4 reasons to consider pre-IPO investment opportunities
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We constantly hear about pre-IPO investments that produce high returns, sometimes higher than 40X the original investment and this has drawn a lot of investors to the pre-IPO space. Let’s talk about why pre-IPO investments should be considered as an important part of a portfolio strategy. Please note this is not investment advice. Investing in pre-IPO companies is speculative and carries capital loss risks. It should be done responsibly. Also past returns are no guarantee of future returns. At the end of this recording I’ll let you know about a unique and complementary stock opportunity.
So, here are 4 reasons to consider pre-IPO opportunities.
- Pre-IPO returns are, generally speaking, higher than public stock returns to make up for the risk difference.
- The following is taken from a Crunchbase News article: “In fact what we found for those unicorns, ie companies valued at over $1 billion, that have made exits, is that the 2020 IPO cohort offered up a 117 percent increase, between the last known valuation for a company in a funding round and its valuation upon going public over a two year median time frame. We’d all love to see returns like that in our portfolios!
- A pre-IPO strategy lends itself to diversification ie spreading risk across a selection of pre-IPO companies. Risk can be reduced while still maintaining a higher return profile. Pre-IPO investment funds like CrossWork.us pre-IPO fund, that offer good diversification, should be considered as part of a portfolio strategy.
- More data is being made available on private companies so we can make smarter investment choices. Artificial intelligence or AI, is making us smarter about evaluating private companies. This lets us make faster and more insightful decisions using sophisticated machine learning models. At CrossWork we have developed our own internal AI tools that we can use to analyze thousands of the world’s private companies faster and at a large scale. Finally:
- There is more liquidity in the capital markets. In the last few months we have seen some of the world’s biggest IPOs. The rise of special purpose acquisition companies, as an alternative to IPOs as well as an increase in exit volume over time helps drive more exits. Our team members have been involved in these exit markets and we believe that we are in an unprecedented time for companies that want to go public.
Now, here’s the complementary bonus that I mentioned earlier. At CrossWork.us, to further enhance returns to our pre-IPO portfolio, we provide investors with complementary equity (ie at a cost of ZERO) in the portfolio in 10 additional companies from our later stage accelerator. This produces more returns for investors and further increases portfolio diversification. We basically add stock from 10 companies for free to your returns! We do this from time to time and availability is limited so check in and see if we are doing this now.
You can easily schedule time to chat with us at meetings.crosswork.us – keep in mind that we do not offer investment advice. You can also read our fund materials at midasdocs.crosswork.us .