Alternative investments are assets outside of traditional stocks, bonds, and cash. Examples include private company shares, private equity, private credit, real estate, hedge funds, and collectibles. These investments often have different risks, returns, and liquidity compared to public markets.
Filter FAQ list:
What is an alternative investment?
Why consider alternative investments?
They can diversify a portfolio, offer potential for higher returns, provide access to innovation, and, in some cases, hedge against inflation.
What are the risks of alternative investments?
Alternative investments involve unique considerations and risks that differ from traditional investments:
- Liquidity constraints: Private investments typically cannot be easily sold or converted to cash on demand.
- Longer investment horizons: Many alternatives 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.
What are private markets?
Private markets involve investing in companies or assets that are not traded on public exchanges. Common types include private equity, venture capital, private credit, real estate, infrastructure, and pre-IPO shares.
They generally have less frequent pricing, less disclosure, higher minimum investment amounts, and longer holding periods.
What is a Pre-IPO?
Pre-IPO refers to buying shares in a private company shortly before it plans to list on a public exchange. These shares are sold privately to qualified investors.
How do I invest?
Through Special Purpose Vehicles (SPVs) that pool investor capital to purchase shares. Investors complete onboarding, submit an indication of interest (IOI), review offering documents, and fund their investment.
What is an SPV?
A Special Purpose Vehicle (SPV) is a separate legal entity created to hold private company shares for a group of investors. You are buying interest in the SPV, not the company’s stock directly.
SPVs can provide access to larger deals, allow investors to pool funds (which lowers minimums), simplify paperwork, and help navigate certain transfer or shareholder limits.
What is an IOI?
It’s an Indication of Interest (IOI), which is a non-binding way to show your intent before making a final commitment.
Are IOIs binding commitments?
No, indications of interest are entirely non-binding. An IOI signals your potential interest in an investment opportunity if it becomes available at terms that meet your criteria.
You maintain complete flexibility to evaluate the formal offering and make your final investment decision when a deal goes live.
What happens if I submit an IOI but do not invest?
There are no consequences for submitting an IOI and subsequently deciding not to invest. IOIs are used purely for demand assessment and deal prioritization. Your investment decisions remain entirely at your discretion when opportunities become available.
What is the difference between an IOI and a Subscription?
An IOI (Indication of Interest) is a non-binding expression that you are interested in a deal. It does not require funds, does not guarantee allocation, and does not commit you to invest.
A Subscription is a binding commitment to invest. It does require sufficient funds, and once you sign the agreements, your funds are placed on hold until the investment is complete.
Are there minimum investment requirements?
Yes. Every SPV has its own minimum subscription requirement. Customers will see the minimum number of shares required directly on the subscription page.
What fees are involved?
All fees are included in the Investor Fee Per Share. There are no additional fees beyond what is disclosed in the offering documents. Please visit the Pre-IPO page on the BBAE platform and review the SPV details to determine the applicable fees.
How is pricing determined?
Private company share prices are set by negotiations in the private market, often based on the most recent financing rounds or comparable transactions.
When are my funds placed on hold?
Funds are placed on hold immediately after the customer completes all subscription agreements.
Where can I submit an IOI or a subscription?
Log in to your BBAE account and navigate to the Pre-IPO page. Complete any required questionnaires, and you will then be able to view available offerings and submit an IOI or subscription.
Can I cancel my IOI?
Yes. Because an IOI is non-binding, you can typically cancel it at any time before submitting a subscription.
Can I cancel my subscription?
Once you submit a subscription and sign the agreements, it becomes a binding commitment. At that stage, cancellations are generally not allowed, as the funds have been allocated for the investment. If you believe there is an error, please contact support as soon as possible so we can review your situation.
Who is eligible to participate in pre-IPO offerings?
These types of investments are not suitable for all investors.
To help determine whether these offerings may be appropriate for you, we require you to complete a questionnaire the first time you access the Pre-IPO page. The questionnaire assesses your investment experience, financial profile, risk tolerance, and understanding of alternative investments.
When do I complete the suitability questionnaire?
You will be prompted to complete the questionnaire when you first visit the Pre-IPO page. It must be completed before you can view or participate in any offerings.
Your responses are valid for one year. After that, you will be required to retake the questionnaire to refresh your information.
Does completing the questionnaire guarantee I can invest?
No. Completing the questionnaire is required, but you must still meet eligibility rules and the specific requirements of each offering. Some SPVs may have additional restrictions or minimums.
Why is suitability important?
These investments are high-risk, illiquid, and may involve limited information. Suitability requirements help ensure that investors understand these risks and are financially able to participate.
