Getting in is easier than ever. But I doubt most buyers understand how hard getting out can be.
WSJ: The Investing Boom That’s Squeezing Some People Dry
The WSJ recently published an article about the downside of illiquid investments – restricted withdrawals, resale at steep discounts, and who determines “net asset value”. There are alternatives, even for established funds.
One strategy is to link the existing fund on a “white label” basis to an SEC/FINRA compliant alternative exchange offering investors the option of digitalizing their units and trading them on a secondary market.
Another strategy is to set up a digital token investor SPE. Smaller investors can invest via the SPE on the same terms as the institutional investors and the institutions can offer to sell their units to the SPE. Done correctly, the SPE will be an investor in the fund on the same terms as the other investors and the existing fund documents will not need to be amended.
Contact us to discuss these and other digitalization strategies.