Pre-IPO (pre-initial public offering) is an important part of the investment process when it comes to companies. It is a way for private companies and investors to allow the general public to gain access to the company and potentially invest in the shares of the company before it goes public.

Pre-IPO is a sale of large numbers of stocks, otherwise known as a block of shares, that usually comes at a discounted rate from what the stock will later cost when it begins trading on the public exchange. This sale allows investors to purchase stocks from the company before it even becomes public, giving investors the potential to make huge profits if the stock does well on the public exchange.

For the company, pre-IPO serves an important purpose: it allows them to raise large amounts of money to finance expansions and investment without having to go public and offering the company in shares on the open market. It serves as a hedge against the potential that the stock price wouldn’t rise as expected after the IPO.

In a way, pre-IPO placements allow companies to test the enthusiasm of investors and gauge the public’s opinion of the company’s stock. This also allows funds that want to invest in the company to get in early and avoid rushing to buy the stock when it becomes available on the public exchange.

The main benefits of a pre-IPO are that it allows investors to gain access to a company’s stock before it goes public, allowing them to benefit from a discounted rate and potentially make returns if the stock is successful when the company goes public. It also allows the company to raise money and offset the risk of an unsuccessful IPO.

Getting involved in a pre-IPO can be quite involved, and requires investors to understand the legalities and paperwork involved in the pre-IPO process before diving in. But for investors who do their homework, pre-IPO can be a lucrative way to invest in promising companies and reap the rewards before the rest of the public.