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).

What is Vex.trade?

Vex.trade is the website platform where Vex Securities conducts daily auctions 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 structured auction system that runs daily (on each of the 252 days per year that Fedwire Funds Service is open) and attempts to acquire equity stakes in targeted startups through secondary market transactions.

Who can invest through Vex.trade?

Only Qualified Purchasers as defined under the Investment Company Act of 1940 (ICA) may participate in Vex auctions. 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.

How do the auctions work?

Each auction:

• Runs for a specified number of business days (typically 5)
• Offers units in a newly formed SPV (the number of units and reserve price are set per auction)
• Requires a minimum raise threshold to proceed
• Targets acquisition of equity representing a specified percentage of the fully diluted valuation (FDV) of a specific private company

Specific parameters for each auction (units offered, reserve price, minimum raise, target ownership percentage) are disclosed in the Series Supplement published before the auction begins.

How are units allocated if an auction is oversubscribed?

Vex Securities uses uniform pricing with priority determined by funding timestamp. All winning bidders pay the same clearing price. If the auction is oversubscribed, bids are filled in the order funds were received. Only the marginal bidder (the last bidder in the winning set) may receive a partial allocation. Earlier bidders receive their full requested amount.

What is the minimum investment?

The minimum bid size is specified in each auction's Series Supplement. Once an auction becomes fully subscribed, investors may only place bids that would be in the winning set, and the minimum bid size still applies.

How do I fund my bid?

Bids must be fully funded at the time of placement using either:

• Wire transfer (via Fedwire)
• USDC stablecoin over the Solana blockchain

A bid is only accepted once funding is received. The timestamp when funds arrive determines your priority in the allocation queue.

Can I place multiple bids in the same auction?

Yes. Investors may place multiple bids in the same auction. Each bid is treated separately for allocation purposes, with priority determined by when each bid's funding was received.

Can I cancel or modify my bid?

No. Bids cannot be withdrawn or modified once funded. If your bid is not in the winning set at auction close, your funds will be returned.

What companies are targeted in auctions?

Vex Securities selects private companies for auction at its discretion. Target companies are primarily, but not exclusively, in the following sectors:

• Biotechnology
• Financial technology
• Artificial intelligence
• B2B software-as-a-service (SaaS)

Generally, companies that have publicly announced raising more than $50 million in venture funding may be selected. Auction targets are not pre-announced; they are revealed when the auction begins.

What happens if the auction doesn't reach the minimum raise?

If an auction fails to reach its minimum raise threshold, the auction fails, the SPV is not formed, and all funds are returned to bidders. No fees are charged in this scenario.

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 the target company's equity?

After an auction successfully closes, the SPV attempts to acquire equity from existing shareholders of the target company through secondary market transactions. The acquisition process may involve:

• Identifying existing shareholders willing to sell
• Navigating Right of First Refusal (ROFR) processes
• 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 fees does Vex Securities charge?

Auction/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 auction 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 six month transfer restriction following auction close. Each Series files Form 10 with the SEC to become an Exchange Act reporting company, which shortens the Rule 144 holding period to six months (rather than one year for non reporting issuers).

The transfer eligibility date is the later of (i) six months following auction close or (ii) the date the Series acquires the target company's securities. After these 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 6 months after auction close (subject to reporting status and acquisition timing)
• Secondary market liquidity may be sparse or non-existent
• The SPV may be unable to acquire the targeted equity
• 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
• 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.