Introduction
Pre-IPO investing is gaining popularity in India. It has several reasons such as increasing awareness in education about the stock market and curiosity to know how high net-worth individuals and institutions making profits from companies that are still not listed in exchanges. In this blog, I will cover all the details of pre-IPO and how it benefits everyone.
What is Pre-IPO Investing ?
Pre-IPO investing means that you are investing in those companies that are not listed in exchange yet but can get listed in the future. If you belong to the finance field or you love reading news, you have heard many times that X company has acquired a stake in Y company or in other words, I am saying that X company has invested in Y company.
This means that x company has invested in Y company. Now if Y company in the future gets listed on an exchange, then the invested company x will get profit as the shares rise.
After the investment company becomes a promoter of that group. By this pre-IPO investing, You got shares in your pocket at a very low valuation.
Quick Tip:
Before investing, Check company financials and business structure. In India, generally investing in the IT sector benefits more.
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Benefits of Investing in Pre-IPO Companies
- If you invest in pre-IPO companies, you are getting shares at low valuations because valuations will increase after companies announce a public listing on the exchange.
- You become a promoters if you invest huge or at least a member. Voting rights for you may not be there as per company criteria.
- You can multiply your money with multiple folds in the long term.
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Risk of Pre-IPO investing
Liquidity Risk-
High liquid means there are a lot of buyers and sellers and you can buy or exit your shares instantly at your decided price. Low liquidity means there are not sufficient buyers and sellers and you have to wait to sell or buy shares. Also, there is a risk of price fluctuations and chances that you can't sell at your decided price. Low liquidity is a risk in such Investment.
Low Transparency
These Private companies may hide financial data or may not disclose all data to you or in the market. Public listed companies have obligations to disclose every event and financial data to the public and investors.
Regulatory Risk
As these companies are not regulated by SEBI, your investment in such companies may come to risk. These companies might delay listing of IPO due to insufficient criteria for listing or maybe SEBI can disallow listing.
- Warning:
Pre-IPO shares are not liquid, so be careful before Investing as you can't sell after buying before listing.
How to invest in Pre-IPO Companies in India
Here are methods you can follow to invest in Pre-IPO Companies in India:
Brokers House
You can consult with brokers such as Zerodha or Angel One. They can provide or arrange shares.
Platforms
You can use different platforms such as unlisted kart, and stockify which can help you get unlisted shares.
ESOP
It stands for Employee Stock Options (ESOPs). Some employees of unlisted companies also sell their company shares. If can consult with them you can get shares.
Things to Consider Before Investing in Pre-IPO Companies
Before Investing in pre-IPO , you should consider this points carefully:
- Evaluate Financials- Check the financials of the company and check valuations carefully. To check financials you can use Google or company websites, They upload their annual statement on their websites.
- Management Team- Read about their promoters and investors and their success stories. Management with an experienced team can contribute to the success company.
- Growth Potential- Research industry growth before investing. Such as the IT sector has rapid growth potential. After IT, the financial sector is very good for investing.
How to Pick the Best Pre-IPO Companies for Investment
Investing in Pre-IPO shares can give you good reward, but choosing and finding the right companies is not easy. Since these companies are unlisted, financial transparency is low, liquidity is limited, and risks are high.
Identify Reliable Sources for Pre-IPO Shares
You need to find Pre-IPO shares from reliable sources.Here are the best ways to access them:
Online Pre-IPO Marketplaces
Platforms: UnlistedZone, Planify, Altius Investech, Stockify
These platforms offer verified unlisted shares from employees & investors.
Check if the platform provides SEBI-compliant reports & due diligence.
Private Equity (PE) & Venture Capital (VC) Funds
Investing through PE & VC funds gives access to high-potential startups. This private ventures already has verified the financials and thus they are invested.
ESOP & Employee Sales
Employees of private startups sell pre-IPO shares for liquidity.
Example: Before Zomato’s IPO, employees sold their shares at a discount.
Evaluate the Business Model & Market Opportunity
After identifying available pre-IPO companies, you need to analyze their business fundamentals.
Understand the Industry & Growth Potential:
Is the company belongs from high-growth sector?
Some Sectors with high Pre-IPO success: Fintech, EVs, AI, SaaS, Healthcare, E-commerce
Example: Nykaa benefited from India’s booming beauty & fashion e-commerce sector.
