How to Invest in Pre-IPO Companies Before They Go Public

The Complete Guide to Pre-IPO and Private-Market Trading in 2026

By Heath Muchena | Decentralised News | 17 hours ago

Learn how pre-IPO and private-market trading works in 2026, including direct shares, SPVs, secondary marketplaces, forward contracts, tokenized private markets and pre-IPO perpetual futures.

Summary

Pre-IPO investing is not one product.

A platform offering access to a private company may provide:

Actual private-company shares
An interest in an SPV that owns shares
An interest in a fund
A forward contract promising future delivery
A token linked to an SPV
A synthetic contract tracking private-market value
A perpetual future linked to expected valuation
A prediction contract tied to an IPO event

These structures do not provide the same rights.

The most important question is not:

Which private company can I trade?

It is:

What legally owns the underlying shares, what exactly do I own, and what happens if the company never goes public?

Direct shares and issuer-approved SPVs can provide genuine private-equity ownership.

Forward contracts create a claim against a counterparty.

Tokenized products may provide only economic exposure.

Pre-IPO perpetual futures provide cash-settled price exposure and do not grant ownership, voting rights or entitlement to actual shares.

Why Pre-IPO Markets Are Growing

Many of the world’s most closely watched technology, artificial intelligence, defence, fintech and space companies have remained private for longer than earlier generations of high-growth businesses.

This creates tension between three groups:

Employees and early investors seeking liquidity
Private companies trying to control their shareholder base
Outside investors seeking exposure before an IPO

Traditional private-company transactions are slow and restricted.

Crypto-native platforms are attempting to make the market faster by offering tokenized interests, valuation-based derivatives and 24-hour trading.

The result is a market where products with very different legal characteristics can appear similar on a trading screen.

What Does Pre-IPO Mean?

Pre-IPO describes a company that has not yet completed an initial public offering.

The term does not guarantee that an IPO is planned, imminent or likely.

A company may:

Remain private for many years
Conduct further private funding rounds
Offer employee tender programmes
Be acquired
Merge with another company
Complete a direct listing
Pursue an IPO
Cancel a proposed listing
Fail or enter insolvency

An investment should therefore be evaluated as a private-company exposure, not merely as a discounted public stock.

The Six Main Ways to Trade or Invest in Private Companies

1. Direct Private Shares

A direct transaction transfers private-company shares from an existing shareholder to a buyer.

The seller may be:

An employee
A founder
An early investor
A venture fund
An institution
Another secondary-market buyer

The buyer can become the legal shareholder recorded on the company’s capitalization table after the transfer is approved and completed.

Direct trades may involve:

Common shares
Preferred shares
Restricted stock
Exercised employee shares
Different voting classes

Forge describes a direct trade as a one-to-one share transfer between the seller and buyer. The platform helps verify counterparties and navigate issuer transfer restrictions.

Main advantage

The investor can own actual private-company shares.

Main limitations

The trade may require:

Company approval
A right-of-first-refusal process
Board consent
Ownership verification
Accredited-investor verification
Share-transfer documentation
A lengthy settlement period

Forge states that a direct transaction can take approximately 30 to 45 calendar days after terms are agreed because the right-of-first-refusal period and stock-transfer process must be completed.

2. Special Purpose Vehicles

An SPV is a separate legal entity established to hold an asset or investment.

In a private-company transaction:

Investors contribute money to the SPV.
The SPV purchases private-company shares.
The SPV becomes the shareholder.
Investors own interests in the SPV rather than appearing individually on the company’s cap table.

EquityZen describes its single-company funds as SPVs that aggregate investors, purchase shares directly and appear as one entry on the private company’s capitalization table.

What an SPV investor owns

The investor normally owns:

Membership interests
Partnership interests
Fund units
Another contractual interest in the vehicle

The investor does not necessarily own the underlying company shares directly.

SPV costs can include

Platform fees
Management fees
Administrative fees
Legal expenses
Performance allocation
Transfer costs
Tax-reporting costs
Fees charged by an underlying SPV

Some products use one SPV to invest in another SPV. This can create multiple fee layers and a greater distance between the investor and the underlying shares.

3. Private-Market Funds

A private-market fund can hold shares in one company or a portfolio of private companies.

The fund may provide:

Diversification
Professional selection
Lower company-specific concentration
Administrative support
Access to several private issuers

The investor owns a fund interest.

