How to properly choose Pre-IPO companies for investments?

Higher returns, lower risk.

Pre-IPO is one of the most profitable instruments on the stock market. Typically, the term Pre-IPO refers to companies that have already attracted several large rounds of financing and are approaching their IPO.

These are true venture investments. You buy a private company and earn every time its valuation increases. For example, if a company has a successful round of investment (which can happen several times a year), the overall valuation of the business, and therefore your shares, increases.

  • Just consider the potential returns of venture investments. In the early rounds, shares of the well-known property rental service, Airbnb, could be purchased for $0.02 each. But in later rounds, the company’s shares traded for $105, which is a more than 5000% return.
  • Another excellent example is the cloud solutions developer, Snowflake. While it was private, shares could be bought for $15. But when the company went public, the stock price rose to $250 on the first day of trading. Investors who put their money in during the Pre-IPO stage increased their capital by more than 16 times.

And these are just a few examples. Now Pre-IPO shares are available in Metatrader, and you can invest in them even with a small capital. This market is now accessible not only to large professional investors, but also to traders who can try to choose the best companies in the venture market and earn hundreds of percent profit.

Therefore, we have prepared several tips for you on how to choose Pre-IPO companies properly.

  1. Choose stocks of companies with large market capitalization, aiming for a mark of $1 billion. Such startups are called unicorns. Firstly, such a high valuation already speaks for the company’s prospects and trust from investors. Secondly, the bigger the business, the more stable it is. Small risk factors no longer have a significant impact on it. And thirdly, if the company has already been able to conduct several successful rounds of financing, then why wouldn’t it be able to do so in the future?
  1. Pay attention to the funds that have invested in the company. The opinion of professionals is a good argument. You can use specialized services for venture investors, such as Crunchbase or Pitchbook, to find out who invested money in the company earlier. If these are successful funds with a large number of profitable investments in the past, you can follow their lead.
  1. Evaluate not only the company but also the size of the market it operates in. If we are talking about electric vehicles, green energy, artificial intelligence, and other markets with good growth potential, then companies in these markets should be considered first. In the future, when this market grows, all companies within it will benefit. As they say, “the tide raises all boats.”
  1. Pay attention to the founders. You are investing in a business, so you should know who is leading it. Who are these people? What experience and skills do they have? What is their background? Have they had experience launching successful startups in the past?
  1. Diversification. The rule of “not putting all your eggs in one basket” in the Pre-IPO market also works very well. Don’t bet on just one company. When you have a balanced portfolio of different companies working in different sectors, there is a higher chance that you will hit a “rocket company” that will bring you hundreds of percent of profit.

These simple rules will help you significantly reduce the risks of venture investing. And most importantly, they will help you better choose stocks of promising Pre-IPO companies and fully utilize the opportunities of this market. As mentioned above, Pre-IPO is already available in Metatrader. You can log in to the terminal right now, look at the list of available companies, and choose those whose future growth you believe in. Make your first venture investment today.

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