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Ask HN: How to buy shares pre-IPO?

7 points by tinyhouse ↗ HN
Companies set an initial price for their shares at IPO day. Usually on the day they go public the price fluctuates a lot. Is there a way to buy shares at the initial price? For example, airbnb are going public in a few weeks. Does the average Joe have to wait until it's publicly traded?

16 comments

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gt565k
Pre-IPO sales are limited to "accredited investors," people with a demonstrated net worth of $1 million or a yearly income of $200,000. It's been that way since 1982, when Rule 501 of Regulation D of the Securities Act went into effect.

https://www.wired.com/2010/07/st-essay-pre-ipo/#:~:text=Pre%....

In other words, the rich get richer ;)

tinyhouse
Very interesting. Thanks for the info.

How can someone apply to become an accredited investor? assuming one qualifies.

toomuchtodo
Have sufficient assets in account at brokerage (and/or necessary income), call your rep at your brokerage.
PenguinCoder
Hurray for continued class warfare.
toomuchtodo
While I agree, you overestimate the financial acumen of your average citizen to properly price securities. Regardless, something like a Dutch auction might be helpful to even the playing field.
quickthrower2
The assumption being that pre IPO is a great deal compared to say just investing in some other hand picked stock.
p1esk
200k/year is not exactly "rich", at least not in bay area.
tudelo
If you can sustain that income for 10 years (and lets assume, some moderate growth in income, but even at a static 200k) there is a good chance that you don't have to work another day in your life that you don't want to. To me, that is pretty rich.
p1esk
That's an illusion. I make that much and with two kids I can barely save a a couple of grand a month. Childcare: ~3k, rent: ~3k, food: ~2k.
scott31
you can save 1k more if you stop eating like an american
matthewmacleod
I honestly can’t tell if this is a troll or not. “I’m not rich! I can barely save a couple of grand a month!”

Amazing.

pdovy
Take a look at this: https://www.fidelity.com/learning-center/trading-investing/t...

At the end of the day though, the allocation prior to trading starting in the secondary market is almost entirely discretionary on the part of the issuer and underwriters, and hard to access for the small-fry investor especially if there is a lot of interest.

bluelu
Indeed. It's normal that you get only a small portion, or even none at all of the amount of shares you requested if there is a lot of interest (in Tech there normally is). Maybe you are more lucky if you are a customer of the bank preparing the IPO, or extremely wealthy.

So even the non average Joe does not get access to it.

relaunched
The real key to buying pre-ipo shares is having the right friends - you have to be accredited, but that doesn't really get you access. Realistically, the CEO / influential board members has(have) to be convinced to let you buy in a secondary offering...just b/c you are accredited doesn't mean anyone has to let you buy.

Very few companies allow individuals to make unapproved resale of shares through the secondary markets and it's fairly uncommon for a board to approve those types of requests. The typical way it happens is there is a secondary offering, or new funding, and they let in people they want in.

baccredited
One way to do so via a public company is to invest in: TriplePoint Venture Growth BDC Corp. (TPVG)

They make late stage investments in private companies. Read a few of their quarterly reports to get an idea of their recent deals.

There is no reliable way I know of to cherry-pick individual companies like AirBnB unless you are an accredited investor.