Private Markets

What are private markets?

Private markets give accredited investors access to invest and gain exposure to private companies by investing in Special Purpose Vehicles (SPVs) offered by third parties. The investment is intended to offer direct exposure to the underlying private company. These types of investments are sometimes called Alternative Investments and typically have different risk-return profiles and often lower correlation with public markets than traditional investments.

What are Special Purpose Vehicles?

When you invest in a private company through Private Markets, you're purchasing an interest in a Special Purpose Vehicle (SPV), not shares of the private company itself. SPVs generally own or intend to use the proceeds of its private placement of membership interests either to (i) invest directly in shares of a specified private company, or (ii) to invest in membership interests offered by a second unaffiliated SPV that owns or intends to use the proceeds of its private placement of membership interests to invest directly in shares of a specified private company. Your ownership percentage in the SPV corresponds to your pro-rata economic interest in the underlying company shares. Available SPV investments are currently limited to only 99 investors per offering and therefore there are minimum dollar amounts to invest.

How are the offerings conducted?

The offerings are conducted by third parties unaffiliated with Webull through the platform owned and operated by Monark Markets, Inc. (Monark Markets; such platform, the Monark Platform). The SPV conducting an offering may be an affiliate of Monark or may be a third party unaffiliated with either Webull or Monark.

The offerings are conducted by third parties unaffiliated with Webull. Neither Webull nor any of its affiliates (i) participates in or has any ability to direct or control the structuring, management, or business of any SPV; (ii) participates in the preparation of any Offering Documents; (iii) reviews or approves in any respect any Offering Document; or (iv) makes any recommendation or provides investment advice or other advice (including without limitation tax or legal advice) in connection with a client’s prospective investment in an offering. By investing in an offering you will be entering into agreements with the applicable offeror and not with Webull or any of its affiliates, and Webull will not be liable to you for any losses you may experience in connection with an investment in an offering.

What is Webull’s role in facilitating SPV investments?

Webull provides technological access and connectivity for accredited investors to use their Webull brokerage account to engage in self-directed investments in Offerings and to view their active investments in Offerings pursuant to an agreement between Webull and Monark Markets. Additionally, Webull maintains a referral arrangement with MMM Securities LLC (“MMM”), an affiliate of Monark Markets, pursuant to which Webull receives compensation from MMM in respect of investments in Offerings by clients of Webull through their Webull brokerage account. Membership interests in SPVs owned by clients of Webull in connection with their investment in an Offering are not custodied at Webull but are held on the books and records of the applicable SPV.

How do I invest?

Unlike public securities traded on exchanges, most private company investments or SPVs that invest in private companies aren't readily available through standard brokerage accounts. Webull Private Markets provides access to these investments to accredited investors directly within their Webull brokerage account.

To access Private Markets investments, visit the Private Markets section on the App. By clicking on Companies, you will be able to access market data, news, and information on the largest private companies you might be interested in.

In order to see live and prospective offerings, you will need to click into "Live Offerings" or "Prospective Offerings," but first you need to self-attest to being an Accredited Investor (AI) - please see "Who is Qualified to Invest," for more information on Accredited Investor (“AI”) status.

What are prospective offerings:

The "Prospective Offering" section will have a list of possible upcoming private company SPV offerings. Here you can enter a non-binding Indication of Interest (IOI) if you are interested in an investment in this private company SPV should it become available. If the offering does become available, you will be notified and can then invest. IOIs are non-binding and help our partners gauge our clients' interest in specific private companies and help guide which private company SPV investments are made available. They are non-binding and you may choose not to invest.

What are live offerings:

The "Live Offering" section will have a list of all available private company SPVs currently on offer. By clicking into a specific live offering, you can review offering documents and submit an order. Investment documents are available with specifics on the offering and should be reviewed before submitting an order. You will be asked to review documents and e-sign as part of the order submission process. Unlike IOIs, orders are binding and not cancellable. You need to have settled cash in your account in the amount of your order and funds will be locked up until the offering is closed or cancelled.

Once the SPV is fully subscribed, your order will be processed, funds deducted from your account, and your Private Markets investment will be reflected in your brokerage account.

Who is qualified to invest?

To invest in a Private Company SPV, a client must be an accredited investor. An accredited investor is an individual or entity that meets specific financial criteria established by securities regulators. In the United States, an individual qualifies as an accredited investor by meeting any one of these conditions:

• Annual income exceeding $200,000 (or $300,000 combined with spouse or spousal equivalent) for the past two years with reasonable expectation of maintaining similar income
• Net worth exceeding $1,000,000 (excluding primary residence), individually or with spouse or spousal equivalent
• Holding in good standing certain professional certifications or designations, including Series 7, Series 65, or Series 82 licenses

What are the risks and benefits of SPVs?

