How to Invest In Pre-IPO Stock

Guest Blog by Sandy Gum, Insurance and Private Equity Advisor for Moneyshield

You may have been hearing about the terms IPO and pre-IPO and you`re wondering if you should invest in it. You might also be wondering if you can participate and if you should be aware of any risks. Let’s take a closer look at pre-IPOs and whether this type of investment is for you.

What is an IPO, pre-IPO, and how do you invest in pre-IPO?

An IPO, or initial public offering, is the process of offering a private company’s share to the public, allowing regular investors the opportunity to purchase a share in a new stock insurance.

A DPO, or direct public offering, on the other hand, is when the business sells shares directly to the public without the help of any intermediaries.

Both IPO and DPO methods allow a company to raise capital by listing shares on a public exchange. 

A pre-IPO is when a company issues their shares to the public before they become a stock company. It’s a bit more of a late-stage opportunity to buy a private share of a company. Whether you can buy these shares depends on the people who have the licence to sell them.

There are two types of markets. One is the public market where everyone can trade and it’s open for the public and for retail. The other market is the private market. All companies that first started in the private market are able to sell their shares through, for example, a lawyer doing the transactions.

Once a company becomes an initial public offering (new shares are created, underwritten and sold to the public) or direct public offering (no new shares are created and only existing, outstanding shares are sold with no underwriters involved), it will be on the platform where it is issuing shares to the public market. This allows everyone the chance to participate in the companies that they believe in. There will be future returns in this company in terms of growth and you will have the return.

How can you qualify for a pre-IPO?

When it comes to the private market, there are two types of people. Some private market investments are open to retail investors and some open only to accredited investors.

Pre-IPO is open mostly for accredited investors. Accredited investors are those with an individual income of $200K per year, or a household income of $300K per year. Another qualification is financial assets that total $1 million or a net worth of $5 million. If you qualify through one of these factors, then you are eligible for a pre-IPO.

What are some benefits to buying a pre-IPO?

There are a lot of benefits but the greatest benefit to participating in a pre-IPO is you can buy these shares at a good, discounted rate, typically more than 30 to 40 percent. By the time a share becomes an IPO/DPO, it is usually double, or at least a good 30 to 40 percent growth from what you initially bought it for.

If you’ve been watching the stock market, you may have heard of startup companies, especially in the tech sector, that went on IPO/DPO in 2020.

Two companies, Palantir and AirBNB, went public offering successfully in 2020. Some people missed it because they didn’t qualify. Palantir is currently trading between $25 to $26 per share in the public sector. At first, Palantir was trading in the private sector at $4 to $6 a share. Now imagine if you had participated in the pre-IPO. You would have gotten a huge discount at $4 a share compared to now. It’s a huge jump in comparison.

AirBNB was supposed to be an IPO price of $55 to $60 a share. The pre-IPO price was supposed to be $45 to $50 a share. It is currently trading at $160 to $170 a share. You can see a huge difference! Now at the time of pre-IPO, what retail investors need to understand is on the day of the IPO or DPO, you don’t necessarily get the price published on the news. At the time of the IPO or DPO, these prices are prioritized to financial institutions and institutional investors. 

If the news says it will be issued at $65 a share, pre-IPO could be $10 or $20 less than that, depending on the situation. During the interval that they allow you to get in, it will probably jump to 100. This is the pattern that I have noticed for Palantir, AirBNB, and other companies.

Who is best suited for buying these IPOs?

These IPOs/DPOs are suitable for those with a strong knowledge in investments, an understanding of investment risk, and a portfolio diversified in different sectors, whether in the private or public sectors. The pre-IPO investments will only be one part of their portfolio.

Who do you contact to buy pre-IPO?

Depending on where you come from, there are different regulations in the USA. You are able to trade on some platforms, but you do need the accredited investor status.

In Canada there isn’t yet a platform to be able to trade pre-IPO at this point. You need to look for an advisor who is licenced to be able to promote or offer private markets. These types of advisors may have access to pre-IPO. You will need to double check with the advisor because each firm has a different relationship with the companies that buy pre-IPOs. Not all private market advisors have access to pre-IPOs.

What are the risks of participating in a pre-IPO?

The risks in private equity, particularly in pre-IPO, is that these investments are illiquid, as opposed to stocks that you can sell off or buy pretty much immediately. If the volume is high, you can exit out the next second and have cash in hand. Compared to the private market, it takes time to trade it off or it could be completely illiquid at this point.

The main risk will be the time. For example, for the past few years we have been raising capital for AirBNB and only in 2020 did it become IPO.

