Introduction

What are private markets?

Private markets are investments in companies that are not listed or traded on public exchanges. These investments give accredited investors access to invest and gain exposure to private companies by investing in Special Purpose Vehicles (SPVs). 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. An SPV is a legal entity created for the sole purpose of making a specific investment. Instead of each investor purchasing shares directly, capital is pooled into the SPV, which then acquires shares in the target company or acquires shares in another SPV that is invested in the target 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 through the platform owned and operated by Monark Markets, Inc. The SPV conducting an offering may be an affiliate of Monark or may be a third party unaffiliated with either Webull or Monark. Webull and its affiliates do not structure, manage, control, review, or approve any SPV or offering documents, and do not provide investment, legal, or tax advice regarding these offerings. Before investing, you should carefully review all offering documents and determine whether the investment is appropriate for your financial situation.

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 potential benefits of investing in private markets?

Private market investments can offer several potential benefits within a diversified portfolio:

• Portfolio diversification: Private market investments may 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.

What are the risks of investing in private markets?

Private market 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 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 that a secondary market will develop or be available. 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 investments 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?

Private market investments generally have different characteristics than publicly traded equities, including limited liquidity, less frequent valuations, different disclosure requirements, and longer investment horizons. The table below provides a high-level comparison of the two investment types.