A Pre-IPO is an offering of shares in a company before its initial public offering (IPO). Pre-IPO offerings are available only to a limited number of individuals, and are done in advance of an expected IPO. Pre-IPO prices are generally much lower than they would be at the IPO, but are risky for the investor, as their value is contingent upon the company eventually making an IPO. The planned IPO may never take place. In addition, shares from a pre-IPO are unregistered and are likely to be very difficult to sell until the public offering is completed.

Another problem that had surfaced in recent years is that shares offered in pre-IPOs, having been priced substantially lower than the subscription price in the subsequent IPO, meant that many analysts who participated were able to acquire shares at very low prices. The Conflict of Interest is clear: analysts are likely to have a personal interest in promoting stocks they own, thus tainting the independence of their recommendations. Corporations are anxious to have analysts come on board as shareholders, in part because of the creditability analyst ownership conveys to the investing public. Analyst ownership may also result in positive investment recommendations that become a marketing campaign for the firm's stock.

Olympia Statement of Conflicts of Interest:

Our research Analysts are strictly prohibited from taking any direct remuneration from issuing companies, in any form, or holding any personal stock positions in issuing companies.

We prohibit Research Analysts from soliciting or receiving any inducement in respect of their publication of research and we restrict certain communications between Research Analysts and investment banking personnel within Olympia Capital Exchange which might be perceived to result in inappropriate influence on Analysts' views.

In connection with a securities offering or other investment banking transaction and during the course of such an offering or transaction, our policies permit Analysts to meet and speak with potential investors, at meetings and in conversations not involving the issuer or investment banking colleagues, for purposes of investor education and information. However, Analysts may not actively market an investment banking transaction, and investment banking personnel are prohibited from directing Analysts to engage in such marketing efforts.

Risky Business: "Pre-IPO" Investing

"Pre-IPO" investing involves buying a stake in a company before the company makes its initial public offering of securities. Many companies and stock brokers approach investor clients by presenting an opportunity for high returns by investing in a start-up enterprise at the ground floor level. But investing at the pre-IPO stage can involve significant risk for investors.

Is the Offering Legal?

Any company that wants to offer or sell securities to the public must either register the transaction with the then SEC or FSA or meet an exemption. Otherwise the offering is illegal, and you may lose every penny you invest. The most common exemptions include those found in U.S Regulation D of the U.S. Securities Act. But to meet these exemptions, the company and its promoters generally cannot advertise the offering or make solicitations to the general public. Only offerings to existing company investors, Institutional clients or current Private Equity customers are allowed. Prior Customer Opt-in Prospect Lists are also considered non-general public solicitations.

It is important that if you want to receive information on any Pre-IPO offering being made available through Olympia Capital Exchange. that you go to our Contact Us page and request a Disclaimer form and a Terms and Conditions form to both be signed and returned such that you may be included on any Opt-in List of Interest.

  • You will be Buying Unregistered Securities – That means you may have an extremely difficult time selling your securities if you want to liquidate before the company goes public. You may also have a difficult time obtaining current, reliable information about the company. In addition, if you purchase or acquire Restricted Securities you cannot sell those securities for at least one year—even if the company goes public in the meantime.
  • The Company May Never Go Public – While some IPOs yield double- and even triple-digit returns, many others don't or quickly fall back to levels far below the IPO price. In any event, the fact remains that the company may never go public. And if that's the case, you may never recoup your investment. Before you even think about investing in any pre-IPO opportunity, be sure to do your homework. At a minimum, you'll want to know:

Details About the Offering – Is the securities offering subject to an exemption? Remember, if it's neither registered nor exempt, it's illegal. Check to see whether the company has filed an offering circular under Regulation A or a Form D under U.S. Securities Regulation D. If you ultimately decide to invest, find out whether your stock will be restricted in any way. And be sure to ask how, if at all, you can liquidate your investment if the company does not go public.

  • 1.Information on the Company – What are its products and services? Who are its customers? Does it have the physical plant, contracts, or inventory it claims to have? That's why you should always independently verify claims about any company in which you plan to invest.
  • 2. Management's Background – Who runs the company? Have they made money for investors in the past? Have any of them violated the law, including any of the federal securities laws?

SEC Eased Private Placement Constraints for Pre-IPOs with the Small Company Capital Formation Act of 2011

U.S. Rep. Darrell Issa sent a 17 page letter to the SEC regarding small business capital formation, particularly in the pre-IPO context. That set off a barrage of news coverage. The SEC Chair Schapiro responded with a 26 page letter, indicating that she had ordered a review of all the rules affecting capital formation for small companies and is reconsidering current restrictions on communications in IPOs. On March 14th, 2011 the Small Company Capital Formation Act of 2011 was introduced in the U.S. House of Representatives. The bill seeks to increased the offering threshold from $5 million to $50 million for public offerings of smaller companies exempt from registration under the Securities Act pursuant to Regulation A.

Olympia Capital Exchange conducts all required and reasonable due diligence on any Pre-IPO companies we might offer our customers. But, this should not be used as the entirety of your research and review before you invest.

On the bright side, Pre-IPO investing is the closest thing to “Angle” investing or private “Venture Capital” start – up funding which has made so many investors very wealthy when the right situation presents itself.

Olympia Capital Exchange strives to provide you with data of the highest possible accuracy. Our data is obtained electronically from multiple suppliers including AFX News Limited, The London Stock Exchange, NASDAQ, and The Frankfurt Exchange amongst other reliable sources. If you have spotted an error in our data please Contact Us and we will investigate.