Consider the time it takes for a company to go public and be publicly traded. There could be a delay. You could be potentially running a risk that the company never becomes a stock company. It’s also hard for this to become a liquid investment. If the company doesn’t become public, you will have to keep your cash inside the company or somehow privately sell it yourself.

For example, SpaceX, which is not going IPO anytime, is privately traded. You can buy it, but it’s unknown when it will go public. However, if you like Elon Musk and you want to participate in SpaceX, and you don’t care how long you will have to wait to buy it, then yes, you can trade and sell it at a price that you agree on with another party. 

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Should You Go to College If You Can’t Get a Job

Ever since your earliest days at school, you’ve been told to attend college after high school graduation. You were told it will land you a great job, but the path to a college degree is expensive. Exact figures vary, but it can be over $5000 a year, and the cost is only going to rise!

Is a college degree worth it, however? Should you go to college if you can’t get a job after graduation? Let’s take a closer look at whether a college degree is worth it and if it’s possible to get a high paying income with only a high school diploma.

A College Degree Teaches You Valuable Soft Skills

One of the strongest reasons to go to college is the valuable soft skills you will learn. Soft skills are the communication skills and social skills that are a part of a person’s social intelligence and emotional intelligence.

Examples of soft skills include critical thinking, organization, communication, leadership, creativity, work ethic, and time management. Employers advertise what hard skills they want from a prospective employee, such as reading, writing, math, and computer skills, but they also consider your soft skills.

When you attend college, you coordinate deadlines, work on group projects, and complete written assignments. All of these aspects of college involve working on your verbal and written communication skills, and critical thinking and problem-solving skills.

Your time in college is also an opportunity to make connections with other people who may even work in the same industry someday. These connections may help you to find unadvertised job opportunities in their companies.

Depending on the source, from 15% and as high as 30% of jobs are advertised. That means at least 70% of jobs are in the hidden job market. Your connections could help you to find jobs that you didn’t know existed. These people may even become your job references.

Higher Income and Employment Stability

Another reason to go to college is that statistics show those with a college degree have a higher income earning potential. Those with college and graduate degrees have lower rates of unemployment.

In 2019, those with a doctorate degree had a 1.1% unemployment rate, compared to a 5.4% unemployment rate for those holding less than a high school diploma.

The same study about full-time wage earners found that those who had a bachelor’s degree made a median of $1248 in weekly earnings compared to a median of $746 in weekly earnings for someone with a high school diploma.

Having a college degree is not a guarantee that you will get a job, but you are statistically more likely to be employed than someone without one.

A College Degree is Required for Some Careers

Going to college is a necessity if you want a career that requires a degree. For example, a post secondary education is necessary if you want to be a doctor or lawyer. Also, a degree may be required for jobs in a specific field of expertise. In these cases, your choice of career has already made the college decision for you.

Generally, a bachelor’s degree is expected for most entry level jobs. It may even be the minimum qualification to apply for one. For some jobs advertised, the degree may not seem relevant to the skills required in the job description, but it is the minimum level of education.

A college degree also helps with career advancement, particularly if you are looking for a role in management.

A High Income Can be Achieved Without a College Degree

If you can’t get a job and you don’t have a college degree (and you aren’t interested in getting one), you have another option.

This path involves a lot of ambition and thinking outside of the box. You may need to take risks to try something most people won’t do.

Your income will be similar to a roller coaster ride, with no guarantees of stability, but if you persist and you’re successful, your income will have no limits. One path is entrepreneurship. You’re selling a product or service that people want. Another path is developing your knowledge or skills so you are highly successful or highly in demand, such as excelling in investments or your talent.

Bill Gates, Mark Zuckerberg, Li Ka-Shing, Richard Branson, Jay-Z, Catherine Zeta-Jones, and Uma Thurman are just a few entrepreneurs, musicians, and actors who either dropped out of high school or college and became household names.

Achieving their level of success is not easy. You’ll need to be a self starter and invest in your own education and skills. It also helps to have a good mentor. Many entrepreneurs either didn’t get a college degree or built a successful business in spite of their college degree.

Summary

Going to college has its advantages. You can go to college to work on your soft skills and build connections that will be valuable later in life. Another reason to go to college is to get a degree as a first step to a career. A degree generally increases your income level and chance of employment, but it doesn’t guarantee employment. If you’re willing to work hard and develop a high income skillset, you can be financially successful without a college degree.

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Dating Profiles: What You Should Know About Writing One

What do dating profiles have in common with resumes? You need to put in your best effort for both if you want to get results. This may seem self-evident, yet some people will slap together a dating profile with minimal effort and hope that someone special will come along and pick their profile.

