You can easily buy a US IPO using 3 simple ways that include buying directly, through a broker, or investing indirectly in companies.
Initial Public Offering or in short, IPO is often considered as a good investment option. Mostly, it is because of some of the successfully done large US IPO in history. Applying is usually a cup of tea, the most difficult part is whether or not you get an allotment. Everything depends on that.
The rise in fintech has made buying pre-IPOs a lot easier than before. There are quite a few platforms that assist in it but the regulations have made it a bit challenging for the buyers. Nonetheless, there are 3 ways in which you can buy a US Stock IPO.
3 Ways To Buy Pre-IPO Stock
There is no fixed rule as to which way is the best or the worst. Here is detail on each of the three methods.
1. Use an Investing Platform
There are lots of platforms that can help you invest in companies. They will charge a commission for being a mediator. On such platforms, you can find startups, equity ventures, and bigger companies like Reddit and InstaCart.
Many times, such brokers will give the shares as a welcome bonus for creating an account. The biggest con of this method is that your broker might not have ties with the company you wish to invest in.
Some brokers that do provide Pre-Stock IPO are- TradeStation, Fidelity, TD Ameritrade, NASDAQ Private Market, and many more.
2. Buy Directly
Second and the most used method of investing in Stock IPO is buying directly from the company when they release the offering. By doing so, you have the chance to become an “Angel Investor” in the company.
The key here is that you must know someone who is a part of that private company. An alternate can be that you are an important figure that the company wants. It totally depends on your interest. For example: the healthcare sector, industry, tech firms, and others.
Putting money in companies in the initial stage is probably the best. You can monitor the growth curve and decide whether you want to remain an investor or not.
Most companies do not bring IPOs. So keep checking and researching when your desired company is offering to the public.
3. Buy Indirectly
The last method is to put money indirectly into the company of your choosing. In order to invest indirectly, you can do the following:
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Buy stocks in a public company. Disney owns a 66% stake in Hulu. So, if you are a part of Disney, you can participate in Hulu’s IPOs.
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You can become a shareholder in a “Public Venture Capital Firm”. This way you become a shareholder of private companies in which the firm has invested. Example: Blackstone Group.
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The last option is via “Private Equity ETFs”. The best example is “Invesco Group”.
Hence, if you have your eyes on any upcoming US IPO, you know how to buy it.