written by reader Is there a back door way to get in on an IPO before it’s announced on a private company?

By backoffice, April 7, 2019

Thanks Travis

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Travis Johnson, Stock Gumshoe
April 10, 2019 8:49 am

Sometimes, though it’s certainly not guaranteed to be successful. There are several publicly-traded venture capital funds (PRIVX, GSVC, SVVC) that buy private companies, you can look at their portfolio to see which companies you’re buying exposure to… but they’re diversified, so one big IPO is not going to double your money or anything like that. There are also often “back door” plays in the form of public companies that have made strategic investments in private ones — as with IEP or GM investing in LYFT, for example, though, again, that’s not usually meaningful enough to have a big impact on the public stock of IEP or GM.

There are also plenty of private exchanges through which you can buy and sell shares of private companies (SharesPost, Forge, EquityZen, etc.). These are extraordinarily high risk, use valuation estimates that it’s typically good to be wary of, and put a huge amount of pressure on you to pick the right companies — and often it’s not just “name brand” private companies (large cap “unicorns”) you can buy through those networks, it’s actual earlier-stage startups that are really in need of money.

And, of course, as a general rule, the company you should be most nervous about funding is the company that really needs the money.

I’ve not done much private investing, but I expect that trying to do so to ride an IPO pop would be worthless — you’re never going to be on the same footing as a well-connected venture capital firm that actually has people on the board and gets preferred shares, and the amount of info you receive about the companies is very limited. If you want to get into this kind of investing, I’d prepare for a time-consuming hobby — it could be fun and I bet it would be interesting, but it’s probably not an easy way to make money.

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April 10, 2019 8:56 am

I think this relates to the Wyatt constant push for back doors to upcoming IPOs although thats a guess !! GSVC has had a good run up in 2019 but dropped over the last 2 weeks a sort of sell the news scenario i guess ! I think it looks like a ploy to buy advice and hope for the best . Cannabis IPOs however have been open to the market ie TGOD where I invested that has been quite successful so far although a significant fall from Octobers sell the news legalisation

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April 15, 2019 1:46 am

Dear Gum Shoer’s, April 14th PINTEREST is coming out of the closet, I am going to want to buy some as soon as I can get a price. I’m with SCHWAB so will I be able to purchase shares like on Wednesday?
Thank You

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