Writing a dating profile takes the same effort as writing a good resume. In this case, you aren’t applying for a job, you’re looking for a person. To catch that ideal person’s eye, try some of these tips on how to write stellar dating profiles.

1. Eye-catching photos aren’t just for movie stars

You’ve probably seen this advice multiple times before: choose pictures that show your face. People who are shy or who struggle with self esteem (because they aren’t usually chosen for a date) like to choose photos of themselves looking down, hiding in shadow, standing far away from the camera (so they are ant-sized) or wearing sunglasses. It’s like standing with one foot in and one foot out the door.

Yes, you’re fulfilling a requirement by posting photos. However, the secrecy isn’t enticing. It screams that you aren’t proud of how you look. It’s the same as a resume in which you’re vague about your job experiences. Why should someone pick you if they can’t see who you are?

Confidence and a smile shows people you are proud of how you look and what you have to offer the right person. Choose a photo of yourself doing an activity that you enjoy to reveal an aspect of your life or your personality. At the same time, show your face. Think of yourself as an up-and-coming movie star waiting to be discovered by your future significant other.

2. Dating profile headlines as effective as news headlines

Your dating profile headline is like a news headline. You want it to grab the other person’s attention and keep it long enough for them to start reading the first line or first question in your profile. A question makes an effective profile headline.

For example, you might ask, “Are you the one?” You want to catch someone’s eye so they read your profile to find out if you’re the person he or she is looking for. If you don’t want to be lost in a blur of cliché headings, do some online research for some catchy sayings, questions, and quotes to find one that suits your personality.

3. Writing bios that bring your personality to life

You might be thinking, “I don’t know how to write a bio” or “I’m terrible at writing.” How do you write a dating profile if you don’t have the skills?

First, calm your fears and simply approach this as a task similar to assembling a simple piece of furniture. Provide the necessary statistics about yourself, such as age, city, height and so on. Begin with the easy stuff.

Then select a question to answer, such as a description of yourself and your interests, something that will reveal fascinating facts about you, or a description of the person you are looking for. Start by writing your ideas down as words or ideas. Then string them together into sentences.

Still stuck? Look for dating profile examples online and copy some sentences that you can use as templates or examples of how you can phrase your answers.

The extra work is worth it. A detailed bio, even with a couple of spelling or grammar mistakes, can reveal your personality and provide that much more information about yourself than a picture.

4. Originality can be as simple as a 1-2-3 formula

After getting matched with someone, take the time to check out that person’s profile. Notice details in their write up and photos. Then, for your first message, ask that person something personal about them, based on a detail you had read.

Too many people take the easy option and start their first message with some version of “How are you?” or “How was your day?” Now image you’re reading your 20th “How are you?” message in two days. How excited would you be to see it?

“Copy and paste” messages are like a resume that looks identical to many others in a sea of resumes. Ask an original question. If the dating profile bio is sparse in detail, Google search ideas for interesting (but not creepy!) questions to pique a person’s interest, make you stand out, and increase your chances of getting a response.

Summary

Putting in the time to write a catchy dating profile is worth the investment. Just like you wouldn’t put together a sloppy resume and expect a job interview to follow, it’s worth the time to craft a profile well to attract the right person.

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Working for a Startup – What You Should Ask

Joining a start up can sound like an exciting adventure. The company is new, so you’ll have the opportunity to determine its goals and direction. You can decide on your role and job description. These are all great possibilities, but before working for a startup, be sure to ask these questions.

Having a clear idea about the history and future of the startup can determine whether you’ll be wasting your time or investing in an exciting step in your career.

Does the startup have a mission, vision and set goals for the year?

It may seem unbelievable, but I’ve dealt with a startup that had a mission and vision, but an unclear business direction. The company didn’t have clear goals for its first year of business. That also meant it didn’t have goals for the three year or five-year mark. The company didn’t even have a clear business plan for its first year of business.

The management team had a business idea, a target market, and they created a product which they tried to sell to anyone who wanted to buy it. As you might have guessed, the company struggled throughout its entire first year to find customers. Before joining the startup, find out more about its mission statement and vision as well as its goals.

Does the startup have a marketing and sales plan?

Before opening for business, the startup should be clear about its target market. It shouldn’t be trying to sell to anyone who would want to buy its products and services. It helps to create a clear avatar or client profile. A company that aims to sell to everyone sells to no one.

Next, when the startup has a target market, check that the company has a marketing plan. How does it plan to generate leads? Once they have a steady supply of leads and prospective customers, does the company have a sales team to close the sales?