Private Market investments, also referred to as Alternative Investments or Alternatives, can offer several potential benefits within a diversified portfolio:

• Portfolio diversification: Alternatives often have lower correlation to traditional markets, potentially reducing overall portfolio volatility
• Return enhancement potential: Some alternative investments may offer higher return potential compared to public markets
• Inflation hedging capabilities: Certain alternative assets may provide protection against inflation
• Access to innovation: Private markets may give investors exposure to emerging technologies and business models earlier in their development

Alternative investments involve unique considerations and risks that differ from traditional investments. The risks described below are not intended to be exhaustive of all risks associated with an investment in an Offering. Before investing in any Offering you should carefully review all applicable Offering Documents, consult with any financial, tax, and other advisors you deem appropriate, and determine whether an investment in the Offering is appropriate for your individual financial situation. Additionally, you should review the Private Markets Purchase Risk Disclosures for more information regarding risks of investments in offerings.

• Liquidity constraints: Private investments typically cannot be easily sold or converted to cash on demand. There is a 1-year holding period and there is no guarantee of a secondary market developing or that Webull will offer access to any secondary market. Liquidity events, such as an IPO or merger, may take years to arise, if ever. Bankruptcy of the underlying company investment is also a potential outcome
• Longer investment horizons: Many alternatives require multi-year commitments
• Limited transparency: Private investments may offer less detailed or less frequent disclosure compared to public securities
• Complex structures: Alternative investments may involve sophisticated legal structures that require careful review
• Higher fees: Management fees and carried interest can be higher than those for traditional investments
• Valuation uncertainty: Without public market pricing, valuations may be less frequent and more subjective

How does investing in private markets differ from investing in publicly traded equities?

There are many differences between alternative investments and publicly traded equities. While the answers may vary depending on the specific alternative investment as well as the structure or method of investment, the table below highlights some high-level differences.

What is a double-layered SPV?

A double-layered SPV is a SPV that does not directly own shares of the underlying private company. Instead, it gets investment exposure to the private company by owning shares of another SPV that owns shares of the underlying private company.

Do I own direct stock in the company?

No. As an investor in an SPV, you own an interest in the SPV entity itself, which in turn holds shares of or has investment exposure to the underlying company or holds shares in another SPV that holds shares of or has investment exposure to the underlying company. Your economic rights flow through the SPV structure, giving you indirect exposure to the company's performance and liquidity events.

How are these investments custodied?

Currently, these assets are self-custodied by the Issuer and held on the books and records of the applicable SPV. As SPVs are private investments, they often do not qualify for SIPC coverage.

Why do SPVs have minimum investment amounts?

Many SPVs maintain minimum investment thresholds that range from $10,000 to $50,000+ depending on the SPV's target size. These minimums exist for a few primary reasons:

• Regulatory limitations: Most SPVs are structured as 3(c)(1) funds under the Investment Company Act, which restricts them to a maximum of 99 investors. Based on the company's minimum investment amount and the SPV investor cap, minimum investment thresholds are necessary to ensure SPVs satisfy the regulatory compliance and company requirements.
• Operational economics: There are fixed costs associated with investor onboarding, compliance verification, document preparation, and ongoing investor relations that make very small investments economically unfeasible.

By establishing appropriate minimum investment thresholds, SPV managers can strike the optimal balance between accessibility and operational efficiency, ensuring the vehicle remains economically viable while providing access to opportunities that would otherwise be unavailable to individual investors.

What is a Subscription Agreement?

A Subscription Agreement is a legally binding contract between an investor and an investment vehicle (such as an SPV) that formalizes the terms of the investment. This agreement includes:

• Investment amount
• Representations and warranties from the investor
• Transfer restrictions and liquidity provisions
• Rights and obligations of all parties
• Governing law and dispute resolution mechanisms

The Subscription Agreement is a critical legal document that investors should review carefully before signing. Our platform facilitates digital execution of these agreements to streamline the investment process. You will be required to sign this document digitally as part of the order submission process.

What is a Private Placement Memorandum?

A Private Placement Memorandum (PPM), also called an Offering Memorandum (OM) or Offering Circular (OC), is a comprehensive disclosure document provided to prospective investors in a private placement. The PPM includes:

• Detailed description of the investment opportunity
• Risk factors specific to the investment
• Terms of the offering and investor rights

The PPM serves as the primary information source for investors evaluating a private placement opportunity and should be reviewed thoroughly before making an investment decision. Reviewing the PPM is part of the order submission process.

What is the Risk Factors document?

The Risk Factors document provides investors with general risk disclosure information regarding investing in private companies, the underlying private company in which the SPV is investing, as well as any transaction risk associated with the SPV offering. For example, if an SPV is a “double-layer” structure, where one SPV is investing in another SPV that owns shares in the private company, that factor will be disclosed in the risk factors document. Investors should read the risk factors document carefully before making an investment decision

What is an Operating Agreement or LLCA?

Each SPV is a separate, bankruptcy remote LLC. The LLCA or Operating Agreement defines the structural, organizational, and operational matters associated with each LLC. Such matters include, amongst other things; the name of the entity, jurisdiction of formation and operation, operating procedures, rights of the members, taxes, distributions and transfers. Investors should review the LLCA or Operating Agreement before making any investment decisions.

What fees are associated with private market instruments?

Private market investments in a private company through SPVs typically involve a brokerage fee on the transaction and an up-front management fee that is charged by the SPV manager. These fees are fully transparent and readily accessed in the offering documents. Brokerage and management fees, along with the underlying company investment, make up the all-in price that investors will pay.