Market Share & Competitor Analysis
Is the company a market leader or challenger?
Always Compare it with listed competitors.As this will give a clue about it whether it is a leader or competitor.
Example: Before Zomato IPO, analysts compared it to DoorDash & Uber Eats.
Analyze Financials & Valuation
Pre-IPO companies don’t publish quarterly financials like listed companies, so evaluating financials is tricky.
Revenue & Profitability Trends
Is revenue growing YoY?
If the company is loss-making, is there a path to profitability?
Example: Zomato was loss-making pre-IPO but had strong revenue growth.
Valuation Compared to Public Peers
Is the Pre-IPO company overvalued compared to listed competitors?
Check P/E Ratio, EV/EBITDA, Price-to-Sales Ratio.
Example: Paytm was highly overvalued at IPO, leading to a post-listing crash.
Cash Flow & Debt Analysis
Is the company using too much cash?
High debt = high risk in a pre-IPO investment.
Check Management & Investor Confidence
The founders, CEO, and existing investors play a huge role in pre-IPO success.
Who are the Founders & Leadership Team?
Are they experienced entrepreneurs with a strong track record?
Example: Nykaa was founded by Falguni Nayar, an ex-banker with strong leadership.
Which VCs & Angel Investors are Backing the Company?
If top VCs (Sequoia, SoftBank, Accel) are investing, it’s a positive sign.
Example: Flipkart had investments from Tiger Global & SoftBank before IPO.
Promoter Holding & Stake Changes
Are founders increasing or reducing their stake before IPO?
If promoters are selling large chunks before IPO, it’s a red flag.
Tax Implications of Pre-IPO Investments in India
Selling an IPO incurs two types of taxes. So be careful and select those companies which can perform very well in the long term.
1. Short-Term Tax - If you sell your shares 12 months after listing, then 15% of the capital gain tax you have to pay. Chargeable on profit and not on capital.
2. Long-term Tax - If you sell your shares after 12 months of listing, then 10% of your profit is taxable.
Top Pre-IPO Companies to Watch in India (2025)
Here is a list of companies that are still unlisted but have good financials and are ready to invest in pre-IPO.
1. TATA Capital - From the umbrella of the TATA group. The name is enough.
2. NSE- Market Domination in stock exchange in India.
3. Boat - Electronics equipment brand.
4. Flipkart India- Famous online shopping kart in India.
5- NSDL- National Stock Depository Limited. Market domination in depository receipt.
6- SBI General Insurance- From SBI group in India.
Common Mistakes to Avoid in Pre-IPO Investing
- Don't believe in hype or don't do any investment based on market buzz. If you don't understand financial take help from a registered advisor. they will charge some money but they will give the right advice
- Leverage data analytics to identify risks early and adjust your investment strategy for better returns over time.
- Don't put big money in Pre-IPO companies. You can diversify your portfolio. There are many companies which are good and are not listed.
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There are many companies which are good and are not listed.
Buy shares from authorized dealers only. Don't get trapped by sellers.
Case Studies of Pre-IPO Investments in India
Successful Case: Nykaa IPO (2021)
- Pre-IPO investors got shares at Rs 180-200.
- Post-IPO high of 400 Rs.
- Early investors made 2x profits.
Failure Case: Paytm IPO (2021)
- Pre-IPO shares were expensive at Rs 2,150.
- Post-IPO, stock crashed to Rs 500.
- Investors faced 70%+ losses in months.
Mixed Case: Zomato IPO (2021)
- Pre-IPO investors got shares at 76-80.
- Listing at 116, made high 160 but later fell below 50.
- Those who exited early made profits, but long-term holders profits 4x.
Best Sectors for Pre-IPO Investing in India (2025-2030)
Fintech (UPI, Payment Apps, Digital Lending)
EV & Renewable Energy (Battery Tech, Charging Infra)
AI & SaaS Startups (AI-driven automation, Cloud software)
Healthcare & Biotech (Telemedicine, Genomics, Pharma Startups)
E-commerce & D2C Brands (Nykaa-type consumer brands)
Conclusion
Investing in pre-IPO is very profitable and makes you a millionaire if you approach and bet strategically. I strongly believe that if you take calculated risks you will definitely reward yourself. But the point is that before investing, check your list and verify thoroughly.
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