The fund owns the underlying investments.

This introduces fund-manager, valuation, fee and liquidity risk in addition to the risks of the private companies.

4. Forward Contracts

A private-share forward is a contractual promise involving future delivery or settlement.

For example, an employee may agree to transfer shares or economic proceeds after:

A company approves the transfer
Restrictions expire
The employee exercises options
An IPO occurs
Another liquidity event takes place

The buyer usually does not immediately become a recognized shareholder.

The buyer holds a contractual claim against the seller or intermediary.

Forward-contract risks

The seller may not obtain the shares.
The company may reject the transfer.
A right of first refusal may be exercised.
The seller may default.
The agreement may be difficult to enforce.
Tax liabilities may alter the economics.
The company may restructure its share classes.
The IPO may never happen.

EquityZen warns that forward structures without legitimate share transfers can create significant risk because the private company may block the transaction or refuse to recognize the investor during an IPO or acquisition.

5. Tokenized Private-Market Exposure

Tokenization places a digital representation of an investment or contractual exposure on a blockchain.

A token may represent:

Direct beneficial ownership
An interest in an SPV
A fund interest
A debt claim
A contractual right to proceeds
A synthetic reference to a private company
No enforceable ownership of the underlying company

Blockchain settlement does not determine legal ownership.

The legal documents do.

PreStocks example

PreStocks advertises tokens backed by SPV exposure to selected private companies.

Its disclosures state that the tokens provide economic exposure but do not confer ownership, voting, dividend, information or other legal rights in the referenced private companies. The products are also not affiliated with or endorsed by those companies.

This illustrates an essential rule:

A token can be backed by an investment structure without making the token holder a direct shareholder.

6. Pre-IPO Perpetual Futures

A pre-IPO perpetual future is a leveraged, cash-settled derivative.

The trader can take:

A long position if expecting the valuation to rise
A short position if expecting the valuation to fall

The contract may trade continuously and use funding payments to keep its market price near a reference index.

The trader does not own private shares.

Coinbase International states that its pre-IPO perpetual futures settle in USDC, provide no voting or ownership rights, and reference private-company equity valuation before transitioning into a per-share equity perpetual after a listing.

Binance launched its first pre-IPO perpetual contract in May 2026, using expected SpaceX valuation as the reference. Binance explicitly stated that the contract did not represent ownership of the underlying shares.

Eligible users can explore current pre-IPO and equity perpetual availability through Binance. Availability is jurisdiction-dependent and individual contracts can be converted, settled or delisted.

Who Legally Owns the Underlying Asset?

Before investing, identify every entity between you and the private company.

Direct share transaction

You may own the company shares directly after issuer approval and transfer.

Issuer-approved SPV

The SPV owns the shares.

You own an interest in the SPV.

Fund

The fund or one of its subsidiaries owns the shares or SPV units.

You own a fund interest.

Forward contract

The seller may own, expect to own or promise to deliver the shares.

You own a contractual claim.

Tokenized SPV product

The SPV or custodian may hold the underlying investment.

You own a token governed by separate contractual terms.

Pre-IPO perpetual future

No shares need to be owned for your benefit.

You own a derivatives position against another market participant or venue structure.

Prediction contract

You own a contract paying according to whether a defined event occurs.

You do not own company equity.

The DN Ownership Test

Ask the platform these questions:

Which legal entity owns the shares?
Is that entity recorded on the company’s cap table?
Has the company approved the transfer?
What share class is held?
Do I have voting rights?
Do I receive dividends?
Do I receive company information?
Can I inspect the SPV documents?
Is there another SPV between my vehicle and the shares?
What happens if the manager becomes insolvent?
Who controls the bank account or wallet?
Who handles an IPO, acquisition or distribution?
Can the investment be transferred?
What fees apply at exit?
Which jurisdiction governs disputes?

Do not invest when the ownership chain cannot be explained clearly.

Accreditation and Investor Eligibility

Private placements are often restricted to accredited or professional investors.

In the United States, an individual can currently qualify as an accredited investor through criteria including:

Net worth above $1 million, excluding the primary residence
Individual income above $200,000 in each of the previous two years
Joint income above $300,000 with a spouse or partner
Certain professional licences or financial-sophistication categories

The investor must also reasonably expect the required income level to continue in the current year.

Eligibility does not make the investment safe.

