Can you sell your shares in a startup?

It usually comes as a surprise when tech and startup employees learn that they can sell their shares before their startup goes public – this is frequently referred to as liquidity. That’s right: liquidity provides startup employees the ability to find a buyer and sell their pre-IPO shares.

When should I sell my shares?

Investors might sell their stocks is to adjust their portfolio or free up money. Investors might also sell a stock when it hits a price target, or the company’s fundamentals have deteriorated. Still, investors might sell a stock for tax purposes or because they need the money in retirement for income.

Where can I Sell my pre-IPO shares?

A number of web-based companies, such as EquityZen and SharesPost, connect sellers of and investors in pre-IPO shares. Pre-IPO private company stock exchanges are essentially venture capital markets for the masses. An employee who holds stock in a pre-IPO private company can list shares for sale on this market.

Why should you consider investing in pre-IPO companies?

Startups are risky. However, they also have the potential to bring in massive gains. Gains you don’t see on the stock market. That’s why you should consider investing in pre-IPO companies. Let’s look at the details… What Is Pre-IPO Investing? Pre-IPO investing is when you invest in a private company before its initial public offering (IPO).

Does rule 701 apply to pre-IPO options and stock grants?

Almost all companies try to fit their pre-IPO option and stock grants into Rule 701. Otherwise, when Rule 701 does not apply, the company may need to make a rescission offer, as Google did before its IPO. (See its SEC filing amendment and later SEC settlement, which explain what happened.)

What are the requirements for a private stock sale?

A private stock sale must be approved by the company that issued the shares. Some companies may not want their shares spread around. In addition, some employees of startups may feel pressured to hold onto their company stock as proof of loyalty.