The journey for the customer doesn’t end with the sale either. Find out if the startup has a plan for fulfillment. How does it plan to deliver customer service and ensure that its customers are happy with the product or service that it purchased?

If the startup cannot provide clear answers to your questions about marketing and sales, then it is highly possible that making sales will be a challenge for the startup.

Does the startup have an HR department?

A startup with a remote team has its own unique challenges. For example, when a new member joins the team, do they have a system for onboarding them? Are there contracts and other papers to sign? What applications and software does that new person need to download or update so they can get in the loop with communications?

The person or department that is human resources (HR) will need to address all these onboarding questions. HR will also need to help define the new member’s role in the organization.  Having an HR person is also helpful if a new member has an uncomfortable situation with a team member (an argument, lack of professionalism, etc) and needs help resolving the situation.

Do you have clear goals for yourself?

Some people join a startup because of the career opportunity that it presents. You might be interested in a role in the startup but you don’t have any experience in that role. You could volunteer to gain experience in that role.

You might have been attracted to working for a startup because you have experience at a specific role and you want an opportunity to apply your experience with a new company. The culture, policies and direction of the company are still new, so you have a chance to shape the role in the company, which might not be possible with an established company.

Summary

Working for a startup can be an exciting endeavor. It’s like looking at a clean landscape and having the opportunity to decide what will be constructed on it. However, before you join, find the answers to some important questions about the company first. These answers will help you decide if you will be getting the experience you want.

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Working with a Remote Team: What You Need to Know

Remote work definitely has its perks – no commute, flexible work time, and relaxed dress code. Working from home can also be a bit of a downer. You may feel alone compared to working in person at the office. Working with a remote team isn’t the same as working face-to-face, but when done well, you’ll feel a sense of community.

Here’s what you need to know about working with a remote team, from the culture to the technology of communication.

The Tech that Connects Across Borders

Remote work is like taking all the people working in the same office and scattering them apart like jigsaw pieces.

It’s the same team, but each person is in a different place. Your reliance on technology increases thousandfold, while your ability to read people through body language (smiles, frowns, crossed arms, slouches) becomes almost obsolete.

You’re learning a new way to communicate.

Remote teams decide on what types of technology to communicate urgent messages, lengthy messages, schedules, and work tasks. You’ll be learning what type of message goes on which platform and when.

For example, messaging apps like Telegram, Signal, Skype, and Whatsapp might be used for group chats for instant and urgent messages.

Platforms such as Asana, Monday.com, Clickup, and Zoho can be used to track work tasks. Information for each task includes who the task is assigned to, when it’s due, what needs to be done, progress as multiple steps in a task are completed, and extra notes on what a team member needs to know.

Knowing what messaging goes where and how often you need to check and update various chats and apps is crucial. If you’re confused about the system, then communication can break down fast. If communication is clear, then it will be efficient, no matter where everyone works and what time zone they are in.

Remote Teams Socialize at Odd Hours

Over time, you’ll adapt to the time zone differences and learn to work around them. For example, if you live in Canada and your role in a task is completed first, then you’ll leave instructions about what you’ve done in the project management application. When your teammate wakes up in Europe, your teammate will then work on the next step in that task.

Notes to your teammate about when something will be done, or when you can meet for a quick virtual chat will automatically include a date, time and time zone. You may even readjust your sleep schedule so that you can work at the same time and respond to messages more quickly.

I’ve worked with a remote team with members in Europe and Asia, so we discovered our sweet spot for messaging each other in a steady flow of conversation was best in the early hours of the morning.

Just like water cooler conversations at the office, conversations can become social during work hours. The main difference is these conversations take on a more international theme.

For example, you might trade food photos to compare local cuisine, or compare notes on how you celebrate Christmas in your part of the country or the world. During the pandemic, the remote team I worked with shared stories about the pandemic and how people survived in each of our countries.

You start to make friends in other parts of the country and other parts of the world.

Getting on the Same Page with the Team

When working with a remote team, you may find that one of the biggest challenges is getting everyone on the same page. Whether your team members are located in the same city or in different countries, it’s important to have regular meetings to go over big picture goals.

The team should have a regular meeting at least once a week to review the major goals and priorities of the company. If new projects are starting, the team should discuss the purpose of the project and go over any questions people may have.

Summary

Working with a remote team is different from working in-person with your teammates. You’ll need to be familiar with technology and the system that your company has set up for people to communicate with each other. With a global team, you may even need to change when you work or, at least, when you expect your teammate to reply. However, working remotely may also have its perks, such as making connections with people from other parts of the world.

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