The accreditation framework determines who can participate in certain offerings. It does not guarantee:

Full disclosure
Fair valuation
Liquidity
Company success
An IPO
Regulatory protection
A profitable exit

Other jurisdictions use different categories, including professional investor, sophisticated investor and qualified purchaser.

Tokenized products and derivatives can also carry separate restrictions.

Never provide false information or use a VPN to bypass eligibility rules.

How Private Shares Are Priced

A public stock has a continuously visible market price.

A private company may have several different implied prices at the same time.

These can include:

The last primary funding-round price
The latest tender-offer price
Secondary-market bids
Secondary-market asks
Broker indications
SPV acquisition prices
Employee common-share values
Preferred-share values
Independent valuation estimates
Derivative market prices
Tokenized market prices

Preferred Shares vs Common Shares

A venture fund may own preferred shares with:

Liquidation preferences
Anti-dilution rights
Information rights
Board rights
Conversion rights

An employee may hold common shares without the same protections.

A headline valuation derived from a preferred funding round should not automatically be applied to common shares.

Fully Diluted Valuation

A company’s valuation can change depending on whether the share count includes:

Outstanding common shares
Preferred shares
Options
Restricted stock units
Warrants
Convertible notes
Future employee grants

Pre-IPO perpetuals sometimes use total equity valuation rather than an estimated share price because the final public share count may be uncertain.

Coinbase International’s pre-IPO design uses a valuation-based index before an IPO and can rebase the contract when an authoritative public share count becomes available.

P2P Price Discovery Is Not Fair Value

A secondary-market trade reflects the price accepted by one buyer and one seller.

It may not reflect:

The company’s current financial condition
A preferred share’s contractual rights
The value of every share class
The next funding round
The eventual IPO price
The first public trading price

Private markets can be highly fragmented.

Forge, Hiive and Nasdaq Private Market provide bids, asks, transaction information and other pricing signals, but no single platform necessarily represents the complete market.

Liquidity and Lockups

Private securities should be treated as illiquid.

The SEC notes that private-company securities are generally harder to resell than listed stocks because buyers are more difficult to find, information is limited and restrictions may transfer with the securities.

A private investment may remain locked for years.

Possible barriers include:

No active buyer
Company transfer restrictions
Right of first refusal
Board approval
Shareholder-agreement restrictions
Regulatory holding periods
SPV transfer limitations
Fund redemption gates
IPO lockups
Tender-offer eligibility
Minimum transaction sizes

Do not invest capital that may be required for near-term expenses.

Company Transfer Restrictions

Private companies commonly attempt to control who owns their shares.

Restrictions can include:

Right of first refusal

The company or existing investors can purchase the shares before the outside buyer.

Board consent

The board can approve or reject a proposed transfer.

Co-sale rights

Other investors may be allowed to participate in the sale.

Lockup periods

Shares cannot be sold for a specified period.

Trading windows

Transfers are permitted only during approved periods.

Competitor restrictions

The company can reject buyers considered strategic competitors.

Forge states that private companies frequently use rights of first refusal, lockups and board-consent requirements, and these restrictions can delay or prevent a transaction.

Counterparty Risk by Product

Direct shares

Risk that the seller lacks valid ownership or the company refuses the transfer.

SPV

Risk involving the sponsor, manager, administrator, custodian and vehicle documents.

Fund

Risk involving manager selection, fees, valuation, redemption and portfolio concentration.

Forward

Risk that the seller defaults or cannot legally deliver the promised shares.

Token

Risk involving smart contracts, custodians, SPVs, issuers, token operators and redemption terms.

Perpetual future

Risk involving leverage, liquidation, funding, price indices, market makers, oracle design and the trading venue.

Prediction contract

Risk involving event definitions, resolution sources and dispute procedures.

The number of intermediaries matters.

Each additional layer can add:

Fees
Legal complexity
Operational risk
Insolvency exposure
Information gaps
Settlement delays

Tokenization Does Not Automatically Create Liquidity

A private investment can be placed on a blockchain without becoming easy to sell.

Liquidity still requires:

Eligible buyers
Legal transferability
Market makers
Price transparency
Reliable custody
Settlement rules
Compliance infrastructure
Sufficient demand

A token trading continuously can still have:

Thin order books
Large spreads
Low volumes
Restricted transfers
No redemption
A price disconnected from underlying value

Pre-IPO Derivatives and Their Risks

Pre-IPO perpetuals offer a different proposition from direct investing.

