5 Ways to Invest in Pre-IPO Stocks

The draw to investing in pre-IPO stocks is clear: an early investment in the right company can lead to massive returns.

It's not uncommon for a private equity investment to 10x, 20x, or even 100x before a company's public offering. For instance, Blackbird VC's first $3 million investment in Canva is now worth over $1 billion, a return of 337x.

Even though these deals often lose money, one great investment can more than make up for an otherwise mediocre portfolio.

Until recently, getting access to pre-IPO stocks required knowing the right people and having millions in the bank. While those things still help, they're no longer prerequisites. In 2025, it's easier than ever to buy pre-IPO stock.

Here's everything you need to know about investing in pre-IPO companies, as well as five ways to start investing in them today.

What are pre-IPO stocks?

Pre-IPO stocks are private companies that haven't yet gone public via an IPO (initial public offering) or SPAC. They don't trade on a public stock exchange such as the NYSE or Nasdaq, but likely plan to in the future.

Their shares are held privately by founders, employees, VC & PE firms, angel investors, and other private investors.

The pre-IPO landscape has shifted dramatically over the last 15 years as outside investors (primarily venture capital and private equity firms) have poured money into promising startups at earlier and earlier stages.

Because of this abundance of capital, companies can stay private longer and reach much higher valuations before becoming publicly traded.

Source: ETF Trends

Back in the days of Microsoft, Apple, Amazon, and Google, IPOs were the primary way companies raised money to fuel growth. An IPO was a necessary step in the process.

Today, for many of the world's hottest startups, an IPO is not for raising capital — it's a liquidity event for the company's founders and private investors to sell their shares and reap huge gains.

It's only at this point, after a substantial portion of the returns have been captured, that retail investors can invest.

Fortunately, there are now ways for individual investors to participate alongside private equity and venture capital firms and invest in companies before they go public.

The 5 best ways to invest in pre-IPO shares

1. Buy shares on a pre-IPO marketplace

New regulations have made it possible for accredited investors to buy shares of pre-IPO companies from employees and other shareholders.

It's becoming more common for startups to offer employees stock options as part of their compensation.*

*By giving away equity instead of cash, companies can significantly reduce their cash expenses. Stock options also help retain employees.

Left with valuable but illiquid shares, some employees turn to secondary marketplaces to sell their shares.

Secondary marketplace platforms connect investors who want to invest in private companies to employees who want to sell the stock they've been granted.

It's a win-win — employees get cash for their shares, and investors get equity in private companies they otherwise wouldn't have access to.

A few of the most popular secondary marketplaces to invest in private companies are:

	Hiive	Linqto	Forge	EquityZen
Best for	Best overall	Fastest transactions	Liquidity	Fund offerings
Pros	Transparency, liquidity, & low fees	Speed & a low investment minimum	High trading volume	Several multi-company fund offerings
Cons	Mid-range investment minimum	Most expensive otherwise	Buyer fees & a high minimum	Few offerings & low liquidity
Companies available	3,500+	~90	4,900+	450+
Investment min.	$25,000	$1,000	$100,000	$10,000
	Learn more	Learn more	Learn more	Learn more

Note: I've ranked these in order of our choices from left to right.

Each platform takes a different approach to selling pre-IPO shares.

For example, Hiive functions most like a traditional marketplace.* Sellers list their shares and asking prices, and buyers place bids on those shares. Once they agree on a price, Hiive's team helps facilitate the transaction. 

*For this reason, Hiive tends to have the most accurate and up-to-date prices. Even if you use another platform to buy and sell, it's worth having an account on Hiive to make sure you're getting the best price.

Hiive offers one of the largest selections of private companies, one of the lowest investment minimums, and tends to have good liquidity. That's why we've named it best overall.

That said, company availability differs across platforms, and prices can vary from one platform to another.

Many investors choose to sign up for several platforms and then buy based on whichever one has the best price and lowest fees. Be sure to do your due diligence and familiarize yourself with a platform's terms before investing.

These platforms are for accredited investors only. Some are also restricted to U.S. investors.

2. Become an angel investor

Another route to investing in pre-IPO companies is to become an angel investor.

Angel investors are typically former entrepreneurs or executives who have 1) money, 2) connections, and 3) expertise, and are willing to take on the risk of investing in early-stage private companies.

Most angel investments range from $200,000 to $400,000 per deal, though the exact figures can vary significantly (many investments are several million dollars or more, while some can be less than $50,000). 

In addition to having the money, angel investors need connections.

Most often, angel investors need to know somebody at the company, have a mutual connection with the founder, or be a known expert in the industry.

Many founders are looking for angel investments from investors who have run successful businesses in the same industry, as they can provide priceless advice and direction.

Plus, having some expertise in the industry you're investing in can significantly increase your chances of making a profitable investment.

If you have the capital and expertise but don't have the connections necessary to make individual angel investments, you may want to check out crowdfunding VC platforms like FundersClub and AngelList.

I'm a bit wary of these platforms, however, as the average quality of the deals on them is quite low. Most of the investments have already been passed over by venture capital and private equity firms — often for good reason.

3. Invest in pre-IPO & venture capital funds

Instead of building your own portfolio on a pre-IPO marketplace or as an angel investor, you can simply invest in funds that do the work for you.

