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InvestX Review 2021: Best Startup Investing Platform?

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InvestX
  • Minimum Investment
  • Accessibility
  • Transparency
  • Investment Fees
  • Offering Selection
2.9

Summary

InvestX allows startup shareholders the ability to sell their shares before the company goes public. This can be useful for early employees and other shareholders that need liquidity today.

On the other side, this allows accredited investors to gain access to companies that do not readily trade on any major exchange.

The platform is primarily intended for institutional clients so information for retail investors is limited.

Pros

  • Access to well-known startups
  • Strict due diligence
  • Strong track record

Cons

  • Limited information for investors
  • Limited startup selection
  • Accredited investors only

As retail investors, we are generally at a significant disadvantage when compared with institutions. We typically have less information, less capital, and less access to some of the best deals out there.

By the time many companies go public and become available to the masses, much of the upside has been realized. It’s significantly easier for a $100 million dollar company to double in value than it is for a $100 billion dollar company. But most of the time, it’s only venture capitalists and large funds that even have the opportunity to invest in companies earlier on.

However, InvestX is a platform that is aiming to solve this problem. Founded with the mission to provide everyday investors with the ability to invest in private companies, the InvestX team is determined to give access to the little guy.

In this InvestX review, we’ll be diving into the features that set InvestX apart from many of the other startup investing platforms. Additionally, we’ll show you how you can potentially use InvestX to invest in well-known companies like Uber and Spotify while they are still in their early stages.

InvestX Review: Platform Highlights

  • InvestX carefully vets and selects private companies for their users to invest in
  • Past companies listed on the platform include Uber, Airbnb, SpaceX, and Pinterest
  • Investors can start by investing as little as a few thousand dollars on the InvestX platform
  • There is a very involved sign up process to create an account on the platform before investors are able to view deal information
  • InvestX users need to be accredited investors in order to access all of the deals listed on the platform
  • Financial advisors and broker-dealers are able to take advantage of the InvestX GEM Marketplace to invest on behalf of their clients

What is InvestX?

InvestX is a platform for investing in private companies. In 2014, the InvestX team set out to find the most promising startups to invest in. As they honed their due diligence process and began to accumulate a strong track record, they began to allow everyday investors to participate in their deals.

The mission of InvestX is to allow retail investors to access off-market startups that were previously reserved for venture capitalists. At the same time, private companies and early shareholders are able to access liquidity by selling some of their shares to InvestX.

How Does InvestX Work?

While many startup investing platforms merely broker deals, InvestX actually invests in all of the deals listed on their platform. This means that they have skin in the game and have high conviction behind their listings.

At the time of writing, there are only three active listings on the platform. This demonstrates the care they put into each deal they decide to list.

InvestX Deals

InvestX prides itself on the variety of companies offered on the platform. For context, the three deals currently listed on the platform include a cryptocurrency exchange, a mobile game company, and a cloud storage company.

After selecting a company that is of interest, you are able to view important information about the company. This includes financial information, notable investors, and leadership information to help you make an investment decision.

If you decide you want to invest in a company on InvestX, the next step is to express interest in the company. In order to express interest, you’ll enter the amount you are considering investing and a brief statement about why the company is interesting to you.

InvestX Express Interest

After submitting your considered allocation, InvestX will contact you to let you know whether you’ll be able to invest. In some cases, they may offer you a smaller allocation depending on the total allocation available.

The reason that InvestX requires investors to express interest before investing is that each deal only has so much allocation. The demand for many of the deals on the platform is very high and they need to ensure they do not over-sell a deal.

Comprehensive Security Measures

Signing up for an InvestX account is no quick task. Investors on the platform are required to enter a significant amount of personal information to verify that they are who they say they are. This includes proof of income for accredited investors, and a photo of your driver’s license.

While this may seem tedious, it allows InvestX to share more information about each deal with their users. Because they know you are who you say, they are able to be more open about the listed companies.

InvestX Returns

Similar to many other startup investing platforms, InvestX users have direct ownership in the companies they invest in. As a result, your returns are directly tied to the performance of the companies you choose to invest in.

Per the nature of startups, you won’t be receiving any dividends on your investments. Instead, you’ll be counting on capital appreciation resulting from a liquidity event.

A liquidity event is some situation that allows startup investors to sell their shares. Two of the most common of which are an Initial Public Offering (IPO) or an acquisition.

An IPO occurs when a private company becomes listed on a stock exchange and becomes a publicly traded company. An acquisition, on the other hand, happens when a larger company purchases the company. In this scenario, investors typically either have their shares converted into shares of the larger company or are bought out.

The nature of startup investments is that they are not liquid and it is not easy to sell your investment before one of these events. InvestX recommends a minimum time horizon of 3 – 7 years for all investments on their platform.

However, it’s important to keep in mind that investing in startups is very risky. In most cases, a company will never reach an IPO or acquisition and the investment will go to $0. This is the risk you take with startup investing. But for many, the potential upside makes it worthwhile.

InvestX Past Deals

InvestX Fees

The InvestX platform states that most deals have “low to no fees”. However, that is the extent of information that is provided.

Startup Yields reached out to InvestX for more information on their fee structure but did not receive a response.

InvestX Pros

  • Very strong track record of companies offered
  • Strict due diligence before companies are listed on the platform
  • Direct ownership in the startups you invest in on InvestX

InvestX Cons

  • Limited startup selection at any given time
  • Only available for accredited investors
  • Very involved signup process
  • Unclear fee structure on investments

InvestX Review: Final Thoughts

Investors looking to invest in the next Spotify or Lyft before it hits it big may find exactly what they are looking for with InvestX. The platform’s strict due diligence ensures that the deals that are listed have been carefully examined beforehand.

The accreditation requirement may prevent some potential investors from accessing the deals on InvestX. While this may appear to be a downside, there are many startup investing platforms for non-accredited investors as well.

InvestX’s strong track record makes for a compelling reason to at least give the current deals a look to determine whether any of them catch your eye. If they do, the platform makes it easy to dig deeper into the company and determine whether it might be a worthwhile investment.