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How to Buy Pre-IPO Stock: A Guide to Investing in Startups – Investment U

Learning how to buy pre-IPO stock can reap big benefits for investors. Getting in on startups before they go public can help you win big. So, how can you get in on private shares of a company?

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Learning how to buy pre-IPO stock can reap big benefits for investors. Getting in on startups before they go public can help you win big. So, how can you get in on private shares of a company?

What is Pre-IPO Stock?

Pre-IPO stocks consist of shares that a private company sells to investors before going public. An IPO placement is the most common way for companies to offer pre-IPO stock. Many institutional investors, including hedge funds and private equity firms, buy these shares. In addition, some retail investors can get in on private equity.

However, most investors face high barriers to entry for pre-IPO investments. It’s common for deep-pocketed institutional investors to buy the majority of shares in pre-IPO offerings. Traditional investors can also participate, but there are restrictions in most cases. Nevertheless, there are a few exceptions.

How Do Companies Sell Pre-IPO Stock?

When it comes to buying pre-IPO stock, here are three common ways…

  • Many of the initial funding in a company is provided by angel investors or venture capital firms. These institutional investors often buy a block of stocks. Typically, a block consists of more than 10,000 shares.
  • Underwriters of IPOs offer discounted stocks to certain investors before a public debut in a pre-IPO placement. They usually take place right before a company goes public.
  • Employees sometimes receive stock options, which they may resell with certain restrictions. You can find these on secondary markets that I’ll go into later in the article.

It can be challenging to get access to shares of pre-IPO stock unless you’re a major industry player or a company employee. However, there are some exceptions to this…

How to Buy Pre-IPO Stock: Three Methods

Find a Broker Who Specializes in Private Equity

A lot of brokers and financial advisors take part in pre-IPO trading. Some of them may own stocks they’d like to sell or they may represent sellers who are seeking buyers. To find pre-IPO stock, find a broker who specializes in pre-IPO sales or ask your current broker about pre-IPO stocks. Ask banks, financial institutions and accounting firms for guidance. Discover whether they know of any private companies that plan to issue pre-IPO shares.

How to Buy Pre-IPO Stocks Directly From Companies

​​Find out about companies that are seeking funding and plan to go public. In this case, contact them directly to find out if pre-IPO stocks are available.

How to Buy Pre-IPO Stocks Indirectly

In light of the investor criteria and minimum investment requirements, the idea of buying …….

Source: https://investmentu.com/how-to-buy-pre-ipo-stock/

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