In its simplest form, a direct investment is an investment in a company. You exchange money, expertise, or some other thing of value for a
security interest in the company. This interest may be equity or debt; the company may be public or private.

Direct Investments Data within private i

Within private i, a direct investment is like a LP commitment in several respects. Capital calls for an LP are simply called funding for a direct investment. Fees, cash or stock distributions and net asset value are essentially the same. Performance calculations, such as internal rate of returns, or time-weighted returns, are calculated with the same cash-on-cash metrics. The main difference between an LP commitment and a direct investment is in how the investment is described and how its transaction details are captured.

An investment in a limited partnership that invests in portfolio companies creates an arms-length transaction, where what you as an
investor should or can know about the specifics of the company are filtered through the general partner of the fund. When you make a direct investment in a portfolio company, this investment implies a greater intimacy with the details of that company. This may include keeping track
of the company, its officers, conversations, due diligence activities, board meetings and so on.

The direct investments module was designed to allow you to track the transactions, characteristics and people behind the company by tying it
into private i's contact management system. Transactions are captured through a controlled inventory management system that works behind
the scenes. As well, this design is tied into the existing portfolio entity characteristics database.

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An Example:

You provide cash in the form of a loan to a company. The company succeeds and your loan and any accrued interest is converted to preferred stock. You invest more and buy shares of a different class of stock. The company goes public and all of the stock is converted to common shares. For a short time, you hold on to the stock because of trading restrictions. It splits 2 for 1 and pays a dividend. You gradually liquidate your
position by selling the stock over time.

This cascade of actions began with a single purchase. Tracking each event is critical for accounting, taxation, performance measurement, and reporting.

A Broader Definition

For our purposes, the definition of a direct investment is broader: within private i, a direct investment is any investment with securities you
want to track as a group. For many purposes, you might think of the direct investment as a deal or, in another context, as a manager. For
example, you could own a set of securities in different companies that you think of as a single direct investment; you could want to track the details of a basket of stock positions managed by outside managers; you might monitor the details of a co-investment. The model is the same
for each: the activity for the direct investment is the sum of the combined activity of each security. However, an important concept in this
design is that there are activities that have no net impact on the direct investment. A 2:1 stock split will double the shares that you hold, but will not increase your cost basis. Likewise, a merger or acquisition must be recorded so that it has does not affect the net funding.

The private i direct investments module allows you to track security interests purchase by purchase. Tracking is done groups of shares called
lots, identified by a lot number. A lot number is an identifier that enables specific lot identification for transactions it has no other meaning.

This lot-based model allows you to carefully track what happens to these securities over time. Within this module you can perform all of the
record keeping associated with owning securities.