They can provide:

Long and short exposure
24-hour pricing
Smaller position sizes
Leverage
Faster settlement
No accredited-investor share purchase

They also introduce:

Funding payments
Liquidation
Valuation-index risk
Thin liquidity
IPO gap risk
Auto-deleveraging
Market halts
Contract-conversion risk
Counterparty risk

Coinbase International states that its pre-IPO contracts can use leverage of up to 5x and may experience large price gaps around prospectus filings, final pricing and the first public trading session.

A derivative should never be marketed as equivalent to owning the private company.

What Happens When the Company Goes Public?

Direct shares

The private shares may convert into publicly tradable shares according to the company’s capital structure.

The investor may still face:

Lockup periods
Transfer-agent processes
Brokerage requirements
Tax events
Share-class conversion
Delayed distribution

SPV

The SPV may:

Distribute public shares
Sell the shares and distribute cash
Continue holding the listed shares
Wait for a lockup to expire
Charge exit and administration fees

Fund

The fund follows its governing documents.

It may distribute cash or shares, or continue holding the position.

Forward contract

The contract may require delivery or cash settlement.

The result depends on whether the seller can deliver and whether the company recognizes the arrangement.

Tokenized product

The operator may:

Redeem the token
Convert it into public-market exposure
Distribute proceeds
Continue tracking the asset
Delist the product

The exact result depends on the token’s legal terms.

Pre-IPO perpetual future

The contract can be rebased or converted into a standard equity perpetual.

Coinbase International describes a two-stage process that first converts valuation units into per-share units, then bridges the contract into live equity pricing after public trading begins.

Binance has stated that eligible pre-IPO contracts may transition into its standard traditional-finance perpetual framework when a stable market price is available.

After a company becomes publicly traded, eligible international users may also find synthetic equity perpetuals on platforms such as Ondo Perps. Ondo Perps lists public equity and index-linked perpetuals, including SPCX, but these contracts provide synthetic price exposure rather than share ownership.

What Happens If the IPO Is Delayed?

The investor may remain locked in the private structure.

A perpetual future may continue trading against a valuation index, but:

Liquidity can decline
Funding can become persistent
Spreads can widen
Market-maker participation can fall
The contract can be amended or delisted

Coinbase International states that a delayed or cancelled IPO may leave the valuation-based perpetual listed, subject to market conditions and platform decisions.

What Happens If the IPO Is Cancelled?

Possible outcomes include:

The company remains private
A new funding round resets valuation
A tender offer provides partial liquidity
The private shares remain locked
A derivative contract continues
A derivative contract is settled or delisted
The token trades at a larger discount
The SPV remains open indefinitely

An IPO cancellation does not automatically create a refund right.

What Happens If the Company Is Acquired?

Direct shareholders may receive:

Cash
Buyer shares
A combination
Contingent payments

SPV and fund investors receive whatever proceeds their legal structure permits after expenses and liabilities.

A derivative may be settled according to the acquisition valuation or the venue’s fallback methodology.

Coinbase states that an acquired-company pre-IPO perpetual may be settled using a publicly disseminated valuation or, if unavailable, a final mark price before delisting.

What Happens If the Company Fails?

The investment can become worthless.

Preferred investors, lenders and other creditors may rank ahead of common shareholders.

A highly publicized private valuation does not guarantee recovery value.

Investors should be financially capable of losing the entire investment.

Platforms by Product Type

Direct shares and issuer-approved secondary transactions

Examples include:

Forge
Hiive
Nasdaq Private Market
EquityZen

Availability is generally limited to eligible investors and depends on actual seller supply, issuer restrictions and product structure.

Tokenized private-market exposure

PreStocks advertises blockchain tokens connected to SPV exposure in selected private companies.

Its disclosures state that the tokens provide only economic exposure and no direct ownership rights.

Pre-IPO perpetual futures

Coinbase International and Binance have introduced valuation-linked pre-IPO perpetual structures for eligible users.

Use Binance only after checking whether an active pre-IPO contract is currently listed and available in your jurisdiction.

Public equity perpetuals after listing

Eligible non-US users can investigate post-listing synthetic exposure through Ondo Perps, where supported public equity contracts are available.

This is not private-company share ownership.

The DN Pre-IPO Due-Diligence Checklist

Before investing, obtain clear answers to the following.

