Frequently Asked Questions

What is Vex Securities?

Vex Securities is a FINRA-registered broker-dealer operating an alternative trading system (ATS) focused on facilitating investments in venture-funded private companies through special purpose vehicles (SPVs). Qualified investors browse a catalog of private companies and participate in book builds to acquire indirect ownership interests.

What is Vex.trade?

Vex.trade is the platform where qualified investors browse a catalog of private companies and participate in book builds for SPV units, which may represent indirect ownership interests in equity of private, venture-backed companies.

How does Vex Securities differ from other private market platforms?

Vex Securities operates a demand-driven model. Investor interest in catalog companies can trigger anchor commitments, which lead to structured book builds with transparent demand curves and uniform clearing prices.

Who can invest through Vex.trade?

Only Qualified Purchasers as defined under the Investment Company Act of 1940 (ICA) may participate. Qualified Purchasers generally include:

• Individuals with at least $5 million in investments
• Family-owned businesses with at least $5 million in investments
• Trusts not formed for the purpose of investing with at least $5 million in investments
• Entities owned entirely by Qualified Purchasers
• Entities with at least $25 million in investments

Additionally, investors must be eligible to invest in funds exempt from registration pursuant to Section 3(c)(7) of the ICA (3(c)(7) funds) through a broker-dealer.

What documentation is required to open an account?

All users must complete Know Your Customer (KYC) verification by providing:

• Government-issued identification document(s)
• Completion of required investor questionnaires

Are there geographic restrictions?

Any Qualified Purchaser eligible to invest in 3(c)(7) funds through a broker-dealer may participate, subject to applicable securities laws, regulations and US Government sanctions.

What companies are in the catalog?

The catalog includes private, venture-funded companies selected at Vex Securities' discretion. Sectors represented include biotechnology, financial technology, artificial intelligence, and B2B software-as-a-service (SaaS). Generally, companies that have publicly announced raising more than $50 million in venture funding may be included.

How is catalog research sourced?

Research summaries cover funding history, valuation, stage, and sector based on publicly available information. These summaries are informational only and do not constitute a recommendation to invest.

What does starring a company do?

Starring a company tracks it for your reference. Aggregate star counts may inform which companies attract anchor commitments, but starring does not commit capital or create any obligation.

How often is catalog content updated?

Catalog listings are periodically reviewed and updated as new information becomes publicly available.

What triggers SPV formation?

An anchor commitment of $1,000,000 or more for a catalog company triggers Vex Capital to form a 3(c)(7) Series SPV for that company.

What happens to my anchor commitment?

Capital is placed on hold. The anchor investor must countersign the subscription documents within the specified deadline. If the anchor investor does not countersign within the deadline, the commitment is released and the cash hold is removed.

Can the anchor commitment fail?

Yes. If the anchor investor does not countersign within the deadline, or if Vex Capital determines the SPV cannot be structured for the target company, the cash hold is released.

How does the book build work?

Once an SPV is structured, the deal opens to all Qualified Purchasers. The minimum bid is $10,000. Each bid specifies a maximum fully diluted valuation (FDV) the investor is willing to accept. Bids are binding and non-cancellable once placed. Investors may raise existing bids or add new bids, but may not withdraw.

What is the demand curve?

The demand curve is a live visualization of aggregate bid interest. The horizontal axis shows candidate clearing FDV levels. The vertical axis shows cumulative USD committed at or below each FDV level. Participation is pseudonymous.

How is the clearing price determined?

The operator sets a capital cap for the SPV. Bids are sorted by maximum FDV in descending order. The system walks cumulative USD commitments until the cap is reached. All winning bidders pay the same uniform clearing price. Bidders at the margin receive pro-rata allocation.

What happens if my bid is excluded?

If your maximum FDV is above the clearing price, your bid is excluded and the cash hold on your funds is released.

Can I cancel my bid?

No. Bids are binding once placed. Investors may increase existing bids or add new bids, but cannot withdraw or reduce bids.

What is the legal structure of each SPV?

Each SPV is structured as a 3(c)(7) fund under the Investment Company Act of 1940. This structure is available only to Qualified Purchasers and is exempt from registration as an investment company.

How does the SPV acquire equity?

After a book build clears, Vex Capital deploys capital through secondary market transactions or primary channels to acquire equity in the target company. The acquisition process may involve identifying existing shareholders willing to sell, navigating Right of First Refusal (ROFR) processes, and completing transfer procedures through the company's transfer agent.

Who manages the SPV?

Each SPV is managed by Vex Holdings Puerto Rico Corp d/b/a Vex Capital (CRD# 337207), an affiliated investment adviser that serves as the manager for all SPVs.

What are the possible deployment outcomes?

After a book build clears, the SPV may deploy fully (acquiring the targeted equity position), deploy partially (acquiring less than the targeted position, with remaining capital returned to investors), or fail to deploy entirely (if no suitable seller or primary opportunity is found, in which case all capital is returned to investors).

What fees does Vex Securities charge?

Acquisition Phase:

• 5% commission paid by selling shareholders when they sell equity to the SPV (not charged to investors)

Ongoing Management:

• 1% annual fee paid in unit dilution (0.25% of outstanding units per quarter end), starting 12 months after book build close. No carried interest. No management fee.

Are there any other fees?

Not at this time. The 5% seller commission and 1% annual dilution fee are the only fees currently charged. There are no carried interest or management fees. However, Vex Securities may introduce trading fees, withdrawal fees, or deposit fees in the future.

When can I trade my SPV units?

SPV units are subject to a 12-month transfer restriction following book build close under Rule 144. Each Series files Form 10 with the SEC to become an Exchange Act reporting company, which may shorten the holding period.

After the applicable restrictions expire, units may be traded on Vex Securities' secondary market order book.

What kind of liquidity should I expect?

Vex Securities makes no representations or guarantees about liquidity in the secondary market. Investors should assume that SPV units are illiquid investments.

Who holds my SPV units?

Custody of SPV units is facilitated by Vex Registry, an SEC-regulated Transfer Agent. Vex Securities does not hold customer funds or securities.

Will SPV units be available as tokens?

On chain token representation of SPV units is not currently available. This capability is under development and may be offered in the future. All SPV units are currently held in book entry form at Vex Registry.

Overview

Investing in SPVs through Vex Securities involves substantial risks, including the potential for total loss of capital. These investments are suitable only for sophisticated investors who can afford to lose their entire investment and who do not require liquidity.

Key Risks

• Units cannot be traded for at least 12 months after book build close (subject to reporting status and acquisition timing)
• Secondary market liquidity may be sparse or non-existent
• The SPV may deploy partially or fail to deploy entirely, in which case capital is returned
• Private company valuations are subjective
• Each SPV holds equity in a single company, so lack of diversification increases risk
• The GP has complete discretion over voting and governance rights
• Catalog research is informational only and does not constitute a recommendation
• There is no guarantee of returns. You can lose all invested funds

How do I open an account?

1. Providing required identification documents
2. Completing the Qualified Purchaser verification
3. Completing required investor questionnaires
4. Reviewing and accepting applicable agreements

Where can I get more information?

Contact Vex Securities at john@vexsecurities.com (510) 542-5380.

Not Investment Advice

This FAQ is for informational purposes only and does not constitute investment advice, tax advice, or legal advice.

Not an Offer

This FAQ does not constitute an offer to sell or a solicitation of an offer to buy any security.

SIPC Coverage

Vex Securities is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Securities and cash held at Vex Registry are not protected by SIPC.

Member FINRA/SIPC

For more information visit www.finra.org and www.sipc.org.