Equitybee platform investments outperformed top-decile VCs in DPI across 5 of 6 vintage years

Equitybee platform investments have demonstrated strong capital returns across varied market conditions, historically outperforming top-decile VC funds in five of the last six vintage years (2018-2023). Despite a challenging distribution environment, Equitybee’s unique platform has enabled above-market DPI performance, providing investors with reliable returns.

DPI Comparison Table

Vintage

Equitybee*

Top Decile VC

Top Quartile VC

Median VC

2018

3.78x

1.06x

0.45x

0.08x

2019

1.36x

0.34x

0.24x

0.05x

2020

1.04x

0.36x

0.08x

0.00x

2021

0.32x

0.14x

0.01x

0.00x

2022

0.04x

0.06x

0.00x

0.00x

2023

0.05x

0.01x

0.00x

0.00x

This table and the chart below showcase Equitybee’s Platform Investments ability to consistently return capital to investors in spite of the recent unprecedented distribution drought across the venture capital landscape.

Specifically, Equitybee’s platform investments net distributions to investors (as measured by DPI) have outperformed those of top-decile venture capital funds in all but one vintage year between 2018-2023.

These results highlight the effectiveness of Equitybee’s platform in providing access to pre-IPO opportunities at earlier valuations, allowing investors the opportunity to achieve substantial early liquidity by supporting employees in exercising their stock options.

All data shown is Distributions to Paid-In Capital. Top Decile, Top Quartile and Median VC data sourced from Pitchbook.

*Past performance is not indicative of future results. Equitybee s DPI is defined as Total Net Investor Distributions divided by Total InvestedCapital (including fees) aggregated by vintage year. This performance data does not represent any investor s portfolio or any model portfolio.

Context: The Distribution Crisis

The venture capital market is currently experiencing a distribution crisis, with distributions hitting record lows. For eight consecutive quarters, distribution rates have averaged single-digit percentages of Net Asset Value (NAV), significantly below the decade average of 16.8%.

This distribution drought is largely due to a severe lack of exits, as shown by only 14 IPOs and a total exit value of $10.4 billion in Q3 2024.

Market and Fundraising Impact

Reduced Investor Activity: Investor engagement has fallen to 45.5% of 2021 levels, with only 23.1% of available capital ("dry powder") deployed last year.

Fundraising Contraction: This drought has led to two years of reduced VC fundraising, highlighting the critical role of DPI in navigating the challenging market.

A Primer on Distributions to Paid-In Capital (DPI)

Distributions to Paid-In-Capital represents the actual amount of capital that has been returned to investors relative to the amount of capital they have contributed. This is an important tool leveraged by investors when evaluating a venture capital fund's ability to return capital efficiently to its Limited Partners.

DPI =

Σ Distributions

Paid-In Capital

Distribution Trends

Average US VC fund distributions, from funds age five to 10 years old, as a share of beginning net asset value

Source: Pitchbook, “VC distributions sink to 14-year low”, February 9, 2024
Q1 2024 data sourced from Pitchbook-NVCA’s Venture Monitor Q3 2024 edition

How Equitybee Achieves its Strong DPI Performance

Integration icon

Broad Access to Startups

Exposure to a wide range of pre-IPO companies.
Integration icon

Early Valuations

Investments at earlier valuations based on grant dates.
Integration icon

Discount to 409A

In-the-money investments due to a discount to 409A valuations.
The Problem that Creates Opportunity for Investors

Startup employees often receive stock options as part of their compensation. To convert these options into shares, employees must exercise their right to purchase these stock options, which involves significant upfront capital. Many employees cannot afford to do this, missing out on participating in the potential future success of the companies. Equitybee’s investors can provide the needed capital, allowing employees to exercise their options. In return, investors receive their initial investment, annual interest, and a percentage of the equity's value upon a successful liquidity event, such as an IPO or acquisition. This creates a mutually beneficial opportunity in a largely untapped market worth over $150 billion*.

Liquidity Considerations with Equitybee

Despite the aforementioned distribution drought from traditional US venture capital funds (mainly stemming from the lack of IPOs), Equitybee investments have continued to generate liquidity from a myriad of liquidity event types. This well-balanced mix means that Equitybee investors don’t need to rely on a hot IPO market to receive distributions. Additionally, tender offers (Equitybee’s historically highest performing liquidity event type) are a mostly unique exit route tied to the funding of employee stock options, which typically traditional VCs don’t have access to. Specifically, tender offers & secondaries liquidity events through Equitybee investments have delivered a 2.81x net multiple on invested capital in just under 2 years on average.

Realized Investments by Liquidity Event Type

Liquidity event type
# of events
Time to liquidity
MOIC
IPOs
49
17.5 Months
1.72x
M&As
81
27.2 Months
1.59x
Tender Offer / Secondary
23
21.9 Months
2.81x
SPAC
32
20.8 Months
1.65x
Bankruptcy
13
29.4 Months
0.00x
Dividend
4
26.1 Months
N/A
Overall
202
23.6 Months
1.70x

*TAM is calculated based on the estimated number of startup employees (1.1M) in the companies that qualify to receive funding through the Equitybee platform.
This number is derived from Pitchbook, multiplied by the average employee offer size sourced from Equitybee s proprietary data.
** Weighted average for MoIC, sourced from Equitybee s proprietary data
*** Indicates average time from investment date to distribution date, sourced from Equitybee s proprietary data

Past performance is not indicative of future results. Private placements are speculative, illiquid, contain substantial risk and may result in the complete loss of
capital to the investor. Consult your tax accountant as there may be tax considerations on profit amounts. Results may vary with each use and over time. Investor
proceeds may be settled in cash or shares.

Equitybee executes private financing contracts (PFCs), private placements which fund employee stock options. PFCs do not grant or transfer ownership of startup company stock, are speculative, illiquid, and are subject to risk including the complete loss of capital to the investor. Risks may be greater during extreme market conditions. Please read the private placement memorandum before investing. Securities offered through EquityBee Securities, LLC, member FINRA.

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750+
Startups
Equitybee investors have funded employee stock options in over 750 pre-IPO companies
202
Liquidity events
Equitybee investors have benefited from 202 unique liquidity events for 151 different companies
37%
Realized net IRR
The average internal rate of return, net of fees, for investments that achieved liquidity was 37% and 70% ROI
3,500+
Active customers
Over 3,500 investors and startup employees working together to fund stock options and provide liquidity.
23.6
Avg # of months to liquidity
For investments that reached liquidity, the average time to return was 23.6 months
77.6%
Median discount
Equitybee investors enjoyed an entry price that saw a median discount of 77.6% based on the most recent share price paid by investors on the cap table

Past performance is not indicative of future results. 37% net IRR represents all fully realized investments across the Equitybee platform, including US and Israel markets. Investors should be aware that these returns were primarily achieved during favorable market conditions. Results based on offers from June 2018 through July 2024. Net IRR is shown net of all applicable fees for the respective market. This performance data does not represent any investor’s portfolio or any model portfolio. IRR figures are calculated for each transaction into an offer on the Equitybee platform from the date the investor's funds were received through the distribution date of proceeds, if any. If the distribution date was less than one year after the invested date, the IRR represents an unannualized return. For distributions one year or more after invested date, IRR is annualized. Data quoted excludes partial returns of invested capital, e.g., tender offers for a portion of covered securities, and investments which have not experienced a liquidity event. As of July 31, 2024 approximately $108M million has been invested on the Equitybee platform; 17.9% of invested capital has experienced a fully realized return, 82.1% of invested capital is unrealized or partially realized.