Pre-IPO investments have long been the domain of wealthy individuals and institutional investors, but Linqto, a San Jose, California-based firm, is aiming to change that dynamic. Linqto's mission is to democratize private investing, making it accessible, affordable, and liquid for individual investors. As more people become aware of the potential profitability of private companies—shown to be 50% more profitable than their public counterparts—the interest in pre-IPO investments is growing.
Linqto offers a platform where individual investors can engage with private markets meaningfully. The company promises an inclusive, easy-to-use, secure, and fast digital experience. One of the standout features is its affordability; investors can start with a minimum of $2,500, with subsequent investments requiring $5,000. This is in stark contrast to competitors like Charles Schwab, which recently announced a platform for qualified investors needing assets of more than $5 million.
Linqto also maintains significant holdings for shares of companies on its platform, sourced from founders, employees, and other investors at a negotiated price. This liquidity is a crucial selling point for Linqto, making it easier for retail investors to participate in private investments.
The firm primarily focuses on mid to late-stage private companies in the technology sector. These companies must meet minimum revenue requirements and have backing from institutional venture capital or private equity investors. Linqto employs in-house research and evaluation capabilities to conduct in-depth due diligence on the firms it includes on its platform, ensuring that both Linqto and its investors have skin in the game. This approach streamlines the investment process, making it as easy as pointing and clicking to participate in the presented opportunities.
When an investment is made through Linqto, investors receive shares in a Special Purpose Vehicle (SPV) managed by Linqto but owned by the investors. This approach offers protection against creditors in case of bankruptcy and guarantees immediate sale, bypassing the company's right to refuse the sale. The SPV structure also simplifies the company’s cap table, which is advantageous for funding and regulatory reasons.
Linqto requires a 90-day holding period for purchased shares. Investors must hold the asset for 90 days before selling and cannot use those shares to purchase another security on the platform.
As a registered broker/dealer with the Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA), Linqto operates a regulated platform. This includes Alternative Trading System (ATS) licenses, which allow securities trading outside traditional stock exchanges, enabling quicker and more efficient transactions for investors.
With the growing demand for private investments and many companies remaining private for longer periods, Linqto’s platform offers a turnkey solution for young investors to gain early, pre-IPO access to potentially industry-leading companies. This new avenue for wealth generation could significantly impact how individual investors engage with private markets.
