How to Invest in Pre-IPO Companies

Four weeks ago WeWork was Wall Street's latest IPO darling. Then the wheels fell off.

Their valuation got hacked. Their CEO's questionable business practices got headlines. And next thing you know they pull their IPO.

If only you had "invested" in WeWork pre-IPO shares! What a missed opportunity to lose some money!

But this isn't about WeWork. This is about investing in any pre-IPO company.

Yes, it's possible. No, it shouldn't be part of your financial plan.

Employees of (some) pre-IPO companies can sell shares of company stock on the secondary market. And if you're an accredited investor, you can buy them.

It's about as sexy as it gets. Just imagine bragging about your Airbnb shares to a circle of dads at the next neighborhood BBQ.

What no one in that circle will ask is: why someone inside the company - who knows way more than you do about the company - is selling their shares. To quote C+C Music Factory: "Things that make you go hmm”.

I digress. I'm not here to argue for or against pre-IPO companies. You do you.

The reason why I'm here is to make sure you do it responsibly.  Before you invest in pre-IPO companies or any other speculative "it may go to zero" investments, you must have all your "serious money" buckets topped off.

Are you done saving for college? Are you saving enough every year for retirement? Is your Emergency Fund intact?

If your financial house is 100% in order and you've got a little "play money" to spare, then have at it. 

Just don't gamble Junior's college education away on pre-IPO shares of Postmates.

*If you don't know how much you need for any of these, give us a call. Calculating that stuff is our job.

DISCLAIMER: This publication is for educational purposes only and should not be considered financial, tax or legal advice. These statements have been simplified for illustration purposes. Consult your financial planner or tax advisor for help with your specific situation.