Can I negotiate brokerage fees or management fees?

Brokerage fees and/or management fees are set by the offeror and SPV manager and are not negotiable. The fee structure for each opportunity will be transparently disclosed prior to investment.

Research private companies on the Companies page

Here you will find a list of the largest private companies with company valuations, news and research available

View Prospective Offerings to indicate interest

The Prospective Offering section will have a list of possible upcoming private company SPV offerings. Here you can enter a non-binding Indication of Interest (IOI) if you are interested in an investment in this private company SPV should it become available. If the offering does become available, you will be notified and can then invest. IOIs are non-binding and help our partner gauge our clients' interest in specific private companies and help guide which private company SPV investments they should make available. They are non-binding and you may choose not to invest

What is an Indication of Interest?

An Indication of Interest (IOI) is a non-binding expression of potential interest in investing in a specific private company. IOIs help gauge investor demand and prioritize sourcing efforts for specific companies. Submitting an IOI signals potential interest but does not obligate investors to invest when an opportunity becomes available.

Are IOIs binding commitments?

No, Indications of Interest are entirely non-binding. An IOI simply signals your potential interest in an investment opportunity if it becomes available at terms that meet your criteria. You maintain complete flexibility to evaluate the formal offering and make your final investment decision when a deal goes live.

What happens if I submit an IOI but don't invest?

There are no consequences for submitting an IOI and subsequently deciding not to invest. IOIs are used purely for demand assessment and deal prioritization. Your investment decisions remain entirely at your discretion when formal opportunities become available. However, we would ask that you only submit IOIs for offerings that you are genuinely interested in and likely to make an investment in.

View Live Offerings to invest in available investment offerings

The Live Offering section will have a list of all available private company SPVs currently on offer. By selecting a specific live offering, you can review offering documents and submit an order. Investment documents are available with specifics on the offering and must be reviewed before submitting an order. You will be asked to review documents and e-sign as part of the order submission process. Unlike IOIs, orders are binding and not cancellable. You need to have settled cash in your account in the amount of your order and funds will be locked up until the offering is closed or cancelled. Once the SPV is fully subscribed, your order will be processed, funds deducted from your account, and your private markets investment will show up in your brokerage account.

Can I sell my SPV position?

Shares held by the SPV are generally considered restricted securities under US securities laws, which typically requires a one-year holding period from the date of purchase before they can be resold. There is no guarantee that a viable, liquid marketplace will be available after one year or that Webull will provide access.

What happens if a company I am investing in goes public?

When a portfolio company completes an IPO, the shares will be moved from the transfer agent to your Webull brokerage account. The shares held by the SPV may be subject to a 180-day lock-up period following the IPO, during which time they will be restricted in your accounts, and they cannot be sold. After the lock-up period expires, your shares will be unrestricted.

What happens if a company I am investing in gets acquired?

Acquisitions of portfolio companies can take different forms, and the outcomes for investors will depend on the specific transaction structure:

• Cash Acquisitions: In an all-cash transaction, the proceeds from the sale of company shares will be distributed to SPV investors in proportion to their ownership percentages according to the terms of the SPV Offering Documents.
• Stock Acquisitions: In transactions where payment is made in acquirer stock, investors may receive shares in the acquiring company in proportion to their SPV interests according to the SPV Offering Documents, or the SPV may be required to hold the shares in the acquiring company until there is a liquidity event for the acquiring entity.
• Mixed Consideration: Many acquisitions involve a combination of cash and stock consideration, in which case investors will receive their proportional share of both components according to the terms of SPV Offering Documents

Whatever the make-up of the final distribution, assets will be available in your Webull brokerage account.

What happens if a company I am Investing in goes bankrupt?

Corporate bankruptcies can result in various outcomes for shareholders, typically determined by the bankruptcy proceedings:

• In Chapter 7 liquidations, company assets are sold and distributed to creditors according to legal priority. Equity investors (including SPV holders) are last in the payment hierarchy and often receive little or no recovery.
• In Chapter 11 reorganizations, the company attempts to restructure its operations and obligations. Existing equity holders may receive some consideration in the reorganized entity, though often significantly diluted.

As an SPV investor, your financial exposure is limited to your initial investment amount. The SPV will represent shareholder interests in bankruptcy proceedings and distribute any recovery value proportionately to investors, though full loss of investment is a possible outcome in bankruptcy scenarios.

When can I expect a liquidity event for my private company investment?

Private company investments should be approached with a long-term perspective, as there is no guaranteed timeline for liquidity events. The path to liquidity depends on numerous factors:

• Company growth trajectory and financial performance
• Market conditions and IPO environment
• Strategic acquisition interest in the sector
• Management and board decisions regarding exit timing

There is substantial variation in the timelines that companies go public or get acquired. While Webull will work to provide investors with a solution for secondary liquidity, there can be no guarantee that the market develops or that Webull will provide access should a secondary market develop. As such, investors should be prepared for the possibility that investments may remain illiquid for extended periods or, in some cases, indefinitely.