EBS Form Customer Relationship Summary & Regulation Best Interest Disclosures



These disclosure FAQs expand upon the topics addressed in EquityBee Securities, LLC’s (“EquityBee Securities”) Form CRS, a copy of which is available to view or download above. EquityBee is registered as a broker-dealer with the U.S. Securities and Exchange Commission (“SEC”) and is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Brokerage and investment advisory services and fees differ, and it is important for you to understand these differences. Free and simple tools are available to research firms and financial professionals at: Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.

EquityBee Securities is a wholly owned subsidiary of EquityBee Inc. (“Parent”). The Parent operates and manages the equitybee.com platform (the “Platform”).

EquityBee Securities operates as a private placement broker-dealer. Specifically, EquityBee Securities brokers private fund (“Fund”) interests to accredited and institutional investors (“Investors”), and also facilitates the execution of private financing contracts (“PFC”) between employees, former employees, or investors (collectively, “Shareholders”) of mid- to late-stage start-up companies (“Portfolio Companies”) that hold privately held shares or stock options with respect to such Portfolio Companies, and Funds. PFCs are structured to preserve the applicable private placement exemptions under the Securities Act of 1933, as amended, pursuant to which the Portfolio Company issued those shares, and potentially acquired by Shareholder directly from the Portfolio Company in a primary issuance of shares.

The Platform contains Investor and Shareholder educational materials. The Platform allows Shareholders to provide certain information and to request EquityBee Securities personnel to contact them for additional information. Our personnel may also prospect certain Shareholders and Investors.


In what capacity does EquityBee Securities operate when facilitating execution to Shareholders?

EquityBee Securities operates solely on an agency basis as a private placement broker-dealer with respect to PFCs between Shareholders and Funds. An EquityBee Inc. affiliate provides additional services to the Funds in connection with or related to the execution services provided by EquityBee Securities. These services and affiliates are detailed further below.

In what capacity does EquityBee Securities operate when facilitating execution to Investors?

EquityBee Securities operates solely on an agency basis as a private placement broker-dealer and brokers Fund interests to Investors. In addition, EquityBee Securities also acts on an agency basis as a private placement broker-dealer with respect to PFCs between Shareholders and Funds.

Does EquityBee Securities clear, or hold customer securities?

EquityBee Securities does not perform any type of clearing functions for itself or others and does not handle or hold customer funds or securities.

Does EquityBee Securities provide recommendations to customers?

With respect to Shareholders, EquityBee Securities may recommend that a Shareholder enter into a PFC based upon the Shareholder’s investment profile and what it believes is in the Shareholder’s best interest. EquityBee does not have discretion over a Shareholder’s account and therefore the decision to enter into a PFC is up to a Shareholder. We do not trade principally for our own account, but we may facilitate PFCs between Shareholders and Funds.

With respect to Investors, EquityBee Securities does not make recommendations. We may, however, communicate to Investors information about investment opportunities available on the Platform based on preferences and interests Investors have indicated to EquityBee Securities.

Does EquityBee Securities actively monitor its customers’ accounts?

No, EquityBee Securities does not monitor Investor accounts.

With respect to Shareholders, we may periodically review a Shareholder’s account solely for the purpose of ensuring consistency with PFC transaction terms. This monitoring is not done on a regular basis and therefore the absence of further information from us should not be relied upon as an implicit recommendation to hold a position.

How will EquityBee Securities choose investments to recommend to its customers?

As stated above, we do not recommend investments to our customers. When a customer seeks to invest in a Fund, EquityBee Securities reviews the customer’s investment profile for suitability of the investment for that customer.

It is important to note that EquityBee Securities offers a narrow selection of securities consisting solely of Fund interests and PFCs. EquityBee Securities review each security to determine if the offering would be suitable and in the best interest of at least some Investors. We may limit access to certain securities which present a heightened risk profile.

EquityBee Securities personnel may solicit potential Shareholders or Investors. When contacting these prospective customers, we will provide appropriate disclosure such as Form CRS and these FAQs.

What is EquityBee Securities’ relevant experience, including registrations, education, and other qualifications? What do these qualifications mean?

EquityBee Securities is an SEC-registered broker-dealer and FINRA member. As such EquityBee Securities is subject to review and examination by these various regulators and subject to their laws, rules, regulations and bylaws, as applicable. Additionally, all employees who solicit, propose and/or consummate transactions with customers are registered representatives with FINRA and certain states and jurisdictions, and must meet certain exam qualification and continuing education requirements.


What type of fees and costs are associated with EquityBee?

Shareholders who receive funding to exercise employee stock options will pay EquityBee Securities a Placement Fee of up to 5% of the PFC funding amount. Shareholders may be subject to additional associated administrative fees such as transfer taxes, and wire charges. Upon a successful liquidity event (i.e., when the Portfolio Company is acquired or IPOs) Shareholders are obligated to return the initial funding amount plus interest and a portion of the total share value covered by the PFC to the Fund. The interest rate and applicable portion of the total share value are stated in the PFC.

