When it comes to investing, you might think of the stock market and buying shares of publicly traded companies, like Apple, or Microsoft. But what if you could invest in startups before they become well known and publicly traded? That's where pre-IPO investing comes in. Once a company has an initial public offering, or IPO, anyone can buy or sell that company's stock. But before that happens, it can be challenging for individual investors to obtain shares. Venture capital funds might invest in private companies and employees might receive stock options at pre-IPO companies.
But the general public usually doesn't have access to these private investments. However, there are ways to invest in pre-IPO companies via private secondary markets, like Forge. If you already own pre-IPO stock, or if you want to invest early, you might be able to trade through a secondary marketplace. But who can engage in pre-IPO investing? Well, typically, you either need to own pre-IPO stock that you can sell or be an accredited investor to buy private stock.
An accredited investor is someone who meets certain criteria, such as having a net worth of at least $1 million, or an income exceeding $200,000 for the past two years. Pre IPO investing can offer individuals the chance to get in early and potentially gain outsized returns. But it can also carry more risk, as there is no guarantee that a company will go public or experience long-term gains. Plus, there's generally less price transparency in private markets.
Nonetheless, making private investments could potentially be a way to diversify your portfolio and manage risk. So, if you're looking for new investment opportunities, pre-IPO investing might be worth exploring.
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The information and material presented in this article is provided for your informational purposes only and does not constitute an offer by Forge Global, Inc., Forge Securities LLC or any of its affiliates (collectively, "Forge") to sell, or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of final offering document(s) and purchase agreement and will be subject to the terms and conditions and risks delivered in such documents.
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Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment. Past performance Is not indicative of future results.