Angel List Only announced a newly registered, non-trading fund, USVCEnabling retail participation in the private securities industry. fundraisingAn investment platform initially targeting private real estate investments rather than early or later stage private investments, recently launched a public fund, Fundraising Growth Technology EntertainmentD(VCX). These two funds, along with other options for small investors, are good for retail investors because they provide a way to participate in private securities, which is typically the domain of venture capitalists and other professional investors.
Today, most capital gains from successful private firms are realized before those firms go public (if at all), so allowing retail participation is important to providing access to this asset class.
While some of the holdings of USVC and VCX overlap, there are differences between the two instruments that investors should be aware of.
Since VCX is publicly traded on an exchange, it provides liquidity to investors who need it. It is a fund open to trading.
USVC, on the other hand, provides limited liquidity, which means investors must be patient because there is currently a limited way to exit their holdings.
If you value liquidity, you should take this fact into consideration.
Also USVC different values are given From VCX. USVC has a valuation policy that provides Net Asset Value using audited financial data or recent financing rounds.
VCX is market driven, determined by buyers and sellers on the exchange. It is currently trading at a significant premium to its individual holdings. While NAV is between $18 and $20 per share, VCX is currently trading around $85 per share, or above 4X NAV.
Efficient Application founder Alex Bass We recently discussed this in a conversation thread indicating that X has VCX. Why does the USVC need to exist?
VCX traded between $31.21 and $575 per share. This dramatic range is likely due to a small volatility and liquidity premium, but the premiums remain. Of course, the premium may decrease over time, but it is important for investors to understand the similarities and differences between the two instruments.
Competition should drive prices down, as the current administration and leadership at the SEC support expanding access to private markets for small investors. This is a good thing, but it will take some time. And if Congress approves a new definition of Accredited Investor in which intelligence and knowledge matter, it would help democratize greater access to private markets.
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