By this time next year, we’re predicting a flurry of IPO activity.
And I’m not talking about small IPOs. I’m talking about tech IPOs from Uber, Airbnb, and Snapchat. Multi-billion dollar offerings.
IPOs like this can create enormous wealth—especially for the investors who get in prior to the IPO.
So today we’ll show you three little-known ways to get into some of 2017’s biggest IPOs… before they go public.
They’re Feeling the Pressure
Late-stage start-ups like Uber, Airbnb and Snapchat are facing intense pressure right now.
Their early investors have provided these companies with billions of dollars in capital, and now they want a return on their capital. They want an “exit.”
And these investors aren’t alone. Early employees of these companies are pushing for an exit, too. You see, instead of taking of cash compensation, many of them took stock. And now they want to turn that stock into cold hard cash.
In the start-up world, an exit generally happens in one of two ways:
Either the company gets acquired, or it goes public in an IPO.
Takeovers are more common.
But given the sky-high valuations of some of these companies (Uber, for example, is valued at $62.5 billion), most of them are too expensive for a takeover.
Which is why we believe we’re about to see some exciting IPOs.
Many investors try to buy IPOs at the open, hoping for a quick “pop” in price.
But the real money is made by folks who own stock before the IPO.
Normally, there’s been no way to get your hands on “hot” pre-IPO shares.
But now there is….
Three Ways to Play
Thanks to some new innovations and laws around the private equity market, there are a number of places everyday investors like you can find pre-IPO stock.
Here are three of our favorite options:
EquityZen – This is an investment platform that offers shares in pre-IPO companies. Many of the shares come from a company’s early employees—the employees I mentioned earlier who took stock instead of cash. This is a way for them to “get liquid” on their stock before an IPO.
Basically, EquityZen allows them to list their shares on its website, and individual investors like you can go there to buy them.
At the moment, the site offers shares in such companies as Lyft, Sonos, and Zenefits.
There’s just one downside: currently, its investments are only open to “accredited” investors (at least $1 million in net worth, or annual income of at least $200,000).
So here are two options for non-accredited investors...
GSV Capital – This is what’s called a Business Development Company, or “BDC.”
Think of BDCs like publicly traded mutual funds—but instead of investing in stocks, they invest in private businesses.
GSV holds shares in 46 promising pre-IPO opportunities—companies like Palantir, Dropbox and Spotify. All three are worth more than $1 billion each.
You can invest in GSV using your regular brokerage account. It trades on the Nasdaq and its ticker is “GSVC.”
SharesPost100 – Like GSV, this investment is publicly traded and holds a portfolio of promising pre-IPO investments.
However, as a closed-end fund, it has higher fees, and the minimum investment is $2,500.
Its current portfolio includes DocuSign, OpenX, and Inrix.
Again, we believe 2017 will be a big year for technology IPOs.
And with these new investment options for everyday investors, you can claim a stake in some of the hottest pre-IPO investments with just a few clicks of your mouse.
Please note: Crowdability has no relationship with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.