Here are a few options:

• Fundrise Innovation Fund: Fundrise, best known as a real estate crowdfunding platform, also offers the Innovation Fund. The fund invests in private, high-growth tech companies and holds stakes in OpenAI, Anthropic, Anduril Industries, Canva, Databricks, and more. The Innovation Fund is open to all investors, and the minimum investment is just $10.
• ARK Venture Fund: The ARK Venture Fund invests in disruptive technology companies in both the public and private markets. Its top five holdings are SpaceX, xAI, Neuralink, Lambda Labs, and OpenAI. The fund has an expense ratio of 2.90% and is open to all investors.
• Public VC firms: You can invest in publicly traded VC firms like Blackstone (BX) and investment holding companies like SoftBank Group (SFTBY) straight from your brokerage account. These are billion-dollar companies with stakes in many private companies.
• Private equity ETFs: You can buy private equity ETFs like Invesco's (PSP) or ProShares's (PEX). Both of these ETFs are actively managed and have expense ratios of 1.79% and 2.99%, respectively.

Plus, each of these investments is available to all investors, not just accredited investors.

4. Make indirect investments

Finally, you can make indirect investments in private startups by investing in publicly traded companies that own or have invested in them.

Here are a few examples:

• Disney (DIS) now owns 100% of Hulu. While there's no way to invest directly in Hulu, you can get indirect ownership by investing in Disney stock.
• Salesforce (CRM) invested in Databricks' Series G funding round in 2021. Assuming a $200 million investment, this stake would be worth around $459.2 million today.
• Microsoft (MSFT) has invested $13 billion into OpenAI and may earn up to 49% of its profits.

The problem with many of these opportunities, however, is that the investments in the pre-IPO companies make up tiny fractions of the public companies' overall operations.

For example, Salesforce's $459.2 million stake in Databricks is just 0.19% of its $241 billion market capitalization. Even if Databricks were to 10x, it still would have an indistinguishable impact on Salesforce's stock price.

5. Invest on the IPO date via your broker

In the hours leading up to a company's IPO, some brokerages occasionally have shares available for their clients to purchase.

These shares are available before the stock officially starts trading and are listed for sale at the predetermined IPO listing price.

Depending on market conditions, some highly anticipated stocks increase by as much as 100% from the IPO listing price on the first day of trading, so getting in a few hours early can be very profitable.

For instance, Figma (FIG) reached a high of $124 per share on its opening day, more than 275% above its offering price of $33.

I've seen IPO offerings on TradeStation, Robinhood, Webull, TD Ameritrade, Schwab, and Fidelity.

However, supply is often extremely limited, and most platforms operate on a tiered priority system (higher account balances get preference).

If you're a client of one of these brokerages, they'll notify you if/when they have pre-IPO shares available for purchase.

Can anybody invest in shares of pre-IPO stock?

Yes, anybody can invest in shares of pre-IPO stock, though the type of investment varies.

Buying shares on a secondary marketplace or becoming an angel investor are the two ways investors can gain direct exposure to private companies.

However, these methods are only available to accredited investors.

Accreditation requirements

It's easy to see if you qualify as an accredited investor. You only need to meet one of the following criteria:

• Have an annual income of $200,000 individually or $300,000 jointly.
• Have a net worth that exceeds $1,000,000 (excluding your main residence).
• Be a qualifying financial professional (have a Series 7, 65, or 82 license).

If any of those apply, you qualify.

On the other hand, investing in publicly held funds or publicly traded companies that own shares of private companies will give you indirect exposure. These routes are available to all investors.

So, while there are ways for everyone to invest in private companies, the best and most direct methods are still reserved for investors with the most money and connections.

How to evaluate a pre-IPO investment

It's much more difficult to evaluate a private company than a publicly traded company.

For starters, private companies are not required to disclose financial information.

If they're trying to raise outside capital, most pre-IPO companies will create pitch decks with some financial performance details, but with much less information than a public company is required to report.

It's also harder to find out what the company does, who it sells to, where its management team is trying to take the business, how it stacks up against competitors, and what its growth prospects are.

In general, there isn't a lot of information available to form an accurate picture of the risk involved in the investment.

Therefore, evaluating a potential investment in a pre-IPO startup requires much more qualitative analysis than other types of investments.

Angel investor Julia DeWahl has created her own process for evaluating deals.

DeWahl asks herself these 6 questions:

1. Why is this the team to build a winning company in this space?
2. How deep and specific is the customer pain/need?
3. How will this company acquire customers?
4. What's the business model, and what are the advantages and risks of that model?
5. Why now?
6. What do you have to believe for this to grow into a huge business?

After answering these questions, she adds the company to a spreadsheet and notes her conviction level and estimates the expected value of the business in five years.

From that sheet, she only invests in the most compelling deals.

As you can see from DeWahl's process, investing in private startups requires more “narrative building” than other types of investments. Pre-IPO investing largely comes down to making a bet on the future.

Pros and cons of pre-IPO investing

Pros	Cons
Potentially high returns	Highly speculative and risky
Diversification outside of traditional markets	Limited financial information
	May require accreditation status and/or connections
	Limited liquidity, so you may have trouble selling your investment
	High capital requirements

Final thoughts

While it's now possible for individual investors to invest in pre-IPO companies, the options are still limited.

It's also risky, and the likelihood of losing some or all of your investment can be quite high.

That said, many of tomorrow's industry leaders are just startups today, and correctly identifying and investing in them could result in 20–100x returns.

If you do decide to invest, I'd encourage you to do so with caution and skepticism, and as a small part of a well-diversified portfolio.