A pre-IPO investment or pre-IPO round is the last private fundraising round of a company before its IPO, which is planned for the short or medium term.
On the PRE-IPO platform, these investments can take two forms:
Companies eligible for pre-IPO financing are growing, innovative companies that need rapid stock market listings in order to finance their growth. PRE-IPO obtains from candidate companies (the future “Issuers”) all the documents and information needed to evaluate the proposed fundraising operation. PRE-IPO evaluates the coherence, clarity and balanced character of the information supplied by the Issuer and then conducts a critical review of this information, leading to the selection or refusal of the Issuer based on the following criteria:
PRE-IPO selects financing projects based on these criteria and the eligibility of the Issuer for a stock market listing over the short or medium-term depending on its business sector and growth profile. Only those financing projects selected at the end of this process are proposed to Investors on the Website.
PRE-PO is remunerated in two ways: by the issuers and by the Investors. The remuneration model developed by PRE-IPO aims to align its interests with those of its clients, the issuers and Investors. Issuers only pay as a function of the success of fundraising rounds. Investors only pay when exiting their investment. PRE-IPO therefore has every interest in paying extremely close attention to the quality of its proposed operations.
For the issuers PRE-IPO receives remuneration from the issuers in connection with the realisation of fundraising rounds presented to Investors. This remuneration is proportional to the sums effectively raised. This remuneration, which varies between the different projects, equals between 5% and 8% of the sums raised and depends on the size and complexity of the proposed projects.
For the Investors Registration and subscriptions on PRE-IPO are free for Investors. PRE-IPO is remunerated by the Investors in connection with the sale or reimbursement of their securities. PRE-IPO will receive a Disinvestment Commission equal to 4% all taxes included of the gross amount of the sale or reimbursement of the Investor’s securities. This Disinvestment Commission will be deducted, the case being, from the Performance Commission detailed below. The Performance Commission will equal 20% of the potential capital gain recorded by the Investor after deduction of the Disinvestment Commission described above. In the case where INVEST SECURITIES (operator of the PRE-IPO platform) manages the IPO of the Issuer, PRE-IPO will not receive the Performance Commission in order to avoid any potential conflict of interest. In this case, only the Disinvestment Commission will be charged.
INVEST SECURITIES is an independent, diversified financial services group with offices in Paris, Brussels, Hong Kong and Beijing. The group currently has 110 employees. Overseen a holding company certified by the Banque de France as a Financial Company, the group is engaged in three principal activities:
Each activity and each entity of the Invest Securities Group is subject to rules relating to its independence (Chinese walls) and permanent internal and periodic external supervision, notably by the different supervisory authorities. As a certified Investment Services Provider, Invest Securities has established and maintained up to date an organisational structure and administrative procedures in order to take all reasonable measures to identify, supervise and manage potential conflicts of interest that could arise in connection with its activities. Nevertheless, if a conflict of interests arises relating to a project proposed on the PRE-IPO platform, the Investors will be informed of this conflict of interest.
The PRE-IPO platform is a website operated by Invest Securities that gives the Investors access to investment opportunities selected by Invest Securities. This website is designed to be a crowdfunding website, i.e. featuring restricted access to the details of the financing operations and reserved for validated and approved Investors (see below).
The PRE-IPO platform limits the access to the detailed presentation of the different investment projects to potential Investors who have reviewed and expressly accepted the risks to which they are exposing themselves (see below).
In order to be able to access the detailed information relating to an investment project, the Investor must create an Investor account and have:
A Visitor without a validated and approved account will only have access to a brief presentation of the project to be financed (name of the issuers or code name if the issuer so desires and a brief description of its business, the amount being sought, the date of closing of subscriptions or intentions of subscriptions).
The detailed information notably includes (art. 217-1 of the AMF general regulations):
Professional clients are clients with the experience, knowledge and abilities needed to make their own decisions and correctly evaluate the risks assumed.
The investments accessible on PRE-IPO, like any financing involving unlisted companies, involve several risks, notably the risk of a total or partial loss of capital, the risk of illiquidity and the risk of an absence of valuation. These risks stem from varied factors, notably including :
The minimum investment amount has been set at €2,500 in order to avoid an excessive dispersion of the shareholder structure of the issuing company.
This minimum amount can be increased in certain operations as a result of negotiations with the issuer or the placement procedure chosen.
If you are a natural person residing in France, several tax shelter possibilities can be imagined:
You can potential benefit from the partial deductibility of your investment from income tax or the wealth tax
You can also invest in the proposed operations through a share savings plan or a SME share savings plan depending on the case We advise you to consult with a tax professional in order to select the tax treatment adapted to your situation and the investment under consideration. Information is provided for each operation concerning its eligibility for the different tax measures.
It is generally recommended to invest up no more than 10% of your net wealth in unlisted companies.
The targeted duration of the proposed investments can vary between one and three years. This time period can be longer depending on the time needed to list the company on the stock market under good conditions and to sell the shares on the market without destabilising it. If you have opted for the tax benefits of an investment in an SME in terms of income tax or the wealth tax, you will be obliged to hold your shares for at least five years.
The company could effectively temporarily abandon its IPO project, for example due to unfavourable market conditions. Note that our eligible companies are innovative growth companies that need external financing for their development. In this case, another solution will be found to assure the financing of the company’s development. This could take the form of a capital increase subscribed to by one or several investment funds or equity backing from a major company. Concerning Investor exits, the shareholders agreements negotiated by PRE-IPO for each operation also include four-year rendez-vous clauses that oblige the companies, their managers and principal shareholders to use their best efforts to find an alternative liquidity solution (industry sale, refinancing, LBO, placement of minority stakes etc.).
By the nature of pre-IPO financing, the investment can only be returned after the company is listed on the stock market and potentially after a lock-up period. However, certain issuers could allow sales before the IPO.
Companies preparing for an IPO and using pre-IPO financing generally do not pay dividends, as they are in a phase of strong growth that requires the financing of investments.
For the equity operations, you will be able to participate in the annual general meetings either of the issuer or the holding company covering the Members of PRE-IPO. Information concerning the issuer’s operations will additionally be regularly supplied to Investors.
For certain operations, the fundraising round is conditioned on reaching a minimum amount. If this amount is not reached, the operation will be cancelled and all the funds paid in will be immediately returned to the Investors without any costs.