Five Ways Average People Can Invest in Tech Startups' Pre-IPO

With an 8.2% compound annual growth rate, the global IT market has significantly progressed from $8179.48 billion in 2022 to $8852.41 billion in 2023. The unprecedented growth potential in the tech industry is being witnessed worldwide, and investors are making efforts to capitalise on this to gain significant returns. People are now gravitating toward the growing tech market, and many new tech startups are entering the landscape. The entry of budding startups in the tech field provides significant evidence that this industry is about to witness a skyrocketing performance in both innovation and financial growth. Nearly every major industry has attributed a segment for the inclusion of tech elements into their respective domains, Edtech, Fintech, Agritech, and Insurtech, to name a few. The investors and shareholders have a positive outlook for the growth of the tech industry and are betting on emerging tech startups to get the best deals.

This article will provide a direction to all those who are confused about investing in unlisted shares and beginners who want to gain and benefit from investing in the unlisted market.

Opt For The Right Strategy

Tech startups are expected to bring about a new and improved growth strategy within the market, in turn giving the investors a hope to earn profits. Thus, identifying and deploying the right strategies that will generate maximum returns with minimum risk in order to take advantage of this flourishing market is crucial. There are multiple ways to generate returns and bank the gains from this growing tech industry, the best way being; an investment in the pre-IPO stock of tech startups.

The idea of investment seems complicated for a beginner, and it becomes difficult to tap into the right market and identify profitable stocks. Provided the right strategies and guidance, it is not a mammoth task to generate considerable returns.

Why Choose The Pre-IPO Way?

There are several reasons for choosing to invest in the companies via the pre-IPO route, but before getting on to that, let's have the basic knowledge of what Pre-IPO shares are.

When companies sell a large number of shares before getting listed in the stock market, the sale of such shares is referred to as Pre-IPO shares. This kind of trading is gaining large popularity among both budding investors as well as already existing and well-known investors. The gross transaction value of the top 10 share traders functioning in the unlisted market rose by Rs. 17 crores in the financial year 2019, and this value increased to Rs. 40 crores in the next financial year and has been on the rise ever since.

Reasons to choose Pre-IPO Route:

Some of the leading companies, like Serum Institute, BYJU'S, Boat, and Razorpay, have been ruling the unlisted market domain, and the shareholders have gained significantly after purchasing pre-IPO shares of these famous and well-established names. Investing in the unlisted market is beneficial due to the following reasons:

• A higher return for the value
• A less risky investment to hold
• Shorter Holding Time

Why Bet on Tech Startups Pre-IPO?

Now that the reason for choosing the pre-IPO route is clear, the next doubt arises around the choice of industry. Placing the bet on the tech startup industry can be of benefit, especially if choosing the pre-IPO way. From Tata Technologies to Hexaware, all such established names of the tech industry are also ruling the unlisted market domain. Listed below are the reasons that make an investment in the tech startup pre-IPO a lucrative offer:

• It keeps safe from the fluctuations that the public stock market is clouded by. When the world experienced a downfall due to covid 19, some tech startups showed a significant upsurge in stock prices.

• The chance of getting exponential returns are high if the bet is placed on the right tech startup. After the company goes public, one can sell the company shares for a much higher price in the public market.

• Another benefit of getting a tech startup pre-IPO is a diversified investment portfolio. It not only helps mitigate risks but also opens up numerous possibilities to generate better returns.

Five Proven Tips To Invest In Tech Startups’ Pre-IPO

It is crucial to follow the right strategy if generating multiple returns from the initial stages of the investment journey is the goal. With the evident growth of startups in the tech industry, seasoned investors and beginners in the field of investment are betting on them via the pre-IPO route to get exponential returns. The following steps can be helpful in getting started with the investment journey.

Building An Efficient Network

For a beginner, it becomes necessary to trust credible sources and get accurate information regarding the pre-IPO stocks of the best tech startup companies. Since the focus is on tech startups, building connections with startup incubators and accelerators can be a good start to forming credible networks.

Trust Credible Sources To Gather Accurate Information

While researching for the fintech tech startup pre-IPO stocks, it becomes necessary to gather information and start trading with a valuable and trusted source is the key. Looking out for the best platform to buy unlisted shares should be at the top of the priority list.

Explore The Option Of Syndicated Angel

If investing a large capital amount to get hold of a pre-IPO stock of a tech startup company seems daunting, then one aspect can be joining the syndicated angel list. This gives an option of pooling the capital resources with other like-minded investors to buy the unlisted shares of tech startup companies.

Keep An Eye On The Tech Startup Events

It's necessary to watch out for any tech startup events and conferences to get an idea about the rising and emerging trends in the field that can add value to the existing portfolio. Moreover, knowing about budding startups via events helps in understanding the future possibilities and upcoming offerings.

Trust On The Experts

If you are new to the field of investing and have limited financial knowledge, then trusting an expert is the best way out. Good investment brokers and trading platforms for unlisted shares are available to simplify the investment process.

Following these steps can make your journey in the unlisted trading market a smooth sail!