What are Pre-IPO Investments?
Pre-IPO investments give investors financial exposure to private companies before they are listed on a public stock exchange.
These companies are usually more mature than early-stage startups, but still private. They may already have proven products, growing revenues, and a potential path toward a future liquidity event such as an IPO, acquisition, or secondary sale.
Through Invesdor, investors can access this part of the private market through a structured investment product, starting from €250.
How the investment product works
Pre-IPO investments on Invesdor are structured through a financial instrument that provides economic exposure to a specific private company. You do not acquire shares in the target company directly. Instead, you invest in a bond whose performance is linked to the value of the indirect investment at exit. Investors may benefit from potential value creation if the target company achieves a successful exit, such as an IPO, sale or secondary transaction.
You invest from €250.
You subscribe to a bond issued by an intermediary company.
The intermediary holds exposure to the target company.
Your return depends on the company’s valuation at exit.
Any potential return is typically realised when the intermediary sells its stake in the target company, for example through an IPO, company sale, or secondary market transaction. If the valuation decreases or no exit occurs, returns may be lower or even fail to materialize at all. The repayment of the investment amount may be at risk or may even not occur.
Example structure of a Pre-IPO investment
The chart below shows a simplified example of how a Pre-IPO investment may be structured. Investors do not acquire shares in the target company directly. Instead, they invest in a bond that provides economic exposure to the target company through an intermediate entity.
Invest in the Pre-IPO opportunity through Invesdor
Holds the indirect exposure to the target company
Private company that may achieve a future exit, such as an IPO, sale or secondary transaction
This is a simplified illustrative example. The actual structure, parties involved, intermediate entities, terms, costs, risks and return mechanics may differ per investment opportunity and are described in the official investment documents.
How returns are generated
Unlike a traditional bond, a Pre-IPO Investment does not offer a fixed interest rate. Your potential return depends on the change in value of the target company.
If the intermediary is able to sell its ownership stake in the target company at a higher valuation than the entry valuation, investors may receive a positive return. If the valuation is lower, or if no exit takes place, investors may receive less than they invested or lose their investment entirely.
Downside scenario
The target company is sold at a lower valuation, or no exit occurs. Investors may receive less than their original investment or lose their invested capital in total.
Base scenario
The target company develops positively and is sold at a higher valuation. Investors may receive their invested capital plus a return after costs and fees.
Upside scenario
The target company achieves strong growth and a significantly higher exit valuation. Investors may benefit from higher value creation, subject to costs, fees, timing and market conditions.
These examples are simplified and do not represent a forecast. The actual outcome depends on the exit valuation, timing, fees, taxes, currency effects and the terms of the financial instrument.
Possible exit scenarios
Returns from Pre-IPO investments are typically realised when the intermediary is able to sell its ownership stake in the target company. The timing and outcome of such an event are uncertain and depend on market conditions, company performance and investor demand.
Initial Public Offering (IPO)
The target company is listed on a public stock exchange. Shares may be sold after any applicable lock-up period, depending on market conditions.
Company sale (M&A)
The target company is acquired by another company or investor.
Secondary market transaction
The intermediary may sell its stake in the target company to another investor before an IPO or a company sale. This may allow an earlier realisation of returns.
No exit
There is no guarantee that an exit will occur within the expected timeframe. In this case, your capital may remain tied up for longer, or no return may be realised and you receive less than your investment or may even lose your invested capital in total.
Key risks
Pre-IPO Investments involve high risks and are not suitable for all investors. Investors should only invest amounts they can afford to lose and should carefully review all official investment documents before making an investment decision.
Risk of capital loss
If the target company underperforms, is sold at a low valuation, or fails entirely, the value of the underlying shares declines, which may impacting the repayment ability of the bond. After fees and costs, this can result in partial loss or a total loss of your invested capital.
Liquidity and exit risk
If there is no IPO, acquisition, or secondary sale within the expected timeframe, your investment remains locked. You may have to wait longer than planned (potentially 5+ years), and in some cases no exit may occur at all, meaning your invested capital is tied up indefinitely.
Pricing and valuation risk
Because prices are negotiated in private secondary markets, entry valuation may not reflect future market reality. If the eventual exit valuation is lower than expected, the intermediary may sell shares at a lower price, resulting in reduced or negative returns on your invested capital.
Final returns depend on the market price at the time of exit, not earlier valuations or IPO pricing. If market sentiment declines before the intermediary sells, the realised value may be significantly lower than expected projections or IPO valuations.
Structural / product complexity risk
The investment relies on multiple layers (intermediaries, bond structure). If any part of the structure performs poorly, mismanages assets, or becomes inefficient, this can reduce returns or delay distributions, even if the underlying company performs well.
Counterparty risk
If the intermediary, asset manager, or transaction partners fail operationally, face financial distress, or execute poorly, the investment process (buying, holding, or selling shares) may be disrupted, potentially leading to delays, losses, or inability to realise value.
Information asymmetry risk
If investors receive incomplete or delayed information compared to institutional investors, you may make decisions based on less accurate or less timely data, which can lead to mispricing expectations or misunderstanding of risks.
Different share classes / preferences risk
If other shareholders hold preferred rights (e.g. guaranteed payouts or priority in exits), they may receive proceeds first. In a downside scenario, this can mean little or no remaining proceeds attributable to your investment after preferential claims are paid.
Dilution risk
If the company raises new funding rounds, your indirect ownership share may be reduced. Even if the company grows, dilution can mean your proportional claim on future exit proceeds is smaller than expected, which can limit potential upside.
Timing and lock-up risk
Even after a successful IPO or exit event, lock-up periods may prevent immediate selling. If the market weakens during or after the lock-up, the intermediary may be forced to sell later at less favourable prices, reducing returns.
This overview is not exhaustive. The full risk profile is described in the official investment documents, including the Key Information Document, terms and risk disclosures.
Who this is for
Pre-IPO Investments are designed for investors who understand the risks of private markets and are willing to take a long-term perspective.
Suitable for investors who
- Have experience with higher-risk investments
- Seek exposure to private market opportunities
- Have a long-term investment horizon
- Can accept limited liquidity
- Can bear a partial or total loss of capital
Not suitable for investors who
- Require capital protection
- Depend on regular income or fixed returns
- Need short-term liquidity
- Prefer transparent and regulated public markets
Ready to explore Pre-IPO investment opportunities?
Discover current Pre-IPO investment opportunities on Invesdor and gain access to selected private companies before a potential public listing.
FAQ: Frequently asked questions about Pre-IPO invstment opportunities
A Pre-IPO Investment gives investors financial exposure to a private company before it is listed on a public stock exchange. The investment return and the repayment of the investment depend on the future valuation of the target company.
No. Investors do not acquire shares directly. Instead, they invest through a financial instrument whose return is linked to the value development of the underlying target company.
Returns may be generated if the intermediary can sell its ownership stake in the target company at a higher valuation than the entry valuation. Returns are not guaranteed and depend on exit price, timing, fees, costs and taxes.
No. Unlike a traditional bond, a Pre-IPO Investment does not offer a fixed interest rate. The potential return is linked to the value development of the target company.
An IPO is not guaranteed. Other exit scenarios may include a company sale or a secondary market transaction. If no exit occurs, capital may remain tied up for longer and investors may receive no return or even lose their investment.
Usually not. Pre-IPO Investments are generally illiquid and there may be no secondary market. Investors should be prepared to hold the investment until an exit occurs, if it occurs at all.
Key risks include partial or total loss of capital, limited liquidity, no guaranteed exit, valuation uncertainty, structural complexity and limited information compared with listed companies.