The Ultimate Guide to Pre-IPO Investing

The Ultimate Guide to Pre-IPO Investing
By Joseph Hill
Date August 8, 2017

In 2016, a little-known law was passed… one that leveled the playing field for average investors.

Before, only millionaires could invest in pre-IPO companies. But today you can invest with as little as $100. You can now invest in the Facebooks, Snapchats and Ubers of the future.

Early investors in Snapchat, for example, turned every $100 into $22,000. That’s a whopping 21,900% gain. And some new startups today will return even more.

The real money is made pre-IPO. Just think about it: How rare is it to hear about 100% or 200% gains in the stock market? The stock market is crowded today, and the 100% gains are rare. That’s why you should consider pre-IPO investing.

Pre-IPO investing is a way to supercharge your portfolio’s returns. For those who are unfamiliar with this early-stage world, let’s dig into the details…

A New Way to Invest

When a company goes public, it’s called an IPO, or initial public offering. That’s when the company is listed on a stock exchange and anyone can buy shares of the business. But before a company has its IPO, it’s in the early investing stages.

During the early stages, a business needs funding to grow. So the business often raises funds from investors. But up until 2016, only accredited investors could buy into a business before its IPO.

An accredited investor is someone who has more than $1 million saved up… or has at least two years of annual income of $200,000 or more.

Average investors couldn’t invest in the pre-IPO companies with enormous growth potential. And startup companies needed more investors. These were two reasons why the rules were changed.

The new startup investing rules opened the door for everybody to invest in early-stage companies. One new rule, called Title 3, lets businesses raise up to a million dollars from you. The round is very early – usually the company’s first attempt at raising money from strangers.

As the startups grow, they’ll raise new rounds of funding.

Another rule, Regulation A+, lets companies raise up to $50 million from you. Since this round comes later, a startup’s development is expected to be further along.

To access these deals, you don’t need to invest much today. Depending on a startup’s guidelines, you can put in as little as $100 per deal. The minimums will vary, but it’s doubtful they’ll be above $1,000.

Your access to pre-IPO investing keeps getting better. Hundreds of deals are popping up. You have a huge selection of early-stage companies to invest in… but not every deal is great.

That’s why the Early Investing editors – Adam Sharp and Andy Gordon – specialize in pre-IPO research. They analyze thousands of companies and use their connections to find the best deals.

When you’re finally ready to invest in pre-IPO companies, you don’t have to invest in everything that comes along. You might want to start in sectors that you’re familiar with. But it’s good to diversify.

As for how many companies you should collect over a year’s time, the answer again is “whatever you’re comfortable with.” But the general rule is the more, the better. So if you can do 10 a year, that’s great. Fewer than 10 a year is also fine, but you should really try to invest in more than a handful.

Why is it better to have more? Because all it takes is one big winner to really make a difference in your life. And the more companies in your portfolio, the better your odds of owning the shares of a big (as in REALLY BIG) winner.

Now, before you can diversify – or even buy into a single deal – you need access to these deals.

To gain access, you can invest through online portals, not through brokers or brokerage firms. But the portals will be just as helpful as a broker. If you run into problems, they’ll be able to help you out.

Below you’ll find a few of the top portals to invest in pre-IPO companies…

Three Top-Notch Equity Crowdfunding Portals


Wefunder hit the ground running on May 16, 2016 (the day early-stage equity crowdfunding launched), with 20 high-quality offerings within its first week. That was more than everyone else combined.

The first deal on its platform was a startup called Zenefits, which has gone from being worth $9 million in 2013 to around $3.5 billion today!

Wefunder was also instrumental in getting the JOBS Act (which made this whole service possible) passed and signed into law.

Right now, it’s one of the best place for investors to start looking at deals, with a large number of quality offerings. All the information is clear and easy to understand, and the deal terms are shown prominently.

You can read more about the portal on Check out its live deals here.


New York-based SeedInvest another terrific source of deals.

Adam and Andy have gotten to know the SeedInvest team well over the past few years. They’ve built an impressive platform and do a great job of screening startups. Adam and Andy have even recommended several of their startup deals to members of their research service First Stage Investor.

SeedInvest always has a good number of live early-stage deals. It also usually has several Regulation A+ listings. (As a reminder, Regulation A+ offerings are larger deals of up to $50 million.)


Republic is a spinoff from AngelList. AngelList is the leading accredited investor portal and one of the pioneers of online investing in startups. AngelList has some truly impressive deals. And Republic is following in its footsteps with crowdfunding for startups.

Republic consistently has terrific deals to invest in. And they do a good job of presenting the deal terms and letting you know when the deadlines to invest are.

Republic’s founder is Kendrick Nguyen, a former general counsel at AngelList. Adam and Andy have both met Kendrick — and are very impressed with him.

These three portals are top-notch ways to access equity crowdfunding.

You can now invest in pre-IPO businesses with as little as $100. And investing in the right startups could produce huge returns.

Good investing,

Brian Kehm

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