Private Equity & Pre-IPO FAQs

The private equity secondary market allows investors to buy and sell existing stakes in private companies or PE/VC funds, providing liquidity before an IPO or fund liquidation. This gives shareholders early liquidity and allows new investors to access mature private investments.

An accredited investor is someone who meets SEC requirements: individual income exceeding $200,000 (or $300,000 joint with spouse) in each of the prior two years with expectation of the same this year, OR net worth exceeding $1 million (excluding primary residence). Certain professional certifications also qualify.

Minimums vary by platform. Some platforms like EquityZen offer investments starting at $10,000, while others like Forge Global require $100,000 or more. Institutional platforms may require $1 million+.

No, private equity investments are highly illiquid. You may be unable to sell your investment until an IPO, acquisition, or through secondary market transactions (which can take months and are not guaranteed).

For beginners with accreditation, EquityZen is often recommended due to its lower minimums ($10,000), educational resources, mobile app, and established track record. Hiive is another good option with strong ratings and broad company coverage.

Forge Global is the largest platform with $15B+ historical volume, targeting more institutional investors with $100K minimums. EquityZen has lower minimums ($10K) using an SPV structure. Forge offers real-time pricing; EquityZen does not.

Yes, FINRA registration indicates the platform is a regulated broker-dealer with investor protections. This includes compliance with securities regulations, record-keeping requirements, and SIPC membership in most cases.

Fee structures vary, but Hiive has some of the lowest seller fees at 3%. Most platforms charge 0% buyer fees and 3-5% seller fees. Be aware of any platform fees, transfer fees, or other charges.

ROFR (Right of First Refusal) allows a company to match any third-party offer to buy shares from a shareholder. This can delay or cancel transactions if the company chooses to exercise this right, typically taking 30-60 days.

Timelines vary significantly. Simple transactions can close in 2-4 weeks. Transactions requiring company approval or ROFR waiver can take 2-3 months or longer. Some transactions may not complete at all.

Potentially, through the same secondary market platforms. However, finding a buyer depends on demand, and you may have to sell at a discount. Some platforms have lockup periods or transfer restrictions.

After an IPO, your shares convert to publicly-traded stock, though typically subject to a lockup period (usually 90-180 days) before you can sell. The value may increase or decrease from your purchase price.

Common fees include: transaction/commission fees (typically 3-5% for sellers, 0% for buyers), platform fees, legal/documentation fees, and potentially ongoing management fees for SPV structures.

Tax treatment depends on holding period and investment structure. Generally, gains held over one year qualify for long-term capital gains rates. SPV investments may have K-1 reporting requirements. Consult a tax professional for your specific situation.

Watch for: setup/documentation fees, ongoing management fees (especially in SPVs), transfer fees, early redemption fees, and fees charged by the company for transaction approval. Always request a complete fee schedule.

Key risks include: complete loss of investment if company fails, illiquidity (inability to sell), valuation uncertainty, dilution from future funding rounds, long holding periods, and information asymmetry compared to public markets.

Yes. Private companies can fail entirely, and even successful companies may not achieve valuations that return your capital. Only invest money you can afford to lose completely.

Consider: company fundamentals (revenue, growth, profitability), market opportunity, competitive position, management team, recent funding valuations, potential IPO timeline, and your portfolio diversification.

Linqto filed for Chapter 11 bankruptcy in July 2025. The SEC opened an investigation, and the CEO was replaced. This highlights the importance of platform due diligence and diversifying across multiple platforms.

Platforms typically accept: recent tax returns showing income, letter from CPA/attorney/financial advisor, bank/brokerage statements showing net worth, or third-party verification services like VerifyInvestor.

Unlike bank deposits (FDIC) or brokerage accounts (SIPC), private equity investments are not insured. You bear the full risk of investment loss. SIPC protection only covers securities held at SIPC-member brokers, not investment performance.

Varies by platform: Some hold shares directly in your name at the transfer agent, others use nominee/custodial arrangements, and SPV structures hold shares through the SPV entity. Understand the custody arrangement before investing.