ELEPHANT will rely upon the information contained herein, and therefore, the representations herein are complete, accurate and binding, and may be relied upon by THE ELEPHANT and its affiliates.
    • Although THE ELEPHANT will use their best efforts to keep this declaration strictly confidential, they may present this declaration and any other information which the undersigned has provided to them to such parties as they deem advisable if called upon to establish the availability under the Securities Laws of an exemption from registration of the offer and sale of securities or any other service to be made available by THE ELEPHANT, as amended from time to time, or if the contents thereof are relevant to any issue in any action, suit or proceeding to which THE ELEPHANT or its affiliates is a party or by which they or it are or may be bound.
    • Any offer or services that may be made available to the undersigned by THE ELEPHANT or its affiliates (i) will not constitute a violation of any laws or regulations, including the Securities Laws and investment advice laws, of any applicable jurisdiction; (ii) will be permissible under all applicable Securities Laws and shall not trigger any licensing, registration, or other requirements.
    • It shall not transmit or otherwise send any information to which THE ELEPHANT will give it access to, to any person in any jurisdiction in which the distribution of such information and/or the offering or services are not authorized, or to whom such offer or invitation may be unlawful.

     

    PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

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    Personal
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    Investor
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    Terms And
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    Terms And Policies

    By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents the information above does not qualify as a recommendation or an opinion with regard to conducting any transaction or investment. Each investor should conduct his or her own checks and verifications, while taking into account his or her specific circumstances and requirements. All the relevant aspects of the purchase, including the legal, economic and tax aspects, should be carefully examined with the assistance of professionals and consultants on the investor’s behalf.

    The information above or on the site and the blog does not qualify as an offer of investment and is meant for general information only. Offers for selling of the securities will be delivered only to ‘Accredited Investors‘ as defined in the first supplement of the Israeli Securities Law, 5728-1968. The Elephant, shall not be responsible or liable and shall not guarantee in any way the return of the investments to investors, including any profits earned as a result of such investments. The engagement with the investors shall be in accordance with the transaction documents and the conditions stipulated therein, subject to the negotiations that will be held with the investors.

    The Elephant charges fees from sellers and buyers of securities, and therefore The Elephant has an interest in the information posted about various companies.

    The information published on the Site, does not constitutes an investment consulting as defined in the Regulation of Investment Consulting, Investment Marketing and Portfolio Management, 1995, and the said information is not a substitute for professional consulting which among others takes into consideration the special needs of every person.

    For those who are considering making an investment (including sale and purchase of securities) via the website, can apply different laws deriving from their residence or citizenship, including tax laws, laws relating to the statement or report on investment activity, laws relating to the eligibility of investing, regulatory issues in process and so on. Therefore, those who are considering making such an investment, undertake to examine the applicability of any applicable laws, as they are committed to take all necessary action in order not to violate the said laws, including to disclose fully and fairly in relation to any investment to any local lawfully authority, as the law requires such disclosure.

    We welcome you to The Elephant Investors Community, your gateway to the Secondary Market.

    Note:
    The provision of information in this website is not based on your individual circumstances and should not be relied upon as an assessment of suitability for you of a particular product, service, or transaction. It does not constitute investment advice, tax advice or legal advice and The Elephant Platform makes no recommendation as to the suitability of any of the products, services or transactions mentioned herein. The information included in this website is intended to “Accredited Investors” only, as this term is defined in the jurisdiction in which they reside (or such similar term in such jurisdictions financial regulations). Non-Accredited investors may not partake in any products, services or transactions mentioned herein or offered by The Elephant.


    * Please note that the purchase of the shares of any Target Company may be subjected to right of first refusal of other shareholders, in some cases also to approval of the Target Company’s board of directors or other transfer restrictions as may be applicable.

    The Private Equity Secondary Market

      Sign up as a private stock seller
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      for the sole purpose of the examination of the company or the stock required
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      Terms And Policies


      We congratulate you for choosing to check the opportunity of offering
      the securities you own and hold for sale via The Elephant’s site

      Your message was sent successfully

      Note:
      For those who are considering making an investment (including sale and purchase of securities) via the website, can apply different laws deriving from their residence or citizenship, including tax laws, laws relating to the statement or report on investment activity, laws relating to the eligibility of investing, and so on. Therefore, those who are considering making such an investment, undertake to examine the applicability of any applicable laws, as they are committed to take all necessary action in order not to violate the saids laws, including to disclose fully and fairly in relation to any investment to any local lawfully authority, as the law requires such disclosure.

      This site is for “Accredited/Sophisticated Investors” only pursuant to the applicable law and regulation.

      If you are not an “Accredited/Sophisticated Investor” you are welcome to use the platform to learn about The Elephant and the secondary market but you will not be able to register to the platform and to receive information regarding potential investments opportunities.

      The Private Equity Secondary Market

      The Private Equity Secondary Market – General

      The secondary market, and more specifically the secondary market in the private equity capital segment of high-tech companies, is the globally fastest-growing investment channel in recent years. As the start-up market continues to grow and mature, so do the direct secondary markets. The increasing need for solutions that allow the transfer of private equity capital from hand to hand is the result of several driving factors.