Asset

What exactly am I buying?
Is it a share, fund unit, SPV interest, token or derivative?
What share class supports the exposure?
Is the exposure direct or synthetic?

Ownership

Who owns the underlying shares?
Is the owner recognized by the company?
Has the company approved the transfer?
Is there more than one SPV?

Eligibility

Must I be accredited?
Is the product legal in my country?
Are transfer restrictions imposed?
Can the platform serve my jurisdiction?

Valuation

Which funding round or transaction supports the price?
Are the underlying shares common or preferred?
What fully diluted share count is used?
What discounts or premiums are embedded?

Fees

What platform, management and performance fees apply?
Are there fees at exit?
Does another SPV charge fees?
Are funding payments charged on a perpetual?

Liquidity

Can I sell before an IPO?
Is there an active secondary market?
Are there minimum holding periods?
Can redemptions be suspended?
Is a lockup expected after listing?

Failure scenarios

What happens if the IPO is delayed?
What happens if the company is acquired?
What happens if the company fails?
What happens if the platform or SPV manager fails?
Which court and law govern disputes?

Frequently Asked Questions

Can ordinary investors buy pre-IPO shares?

Direct private-share opportunities are often restricted to accredited, professional or otherwise eligible investors.

Some tokenized and derivative products have different eligibility rules, but they do not necessarily provide share ownership.

Is buying a pre-IPO token the same as buying stock?

No.

A token may provide an SPV interest, contractual claim or synthetic exposure.

Read the legal documents to determine the actual rights.

Are pre-IPO perpetual futures real shares?

No.

They are cash-settled derivatives and do not provide voting rights or delivery of private-company shares.

Which platforms sell actual private shares?

Forge, Hiive, Nasdaq Private Market and similar regulated private-market platforms can facilitate direct or fund-based transactions for eligible investors.

Availability is not guaranteed.

What is an SPV?

An SPV is a separate legal vehicle that holds an investment.

The investor owns an interest in the SPV, while the SPV owns the shares.

Can a private company block my purchase?

Yes.

Rights of first refusal, board approval and other transfer restrictions can delay or prevent a transaction.

How long does a private-share trade take?

A direct transaction can take several weeks because ownership, eligibility, transfer restrictions and company approvals must be completed.

Is pre-IPO investing more profitable than buying after an IPO?

Not necessarily.

Private valuations can be excessive, information is limited and the eventual public price can be lower than the private purchase price.

Can I sell before the IPO?

Possibly, but only if the investment is transferable and a willing eligible buyer exists.

Liquidity is not guaranteed.

What happens if the company never goes public?

The investor may remain in the private investment indefinitely, seek a secondary buyer, wait for a tender or acquisition, or lose the investment if the company fails.

Final Verdict

Private-market access has expanded, but the market has also become more structurally complex.

Direct shares offer the clearest route to actual ownership.

Issuer-approved SPVs can provide legitimate indirect ownership while simplifying the capitalization table.

Funds can diversify exposure but add manager and fee risk.

Forward contracts create contractual claims rather than immediate share ownership.

Tokenized products can improve settlement and transferability, but they do not automatically provide direct shareholder rights or reliable liquidity.

Pre-IPO perpetual futures provide liquid, leveraged price exposure, not equity ownership.

The correct decision process is:

Identify the legal product.
Trace ownership to the underlying asset.
Verify issuer approval.
Understand the share class.
Confirm investor eligibility.
Analyse valuation and dilution.
Review every fee layer.
Assume liquidity may disappear.
Model delayed, cancelled and failed IPO scenarios.
Invest only capital that can remain locked or be lost entirely.

The name of the private company attracts attention.

The legal structure determines what the investor actually owns.

Affiliate Disclosure

Some links in this guide are affiliate or referral links. Decentralised News may receive compensation when eligible readers register or use a featured platform.

Affiliate links are included only where a platform has a verified relevant market or post-listing product. An affiliate relationship does not mean that the product provides direct share ownership.

Disclaimer

This guide is for educational and informational purposes only. It does not constitute financial, investment, legal, tax or accounting advice.

Private securities, SPVs, tokenized investments, forward contracts and derivatives are high-risk and may be illiquid. Investors can lose their entire investment.

Eligibility, securities laws, platform products and tax treatment differ by jurisdiction. Readers must be at least 18 years old and should obtain independent legal, tax and financial advice before participating.