What Pre-IPO Investment Options Do Qualified Purchasers Have?
The five structures a qualified purchaser can use to own late-stage private companies, compared on what you own, how many companies, who sets the price, how you get out and what it costs.
Being a qualified purchaser, generally an individual with $5 million or more in investments, opens more doors into late-stage private companies than accredited status alone. It does not make the choice easier, because the same company can be owned five different ways and the structure matters as much as the name.
The five structures
| Structure | What you own | Companies | Who sets the price | How you get out | Typical costs |
|---|---|---|---|---|---|
| Shares on a secondary marketplace | Usually common stock in one company | One | You and the seller, by negotiation | A later sale or the listing; transfers need company consent | Platform fees and spreads; minimums often $10,000 to $100,000 a trade |
| Single-company SPV | An interest in a vehicle that holds one company | One | The sponsor's purchase price, plus its own economics | When the vehicle sells or the company lists | Setup and management fees, often 10 to 20 percent carried interest, sometimes two stacked vehicles |
| Interval or tender-offer fund | Shares in a registered fund, often mixed with other private assets | Dozens or more | The manager's own periodic valuations | Scheduled repurchases, often quarterly, limited to a slice of the fund each time | Annual expenses charged on the full asset base |
| Listed closed-end vehicle | Exchange-traded shares in a portfolio of private companies | Typically a few dozen | The stock market, which can price the shares far above or below what the portfolio holds | Sell on the exchange any trading day | Management fee and expenses, plus any premium paid over the holdings' value |
| Diversified private fund | An interest in a private fund holding positions the manager bought and priced | Often 20 to 40 | The manager, who underwrites every entry price | Distributions as companies list or sell, over a defined fund life | Management fee and carried interest; higher minimums set in the fund documents |
What separates them
What you own. A headline valuation describes the most protected preferred share in a company. Marketplace buyers and many SPV investors receive common stock, worth measurably less, a gap our valuation primer walks through. Funds hold whatever their managers negotiated, which is one of the things worth asking about.
How many companies. In private technology, a handful of companies produce most of the value. One position is a bet on being right about that handful; a portfolio is a bet on holding it. EQUIAM's analysis of the AI cohort found that a basket of twenty-five names held the winners nearly nine times in ten, against about one time in sixteen for a single position.
Who sets the price. At the moment you buy, someone decides what you pay. In a marketplace trade it is you. In a fund it is the manager, which makes the manager's pricing discipline the thing you are really buying. In a listed vehicle it is the stock market, which has at times valued these portfolios at large premiums to what they hold, and at discounts.
How you get out. Liquidity is the sharpest trade-off. Listed vehicles offer it daily, at whatever the market will pay, and interval funds on a schedule, in limited amounts. Private funds and single-company holdings pay out only when companies list or are sold, which can take years and does not run on anyone's calendar.
Where a diversified private fund fits, and where it does not
A diversified private fund suits a qualified purchaser who wants the asset class rather than one company, and who would rather pay a manager to underwrite entry prices than do it alone. Private Tech 30 Fund II, EQUIAM's current fund, is one example: it targets roughly 30 late-stage private technology companies, entered through both primary growth rounds and direct secondary purchases, typically 12 to 36 months before expected liquidity.
It is the wrong structure for some investors. There are no redemptions, so money returns only as companies list or sell; minimums are higher than in registered funds; and you cannot choose the individual names. Fees include carried interest on top of a management fee, and the result depends heavily on one manager's judgment about price. An investor who needs liquidity, wants a specific company or prefers low minimums is better served elsewhere in the table.
Which fits whom
An investor with strong views on one company, and the time to research it, can buy on a marketplace and should look hard at the share class and the all-in cost. An investor who wants exposure with an exit available any day can use a listed vehicle, accepting that the price may sit well away from the value of the holdings. An investor who wants the asset class held for the full private stretch, priced by someone whose full-time job is pricing it, is the person a diversified private fund is built for.
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