5 Ways To Invest In Startup Pre-IPO

Pre-IPO – Investing in startups can be risky, but it’s also one of the best ways to get access to some of the most innovative companies and technologies on the planet. If you want to invest in a startup before it goes public, here are five different ways to get your hands on Pre IPO investing.

“Traditionally, access to IPOs before they’re traded on the public market has been reserved for large institutional investors” as experts like SoFi comments.

Angel investors and venture capitalists

Angel investors and venture capitalists are professional investors who invest in early-stage companies. These two groups of investors have very different approaches to investing, but both are looking for a return on investment (ROI) of 10-20 times their investment.

Angel investors are high-net-worth individuals who invest their own money in startups. They tend to be friends of the founder or other people in the industry, and they often have a personal relationship with the founder(s).

They generally don’t have as much experience picking investments as venture capitalists do, so they may rely more heavily on criteria like the founders’ network and the idea itself rather than metrics like traction or performance against competitors.

Special purpose vehicles

Special purpose vehicles (SPVs) are a way to invest in startups without needing to be an accredited investor.

An SPV is a limited partnership, and not open to the general public. They are typically only available through private placement or direct investment from venture capital funds or angel investors.

Employee Stock Ownership Plans (ESOPs)

Employee Stock Ownership Plans (ESOPs) are an alternative to traditional venture capital. ESOPs can be used to invest in startups, but they also offer a way for employees to own part of the company they work for.

If you want to get involved with a startup but don’t want the risk of being a founder who might lose all their money if things go poorly, then investing through an ESOP is probably right up your alley.

Revenue-sharing agreements In Startup Pre-IPO

Revenue-sharing agreements are not very common, but they can be a great way to get your foot in the door. In the gaming industry, revenue-sharing agreements are actually more common than equity investments. These agreements allow you to invest in a company with no capital outlay and no risk of loss. All while giving you an opportunity to benefit from their successes.

Rewards-based crowdfunding platforms

Rewards-based crowdfunding platforms are an alternative to rewards-based equity crowdfunding platforms. Instead of giving the investor a stake in the company, they offer rewards such as merchandise and other perks in exchange for funding.

Rewards-based crowdfunding platforms have been around since before the JOBS Act was passed, but it’s only recently that they’ve become more popular with startup investors. Rewards-based equity crowdfunding is a way for startups to raise money from interested parties by selling small stakes in their business at discounted rates (often free).

As with any type of investment, there are risks involved here. But if you’re willing to take them on, you’ll be rewarded handsomely if your company succeeds!

By now, you may be wondering why you should invest in pre-IPO startups. To put it simply, investing in a startup’s pre-IPO is like buying into an idea before it becomes a reality. If you believe that the company will succeed, then it makes sense to get involved as early as possible and reap the benefits when they do go public.

 

 

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