EquityBee Securities typically charges Investors a fee of 5% of the initial investment. Investors may also be subject to additional associated administrative fees such as transfer taxes and wire charges; these costs are not charged by EquityBee Securities or its affiliates.

Funds managed by our affiliated investment adviser charge additional fees on any investment gains.

How might these fees and costs affect the initial investment in a Fund? For example, if an Investor invests $100,000 in a Fund, how much will go to fees and costs, and how much will be received by the Shareholder?

The fee charged by EquityBee Securities is added to the initial investment. On a $100,000 investment in a Fund, the Investor would pay $5,000. Investors will pay fees and costs whether they make or lose money in a Fund. Investors should make sure they understand what fees and costs they are paying.


What affiliates of EquityBee Securities provide financial services?

EquityBee Securities is wholly owned by its Parent. The Parent has a controlling ownership interest in a number of additional affiliated entities. Below is a summary of these affiliates and their activities. For further information please contact us at ebs@equitybee.com. Additional information regarding our affiliated investment adviser is available through www.Adviserinfo.sec.gov.

Equitybee Inc. provides the technology platform for Shareholders and Investors to access and process information about the Funds and PFCs.

EquityBee Advisors, LLC is an SEC Exempt Reporting Adviser. EquityBee Advisors, LLC provides investment management services to multiple Funds. EquityBee Advisors, LLC provides investment management services to the Fund on a non-discretionary basis solely with respect to PFCs.

Equity Bee Technologies LTD is a technology company who provides R&D, product, marketing, and sales support to the Parent.Equity Bee Technologies LTD does not provide financial services.

Equitybee Fund Management LLC provides fund management services to the Funds.

Conflicts of Interest:

EquityBee Securities, acting in an agency broker-dealer capacity, is committed to ensuring that both EquityBee Securities and its financial professionals always act in the best interest of its retail customers and does not place its financial, or other interest ahead of its customers when making a recommendation. Conflicts are caused by a variety of arrangements, including but not limited to, when an affiliate plays a role in a transaction.

How does EquityBee earn fees?

EquityBee Securities earns fees when Investors transact on the Platform by investing in a Fund.

What conflicts of interest do these fees create?

EquityBee Securities makes money only if Investors transact on the Platform. EquityBee Securities earns fees on the securities transactions effected, so we have an economic incentive to encourage larger, more frequent securities transactions in order to increase our revenue.

We earn a transaction fee based on the dollar amount of each PFC that we broker. Therefore, we are incented to encourage customers to carry out as large a transaction as possible.

We have an incentive to encourage Investors to use our platform and to invest in funds managed by our affiliated investment adviser. Other platforms may offer a wider selection of investment opportunities or lower fees on the same transactions or transactions similar to those that are offered on the Platform.

How do your financial professionals make money?

Our professionals receive a salary, commissions for sales of securities on our platform, and equity in EquityBee Inc. We may also pay additional incentive compensation for reaching sales activity targets and based on individual job performance. Our professionals have an incentive to encourage you to transact on our platform, and earn higher commissions as your transaction size increases. The commission is tied directly to transactions, which exacerbates the conflict of interest previously described.

What conflicts of interest exist for EquityBee Securities and its affiliates?

EquityBee Securities brokers PFCs between Shareholders and Funds that are advised by EquityBee Advisors, LLC. EquityBee Advisors, LLC may receive advisory fees from each of the relevant Funds that they advise. In this capacity, EquityBee Securities may receive an economic benefit from such investment advisory fees. This presents a conflict of interest for EquityBee Securities with respect to such activities.

In addition, since a portion of the potential profits derived from our investment advisory affiliate will indirectly benefit EquityBee Securities, there is an incentive to broker PFCs between Shareholders and Funds and to promote PFCs to Shareholders with greater frequency and for larger amounts than otherwise may be advisable.

As indicated above, given that EquityBee’s affiliate provides additional financial services and charges fees for such services, EquityBee is incented to promote these services.

How might your conflicts of interest affect me, and how will you address them?

EquityBee mitigates all of the foregoing conflicts of interest by disclosing all compensation received by EquityBee Securities to Investors and Shareholders as well as the clients and customers of its affiliates. Further, as indicated above, EquityBee Advisors, LLC only provides non-discretionary investment advisory services such that all transactions are pre-approved by each of the relevant Fund Investors. Further, we are subject to extensive policies and procedures, as part of, and in addition to, applicable FINRA and SEC regulations and oversight.

Is EquityBee Securities subject to Best Execution Obligations?

As a broker-dealer, EquityBee Securities is obligated to meet best execution obligations. It must conduct reasonable diligence to ensure the PFC execution is as favorable as possible to buy and sell under the prevailing market conditions. Given the very limited liquidity for Fund interests and PFCs, review of available venues is limited. That being said, PFCs are only executed following negotiation between a Shareholder and a Fund and all PFCs are brokered by EquityBee Securities on a non-discretionary basis.

Additional Information:

If you would like the most current information about EquityBee Securities or to request a copy of additional disclosures, please see our website equitybee.com or contact us at ebs@equitybee.com.

For additional information about securities investments generally, you may visit the SEC’s website at Investor.gov.