Pre-IPO shares of stock are Linqto’s forte, as they are the platform’s primary focus. They are industry experts, therefore they typically have a wide variety of stock options for private companies that are going public. You can buy shares on the platform, and you might even be able to sell them back to Linqto if you decide to cash out early.
Although this type of investing has been around for some time, it typically calls for a significant initial outlay and hefty fees. The company provides a fee-free investment platform and accepts investments as low as $10,000, while most of its competitors demand at least $100,000.
Accredited Investor Status, as defined by the Securities and Exchange Commission, is required to participate in Linqto.
Any individual who meets the following criteria is considered an accredited investor:
has a net worth of over $1 million (alone or jointly with a spouse or spousal equivalent, excluding the value of the person’s primary residence), OR holds a Series 7, 65, or 82 license in good standing, OR has earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year.
To complete the verification procedure on Linqto, you must supply evidence showing that you meet the criteria for an accredited investor.
Only around 2% of the 45 million certified investors in the globe, according to the business, invest in pre-IPO companies. This is because very few people actually have any means of acquiring this type of investment. Linqto fills this void by providing access to this alternative investment vehicle for qualified speculators. There are already more than 100,000 accredited investors in the company.
- Minimum initial investment: $10,000
- Accredited investor requirement: Yes
- Investments offered: Pre-IPO stocks
- Available account types: Taxable brokerage accounts and self-directed IRAs (SDIRAs)
- Mobile apps: Android and iOS
- Customer service: Email only
How Linqto Works
Linqto is similar to a stock broker, however, it has a much narrower focus. Only pre-IPO shares are available for purchase and trade.
In this vein, they provide a slew of sub-fields to choose from.
Liquidshares Portfolio provides access to 152 investments across 32 different firms. In total, over $70 million are invested by over 4,600 members. Acorns, Coinbase, Kraken, Nerdwallet, SoFi, Upgrade, Uphold, and Varo are among the many popular investment options.
Linqto Bucks Referral Program
There is a referral program at Linqto where you can earn two incentives for every successful referral.
When you invite a friend or family member to join Linqto, you’ll both receive $250 in Linqto Bucks, as the company is always looking to expand its network of investors.
You will receive $750 in Linqto Bucks once your referral makes their initial investment. Those Bucks are good for the creation of a Linqto account for both you and the person(s) you prefer.
You can only receive a referral bonus if the person you refer is an accredited investor who invests within 60 days of creating an account. If they don’t make an investment within that window, the referral will be null and void.
In most cases, a wire transfer is the most convenient method for adding funds to your Linqto account. However, you can sign up for an Uphold Wallet if you’d want faster funding and more ease of use.
Contrary to popular belief, Uphold is an independent service that has no ties to Linqto whatsoever. Following registration for a Linqto account, you will be prompted to link your Uphold Wallet. When enabled, you’ll have fast access to funds for your Linqto investments.
Uphold provides a digital wallet that may store numerous different types of assets, including US dollars, foreign currencies, cryptocurrencies, commodities, and more.
Pre-IPO Shares Liquidity
If you buy the stock before an initial public offering (IPO), you should plan on holding onto it until the company sells shares to the public. Thankfully, Linqto is not like that at all! Despite the lack of a secondary trading market for pre-IPO shares, the company will buy them back if you decide to sell them.
You can also use Linqto to unload pre-IPO shares you bought elsewhere, such as from the issuing firms themselves. You must be the issuer’s original shareholder or optionee and appear on the cap table of the firm in question for Linqto to consider purchasing your shares.
You can sell your shares in Linqto before the IPO by visiting the site and selecting the “Sell” tab in the navigation bar. Simply input your name, phone number, email address, the name of the firm, and some basic information about the shares you own, and you’ll be sent to the “Sell Your Shares” page.
Linqto’s current mechanism for early redemptions involves the company buying back pre-IPO shares directly from investors. Repurchase is not always guaranteed by LIngto either. However, it is collaborating with authorities to establish a secondary market for the privately held stock. However, you might take advantage of the opportunity to sell your shares to LInqto in the meanwhile.
Linqto asserts it is a zero-cost investment platform because it does not collect any sort of fee other than the first investment.
Linqto users must meet the following legal conditions, as stated in Article 28 of the Investment Platform Rules:
The Member agrees to pay Linqto an Introduction Fee or any other charge or fee agreed upon by Linqto and the Member or any other person dealing in a Security, “in amounts or percentages as notified to them by Linqto from time to time.”
The amount of the annual charge is not specified in the provision but looks to be 0.50% of the initial value of your investment.
How to Sign Up with Linqto
The platform accepts new investors through its website and mobile app. You’ll need to fill out a short, one-page application for this. You’ll need to attest to the fact that you qualify as an institutional investor before proceeding with the application.
You must be a qualified, accredited investor to work with Linqto. There will be a section of the application process dedicated to confirming that you are an accredited investor. Pre-IPO stocks have a greater degree of risk than other investments, so only accredited investors can buy them. That calls for expertise in the asset class in question and the means to withstand loss.
Linqto will form the entity through which you can invest, whether you do so as an individual, an LLC, a trust, or some other legal structure.
Linqto will give you wire transfer instructions and verify that the money has been received. All orders from current investors must be funded within five business days, and all orders from new investors must be funded within ten.
Alternatively, you can use the Uphold Wallet (described above) to make purchases and receive funds much more quickly.
Why Invest In Pre-IPO Stock and Private Equity?
According to Linqto, in the last 20 years the average time, it takes for a technology company to go public has risen dramatically, from under five years to the current average of twelve.
As they prepare for an initial public offering, many companies choose to remain privately held for a longer length of time.
Investing is no different from any other endeavor in that timing is crucial.
Early investment in stock can frequently make the difference between average returns and exponential gains. This is because you’ll be investing in private companies before their stock becomes public.
Investing in this way is clearly a form of gambling. After all, not every money put in may provide a profit, and some companies may even fail. For those that succeed in developing groundbreaking new goods and services, however, the payoff can be substantial upon (or even before) the company’s initial public offering.
You should still only put a limited portion of your portfolio into private equity, even if you have the necessary credentials to do so. It is a typical example of a high-reward/high-risk asset class, where successful bets can reap large rewards but poorly timed ones might be wiped from the record books.
Linqto Pros & Cons
- Provides access to lucrative pre-IPO investing to millions of accredited investors worldwide.
- Simplifies IPO investing
- Low minimum initial investment of $10,000
- Fund your account with cryptocurrencies through the Uphold wallet.
- Available for both regular investment accounts and IRAs.
- Ability to liquidate your positions early, by selling shares back to Linqto.
- Accredited investor status is required to participate
- Potentially long investment hold period – investments may take years before finally going public. (though this is a function of the investments and not the platform)
- Customer service is limited to email only.
Linqto Review: Final Thoughts
Accredited investors make up a large portion of those seeking to diversify their investments beyond just equities and bonds. To do so, you’ll need to consider assets outside the norm, such as pre-IPO shares.
Due to their independence from the behavior of more conventional financial markets, these assets have traditionally been the exclusive domain of the wealthy. Privately held technology companies can experience explosive growth in revenue and profit even as the broader stock market suffers.
Linqto is a great service to use if you are interested in buying pre-IPO stock. You can buy shares in some of the world’s most promising software startups before they go public, and then sell them back to Linqto at a loss to mitigate your investment.
Linqto investors should only risk money they can afford to lose. When it comes to investing, the pre-IPO stock offers the best of all worlds: high potential returns and high potential risks. To that end, it’s not a good idea to allocate more than a moderate amount of your portfolio to it.