Pre-IPO investing is when you make an investment in a private company before it goes public. An IPO (initial public offering) is the public trading of any private company’s shares for the first time. In 2012, Barack Obama passed the jobs act.
The act makes it easier for private companies to go public to raise their private capital. Unaccredited investors can now buy and sell shares from pre-IPo Companies. Investing in pre IPO companies comes with risk. Startup companies’ success is not guaranteed.
When an investment fails, it will cause you losses and no returns. In the events of crises such as the 2008 financial crisis or the 2020 pandemic, pre IPO investment doesn’t get affected as much. In 2017 Lemonade startup was valued at $600 million and today it is valued at more than $3.4 billion.
It would have turned into $55,000 if it went public in 2020. Back in 2017, Lemonade was valued at £600 million. Today it is worth more than £3.3 billion. Pre IPO is a big win in the case of profits.
Investing in pre IPO companies is risky yet beneficial. Talk to stockbroker or advisory firm who are specialized in pre-IPO shares. Invest through trusted online platforms such as Equitybee, Sharespost, and EquityZen. If you choose wisely and make the right investment, you can make huge money.