How to invest in pre-IPO companies

How to invest in pre-IPO companies comes down to four legal paths: qualify as an accredited investor for a private placement, buy through a licensed secondary marketplace, buy from an existing shareholder in a company-approved sale, or wait for a public listing — a standard brokerage account cannot buy pre-IPO shares directly.

Why pre-IPO shares are not sitting in your brokerage app

Pre-IPO shares are unregistered securities, sold under an exemption from the normal SEC registration process rather than through the public markets your brokerage account connects to. Most private companies raise capital under Regulation D, which lets them sell stock without filing the disclosure documents a public offering requires — in exchange, the resulting shares carry a resale restriction and are legally off-limits to the general public.

That trade-off is the whole reason a search like "how to invest in pre-IPO companies" surfaces so much confusion. The company gets to raise money faster and with less disclosure; the buyer gets equity that cannot be resold on an exchange and is only available, by law, to a narrower pool of investors than the public at large.

Path 1: qualify as an accredited investor

Qualifying as an accredited investor is the gateway most pre-IPO access runs through, and the SEC's test is specific rather than a vague wealth threshold. Under the current definition on investor.gov, an individual qualifies by earned income over $200,000 (or $300,000 with a spouse or spousal equivalent) in each of the prior two years with a reasonable expectation of the same this year, or by a net worth over $1 million excluding the value of a primary residence, or by holding a Series 7, 65, or 82 license in good standing.

Meeting that bar does not hand you a shopping list of companies. It only makes you eligible to be sold shares under Rule 506(b) or 506(c) of Regulation D: 506(b) lets a company sell to an unlimited number of accredited investors plus up to 35 sophisticated non-accredited investors, with no public advertising of the deal, while 506(c) allows public advertising but restricts buyers to accredited investors the issuer has actually verified. Either way, the company still decides who it sells to and how much information it discloses to accredited buyers — verification of your status and access to the deal both depend on the company or platform running the offering, not on you alone.

Path 2: buy through a licensed secondary marketplace

Secondary marketplaces such as EquityZen, Forge Global, and Nasdaq Private Market connect accredited investors with existing shareholders — usually employees or early investors — who want to sell some of their private stock before an IPO. These platforms are broker-dealers, and you can confirm any platform's registration status directly at the SEC's check-your-investment-professional tool or FINRA BrokerCheck before sending money to one.

Two mechanics catch new buyers off guard. First, many of these deals are structured through a special purpose vehicle that pools several buyers' capital to purchase one seller's block, so you often own an interest in the vehicle rather than the underlying shares directly, and you depend on the vehicle's manager to pass through information and eventually distribute proceeds. Second, private companies typically hold a right of first refusal on employee and early-investor transfers, so a marketplace listing is not a guaranteed sale — the company can still block or redirect the transfer before it closes.

Path 3: employee and early-investor share sales

Some private companies periodically sponsor their own liquidity event, called a tender offer, where the company or an outside investor group offers to buy back a set amount of stock or vested options from employees and early shareholders during a defined window. Nasdaq Private Market is a commonly used platform provider for company-sponsored programs like these, and whether a specific company runs one — and on what terms — is decided entirely by that company; it is not something a retail investor can trigger or predict.

This is also the path readers usually have in mind when they search for a specific well-known private company. Anduril is a useful example precisely because it illustrates the limits here: the company remains privately held with no filed IPO, and its own newsroom has confirmed a Series H funding round without disclosing any listing date, price, or valuation figure beyond that release — see the Anduril company profile for the sourced detail. Any specific claim you see elsewhere about a listing date or price for a private company should be checked against that company's own investor communications or an SEC filing before you treat it as real.

Path 4: wait for a public listing

Waiting for a company to actually go public converts a restricted, illiquid position into an ordinary tradable stock, and it happens through one of three mechanisms. A traditional IPO involves the company filing a Form S-1 registration statement with the SEC, underwriters pricing the new shares, and existing pre-IPO holders typically bound by a lockup agreement that keeps them from selling for a period the company and its underwriters set. A direct listing skips underwriter-priced new shares and instead registers existing shares for resale on the exchange, still through an SEC-reviewed registration statement.

A SPAC merger, or "de-SPAC" transaction, is the third route: a private company merges into an already-public shell company, becoming public without a traditional IPO process. The SEC's own investor bulletin on SPACs flags that sponsors typically hold shares on more favorable terms than other investors and that additional financing raised to close the merger can dilute the interest of existing shareholders — a risk worth reading before treating a SPAC announcement as a simple shortcut to public shares.

The real risks a retail buyer tends to underweight

Illiquidity is the risk that shapes every other one on this list: a pre-IPO position cannot be sold on your own schedule, and the SEC's own guidance is blunt about it — investors "should be prepared to hold the securities indefinitely." Even once a resale exemption becomes available, Rule 144 imposes a holding period — six months for securities of a company that already reports to the SEC, one year for a company that does not — before a public resale can even be attempted, and a transfer agent still will not remove the restrictive legend without the company's cooperation.

Dilution is the second risk, and it compounds quietly. Each additional funding round a private company raises issues new shares, and unless your specific agreement includes pro-rata or anti-dilution rights — which retail secondary buyers almost never get — your percentage ownership shrinks with every round the company closes after your purchase. Combine that with the absence of continuous price discovery described in the comparison table above, and a private-company "valuation" you read in the press is a snapshot of the last priced round, not a live, tradable price.

Lockups are the risk that surfaces last, after the payoff you were waiting for finally happens. A company going public through any of the three routes above typically still restricts insiders and pre-IPO holders from selling for a set window post-listing, so reaching a public listing does not mean immediate liquidity — it means a new, shorter waiting period with its own expiration date to track.

A screening sequence before you commit capital

Work through these checks in order, because each one can disqualify a deal before you spend time on the rest.

• Confirm the platform is registered. Check any secondary marketplace or broker-dealer against the SEC's check-your-investment-professional tool before funding an account.
• Verify your own accredited status honestly. The income and net-worth tests are specific and documented, not self-certified informally — a platform that skips verification is itself a warning sign.
• Understand the structure you are actually buying. Ask whether you will hold shares directly or an interest in a special purpose vehicle, and read the subscription agreement for fees, transfer restrictions, and who controls the exit decision.
• Check whether the company has approved the transfer. A right of first refusal can unwind a deal that looked complete on the platform's listing page.
• Size the position for total loss and indefinite illiquidity. A single private company that never lists, or that lists years later than hoped, should not threaten your broader plan.

Investor read-through

• Strong signal: a registered platform you can verify independently, a clear statement of whether you hold shares directly or through a vehicle, and disclosed transfer terms including any right of first refusal.
• Weak signal: guaranteed access to a specific hot name, no mention of accredited-investor verification, pressure to move fast, or any claim of a confirmed IPO date, price, or valuation for a company that has not filed to go public.
• Research bridge: continue to the company directory for how specific private and public names are tracked, defense startups for which defense-tech names remain private, and how to invest in defense tech for the public layers of that sector you can buy today.