      The first factor is the number of goods relevant to this market. The amount and the aggregate value of companies defined as Unicorns (a privately owned company with a value of over 1 billion dollars) are growing at an unprecedented rate. Between the years 2018 and 2022, the number of unicorns grew from 260 to 986, an addition of 726 companies. The aggregate market value of these companies grew from around 900 billion dollars in 2018 to approx. 3,200 billion dollars in 2022, a growth of about 255%, as can be seen in the diagram below:

      Source: Forge

      On top of that, the time cycles from the establishment of a company to the exit are very long. The median age of technology companies at the time of their issuance jumped threefold between the years 1999 and 2021, from a median age of 4 years to a median age of 12 years, and even more so the value at the time of the issuance rose:

      Source: Forge

      This being so, there is a growing need for measures that allow shareholders, especially entrepreneurs and employees, to “meet with the money” at an earlier stage in the company’s life, without having to wait for the company’s issuance or sale to a third party. Nowadays, some of the companies and/or platforms active in the market are trying to organize secondary rounds themselves with private investors or venture capital funds to allow employees to exercise their shares. These transactions give investors the opportunity to realize value and return capital without a full exit.

      The Private Equity Secondary Market – Data

      According to IQ-EQ & Moonfare[1], The growth of the secondary market in the last 15 years has accelerated and reached an all-time high in 2019 with a total transaction volume of approximately $88 billion, a substantial increase from a transaction volume of approximately $37 billion three years earlier. In 2021, the total volume of transactions reached a new record of $132 billion[2], 50% higher than the previous record of 2019 and 120% higher than the previous year.

      Source: Greenhill Cogent and Park Hill (2021 data from Jefferies)

      Referring to the results of the first half of 2022, the Jefferies analysts claim that the strong transaction momentum that occurred in the fourth quarter of 2021 continued into the first half of 2022. These analysts estimate that during the first half of 2022 no sales were made out of distress, as is usually the case during periods of Economic uncertainty, however, limited partners in private equity funds demonstrated a strong desire to close deals when many of them found themselves with the need to sell part of their holdings in private equity in order to correct overallocation situations. The forecast for 2022 is for continued extensive activity in the secondary market, with a projected total transaction volume of approximately 120 billion dollars in the entire year of 2022. The valuations of the companies are expected to decrease on average compared to the first half of the year, which according to the analysts will lead to price decreases in future transactions.

      Prices

      Referring to the prices at which transactions were made, the analysts of the Jefferies company say that they dropped similarly to the sharp drops that occurred during the period in the prices of shares in the public markets. Jefferies believes that price declines are expected to moderate during the second half of the year.

      As a supplementary index to the stock prices of the unicorn companies in the world, the Elephant website investigates the sales prices requested by the potential share sellers on theelephant.io platform, and this is in relation to the share prices in the latest fundraising rounds.

      Since fundraising rounds are held once in very long periods (sometimes years), and since during periods of falling markets there is difficulty in measuring the secondary market decline, companies avoid holding a fundraising round at a falling price, even at the cost of postponing the round, a look at the prices demanded by shareholders in the secondary market can give a complementary index of where the prices are in the private market.

      Over the years, the accepted standard has been that the price of the Common stock, which is mostly held by the company’s employees and its initial entrepreneurs, is about 30%-50% lower than the price of the Preferred stock in the last fundraiser. This is exactly what we observed on the theelephant.io platform – the 2020 data show that employees who offered their shares on the site were quoted at an asking price of about 35% less than the share price in the last round.

      In the analysis below, it can be clearly seen how, after this long-term trend, in which secondary transactions were carried out at a discount as described in relation to the last recruitment price, in 2021 an unprecedented phenomenon occurred in which most of the supply for secondary transactions was at demand prices higher than the last recruitment prices in companies.

      As mentioned, the phenomenon was unprecedented and quite amazing – it should be remembered that the purchase of a Common share in the secondary market is inherently inferior to participating in a fundraising round, and this is due to priority in liquidation, and additional rights such as access to information and more, which differentiate between the types of shares. This reversal, in which a premium on Common shares was required instead of a discount, came from massive excess demand as well as from a continuous surge in prices which resulted in the fundraising that took place a quarter or two ago looking “old” at the time, and therefore its price no longer reflected it.

      However, as the crisis in the capital market continues, with an emphasis on the high-tech sector, it is possible to see a relaxation in this indicator, when in the second half of 2022 they return exactly to the standards known from the past, of an average discount of about 30%:

      Let’s recall that the index represents a discount on the last fundraising round, so even though the discount has returned to its familiar dimensions from the past, it must be remembered that the rounds themselves were at extremely high values.

      Disclaimer

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      [1]  IQ-EQ&Moonfare – Roundtable: The rise of the private equity secondaries market – Key trends, July 2021

      [2] Jefferies, 1H 2022 Global Secondary Market Review, July 2022

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