How to invest in private companies with Forge: A buyer’s guide
Investing in private companies—especially pre-IPO unicorns—offers a unique opportunity to participate in the growth of innovative ventures before they reach the public market. Forge provides a marketplace that enables investors to access these opportunities with transparency and efficiency. The following is a comprehensive guide to investing in private companies with Forge.
Why consider pre-IPO investing with Forge?
Investing in private companies offers the potential to:
- Access high-growth opportunities: Invest in companies that are shaping the future across various sectors.
- Diversify your portfolio: Add uncorrelated assets that can enhance your investment strategy.
- Realize outsized returns: Early investment in promising, high-growth companies can lead to potentially significant gains.
Step 1: Create a Forge account
Creating a Forge account is the first step in your private market investment journey. You can create an account for free in minutes.
Step 2: Qualify as an accredited investor
To participate in private market investments through Forge, you must meet the criteria of an accredited investor, which includes:
- Income: Earning over $200,000 individually (or $300,000 with a spouse or partner) in each of the past two years, with the reasonable expectation of maintaining this income for the current year.
- Net Worth: Having a net worth exceeding $1 million, excluding your primary residence (individually or with a spouse or partner).
- Professional Credentials: Holding a FINRA Series 7, 65, or 82 license in good standing.
Once your accredited status is verified, you can gain access to Forge's marketplace and explore investment opportunities.
Step 3: Explore investment opportunities
Forge provides tools and data to help you make informed investment decisions:
- Company research: Browse and analyze private companies, review their financials, valuations, and market positions.
- Forge Price™: Utilize Forge's proprietary pricing model that offers daily indicative prices for approximately 200 venture-backed, pre-IPO companies, derived from secondary market transactions, funding rounds, and market interest
- Private market indices: Track performance through indices like the Forge Private Market Index (FPMI) and the Forge Accuidity Private Market Index (FAPMI), which monitors late-stage, venture-backed companies.
Step 4: Indicate interest and engage with specialists
When you identify a company of interest that you want to invest in, you can:
1. Express interest: Submit an indication of interest (IOI) through the Forge platform.
2. Consult with specialists: Speak with a Forge Private Market Specialist, if desired, who can assist you in understanding the investment details and process.
3. Due diligence: Review all necessary documentation and perform your own due diligence before proceeding.
Step 5: Complete the transaction
Forge helps facilitate the transaction process, ensuring compliance and efficiency:
- Documentation: Sign all required agreements and disclosures.
- Payment: Transfer funds securely through the platform.
- Share transfer: Forge coordinates with the desired private company and other third parties as needed to complete the share transfer.
Forge's experience with private company transactions and knowledge of applicable securities laws offers a smooth transaction experience.
Considerations and risks you should be aware of
Investing in private companies involves certain risks:
- Liquidity: Private shares can be less liquid than public stocks and selling them may take more time.
- Valuation uncertainty: Determining the value of private shares can be challenging due to limited information. Thankfully, as noted above, Forge offers Forge Price-a derived pricing dataset designed to provide an up-to-date, indicative view of price performance for approximately 200 venture-backed, pre-IPO companies. Using a robust methodology that incorporates recent funding round data, secondary market activity, deal history, and platform interest, Forge Price offers a unique window into private company valuations—insights that have traditionally been hard to access or interpret.
- Regulatory compliance: Investors should understand and comply with all relevant regulations and restrictions.
Forge provides resources and support to help you navigate these considerations; however, investors should further consult their personal legal and/or tax advisors, as needed.
Start your investment journey
Ready to explore private market investments?
1. Create an account: Sign up on Forge's platform for free.
2. Complete accreditation: Submit the necessary information to verify your status as an accredited investor.
3. Explore opportunities: Browse available private companies, indicate your investment interests and submit an IOI.
4. Consider investing in the private market through a SDIRA: A Forge Trust self-directed IRA (SDIRA) lets you use tax-advantaged retirement dollars to make the most of investing for your future.
Investing in private companies through Forge opens the door to a dynamic and historically hard-to-access asset class. With robust tools like Forge Price, in-depth company research, and expert guidance from our personnel, Forge equips investors with the transparency they need to explore pre-IPO opportunities with confidence. While private market investing comes with unique risks, Forge’s platform is designed to streamline the process, reduce friction and support informed decision-making. Whether you're looking to diversify your portfolio or gain exposure to tomorrow’s potential market leaders, Forge provides a comprehensive and trusted pathway to private market investing./p>
About the Author
Jay Manciocchi is a marketing and communications professional with experience in content marketing operations, digital marketing and event strategy. He most recently led these functions at BMC Software. He holds a JD from New England Law | Boston and a BS in Political Science from Northeastern University. Read more from Jay.
