Why Is Pre-IPO Investing Attractive

Pre-IPO investing is when an individual invests into a privately-held company prior to going public and shares being publicly available. This allows an investor to purchase shares at a much reduced price compared to what the share price will be once it goes public. And once the company goes public, an investor can possibly experience uplift within a relatively short time. This gives pre-IPO the edge compared to investing in seed investments which are prone to much higher risk and longer time span to see profit.

Another advantage of investing into a privately-held company is the significant financial gains. Considering investing at a discount pre-IPO and shares trading at a much higher price after going public, you can potentially double, triple, or even increase your profit by more than ten times. Taking a look at some of the past successes from big name firms such as YouTube (acquired by Google for $1.65 billion) and PayPal (acquired by eBay for $1.5 billion) to smaller ones Affinity Labs (acquired for $61 million by Monster Worldwide) and Orbital Data Corp (acquired for $50 million by Citrix Systems) are evidence that substantial profits can be made through pre-IPO.

Investing in pre-IPO companies is a great way for investors to but it's not certainly without risks. Whilst pre-IPO deals may be more mature than their seed or start-up stage companies, they are still small companies after all, which carry risks. It's important to manage your risk and study companies to select more mature, IPO-ready companies to reduce risks.

Pre-IPO investment has great upside but not without risks. However with the new issues market picking up and other alternative investments offering low rates of return, investing in pre-IPO companies becoming increasingly attractive and is set to pick up in a big way.