What can we say about pre-IPO investment platforms? Are they good platforms one can invest in? Read to the end.
But before we go into how one can invest in pre-IPO platforms, let us know what it is.
Pre IPO means pre-initial public offering. As the name implies, IPO is the first public exchange made by a firm.
Companies offer pre-IPOs to source the funds they need to grow their internal processes and legitimacy before scrutinizing a public listing.
These companies are always in their early development stages, operate in new areas, and have innovative business models.
So, pre-IPO investment means funding a public-limited or private company before it goes public with trading on a public exchange for the first time.
Investing in pre-IPO platforms is an excellent choice as they allow their clients to buy and hold shares in one place through online services before going into public exchange for the first time.
The Pros of Pre-IPO Investment
- It creates access to a broader range of opportunities: Not all private companies can the public invest in; therefore, pre-IPO platforms create an opportunity for the investors to back a broader range of businesses than they would have access to.
- Buy shares at a discount: Pre-IPOs are priced lower than they would often be on the public markets, unlike other companies when they go public.
- Diversity of portfolio: The value of pre-IPO investments are private and, therefore, mark-to-market whenever a liquidity event occurs, thereby expanding an investor’s portfolio.
Cons of Pre-IPO Investment
- Less regulated: Unlike other companies in public markets that are well-regulated by the security agencies, pre-IPO are not thus, appear less transparent, making it more challenging to identify their financial position and risk profile
- There is no guarantee that the pre-IPO companies would go public.
- As an investor, you cannot sell your pre-IPO holdings on the public market, making it hard to exit your position.
List of the Top 10 Best Pre-IPO Investment Platforms
There are many IPOs, but below are the top 10 best scrutinized pre-IPO platforms you can invest in.
Robinhood is one of the best pre-IPO investment platforms a trader can invest in before the company’s first public exchange.
It was established in April 2013 by Vladimir Tenev and Baiju Bhatt, who had built high-frequency trading platforms for financial institutions in New York City.
The company began in 2009 by Irish-born programming brothers John and Patrick Collison.
The platform is easy and convenient, making developers invest in it.
It focuses on improving the existence of payment processing offerings for businesses.
Carta helps investors of pre-IPO to transit their product from private to public.
It started serving public companies in 2017.
Plaid was founded in 2013 and is one of the pre-IPOs. It is still private, and looking forward to going public. Investing in the platform is such a great choice.
SpaceX, one of the pre-IPO platforms, was founded in 2002 by billionaire businessman and inventor Elon Musk and is headquartered in Hawthorne.
It is still private; its shares are not yet available on the stock market.
6. Scale AI
Scale AI was established in 2013 by Alex Wang and Lucy Guo and is headquartered in San Francisco, California.
The platform is anticipating going public. Be alert for the updates on the scale AI IPO, and thoroughly analyze the company when investing. The month following an IPO can be volatile, and share prices can change quickly.
Instacart is one of the pre-IPO companies looking forward to going public sooner. It is expected to occur in the second half of 2022, with the company filing with the SEC on May 11 to go public.
NerdWallet is a finance company founded in 2009 by Tim Chen and Jacob Gibson and is headquartered in San Francisco, California.
NerdWallet stock, although high risk, is a high-reward stock.
This platform specializes in pre-IPO stocks. It offers large blocks of shares in private companies about to go public.
Unlike other platforms, linqto buys the shares you purchase from them. You can also sell pre-IPO shares you purchase elsewhere to linqto as long as linqto works with the company, and you are an original shareholder.
It was founded in 2010 in Pacific Grove, California.
Klarna was established in 2005 in Stockholm, Sweden, and has its headquarters.
The company is reportedly contemplating going public in 2022 at an estimated valuation of almost $50 billion.
How to Invest in Pre-IPO Companies with just $50
One can invest in pre-IPO companies with $50 by the following:
- Take counsel from advisory firms specializing in pre-IPO shares.
- Ask your local bankers concerning companies interested in investments.
- Examine the financial news about startups or companies looking forward to going public
- Evaluate and follow your best startups that accept the minimum deposit of $50.
- Finally, invest in the company.
Frequently Asked Questions
Is Investing in Pre-IPO a Good Idea?
Yes, it is.
Investing in any pre-IPO company is a tactical way to build long-lasting wealth. If you invest in the right company at the right time, you surely can get enormous returns on your investment. Though the risk is involved, it is the chance of making a profit.
Which IPO Platform is Best?
Zerodha is the best IPO platform. It does not charge any fee for applying for IPO, and they do not charge any commission when you sell allocated IPO shares via them, but you still have to pay government taxes.
Pre-IPO stocks are sold as private before the IPO is held. They are sold in large quantities of shares before the listing; therefore, average retail investors may be unable to purchase that. It is only higher institutional investors that can buy these stocks.
Can IPO Make You Rich?
IPO can make you rich depending on your retail or institutional investment.
Retail investors may find it difficult to be rich due to their low quantity of shares, unlike institutional investors that can purchase shares in large blocks, making a more significant difference in their wealth.
Investing in any pre-IPO platforms is an excellent choice as you get to buy and hold your shares before going public for the first time.
Watch the video below for a further illustration: