AnchorZero, a startup enabling founders and investors to invest startup equity through Roth IRAs, raised $8 million in seed funding, it tells Axios exclusively.
Why it's the BFD: Through its platform, founders can put equity shares, angel investments, and exotic assets into tax-advantaged retirement accounts.
The big picture: Holding startup equity in a Roth IRA offers significant tax advantages, as any gains from a liquidity event are shielded from capital gains taxes and can be reinvested to grow tax-free.
- However, doing so requires strategic planning upfront, and few custodians support these transactions.
How it works: New York-based AnchorZero established a chartered trust company in South Dakota, allowing it to act as an IRA custodian and to manage customer assets.
- "The only way we saw to actually be able to work was to start a chartered institution ourselves," AnchorZero CEO Sunil Abraham says.
- The company also created vertically integrated software to simplify the process of transferring startup equity into self-directed Roth IRAs.
Between the lines: Abraham says AnchorZero chose South Dakota because "they have a really experienced regulatory environment, meaning the regulators understand custodians and actively support and regulate these institutions."
Zoom in: Bain Capital Crypto and Spark Capital led the seed funding, which included participation from Ethereal Ventures, Mischief Capital, Pascal Capital, Robot Ventures and Sarah Meyohas.
- Since launching late last year, it has signed up founders backed by VCs including First Round Capital, General Catalyst, HF0, Lightspeed Venture Partners and Y Combinator.
Stunning stat: Peter Thiel has built his Roth IRA balance up to $5 billion.
