Q&A with EquityZen CEO, who's selling to Morgan Stanley

Axios: Which side initiated the deal?

Davda: "EquityZen and Morgan Stanley had a partnership previously, so we've known them for years. Over the last couple of years it really became clear that we should at least explore a deeper partnership."

It's not the first time you considered selling.

"EquityZen has raised a grand total of $7 million and have funded our own operations for almost 10 years at this point. One of the questions I get a lot from my investors is, 'What do you think their stock is worth?'

• "So we've run market checks before. In 2021, the market check was very favorable, obviously then we went into a very different environment. We got multiple offers at the time, but ultimately decided to pull back."

Do you expect any pullback in investor demand, as retirement funds become better able to give private asset exposure? Why buy shares of specific startups when you can get access to a fund bucket via your 401(k)?

"I think diversification has a tremendous amount of benefits, especially if you're new to this space, especially if you're not a venture capitalist.

• "I'm a big believer that there's going to be more of this, you know, bimodal curve. You're going to have more and more people that get access through diversified products and there's gonna be more and more people who tend to want direct access."

How come? Isn't the retail trend toward ETFs and other passive packages?

"I completely agree with you on the on the public equity side. On the private equity side, there's one big difference: You can't short private equity."

You can't yet, but you might be able to soon via prediction markets.

"Completely accurate. The current administration is so welcoming of trying to allow all sorts of new business opportunities to find their place in the market.

• "But I think about the next administration. I'm not saying that it's necessarily going to revert, although mean reversion does tend to happen quite a bit in terms of these policies. I'm more saying, 'What is an administration agnostic bet that you can make?'
• "Take a look at EquityZen's own trajectory, founded in 2013. We were still very much in the 'post-Facebook going public' Ice Age, where issuers were just shutting every secondary transaction down.
• "Here we are now, seeing just a huge proliferation. I'm a big believer that if there's a 10-year bet you can make, you'll probably be OK in the one- or three-year period."

So if you're seeing it from there, what are you seeing in terms of employee sellers?

"We are still seeing a tremendous amount of rank-and-file sellers trying to seek liquidity, sometimes just for price discovery purposes, sometimes for actual liquidity purposes."

• "At the end of the day, the greenback is essentially unlimited for this type of market. The supply is not. I think the way to win supply in this market is to essentially plug it into a huge pool of demand, which ties back to Morgan Stanley."

Are you surprised that big banks didn't just create EquityZens of their own years ago?

"I think some tried to do it. If you start institutional first, it's really hard to come downmarket to the self-directed retail side because you're building systems that are designed for the $10 to $50 million check writer."

You've run a private company for over a decade. How long do you plan to stay at Morgan Stanley?

"I'm not a professional executive that some board member installed. I'm the founder of the company. It's important to me that the mission survives this.

• "The only real stint I've spent at a big company was as an intern at Lehman Brothers, and, you know, they gave me the chance to come back, but fortunately I made the decision not to, and the rest is history.
• "I'm actually excited about being able to operate at scale. EquityZen is a 50- or 55-person company. It's a very different skill to learn how to navigate a much larger organization, one that I'm personally pretty excited to explore and learn."