Investing in AI Startups Before They IPO

Artificial intelligence (AI) startups continue to attract billions of dollars in investment. They are creating opportunities long before their names become mainstream. Unfortunately, investing before an initial public offering (IPO) can be challenging.

Private companies offer limited financial information, and their valuations are difficult to assess. This means that there are greater risks than with publicly traded stocks. This updated August 2026 guide discusses several ways to invest in AI startups before IPO.

Via Equity Crowdfunding

You can invest in early-stage AI startups by using regulated online equity crowdfunding platforms. These platforms open private company shares to everyday retail investors. According to SEC rules, you must choose a registered intermediary, either a broker-dealer or a funding portal.

How this method helps: Traditional startup investing requires a six-figure net worth or accredited status, but crowdfunding allows smaller investments starting at pocket-friendly amounts.

Best practices:

• Evaluate the founding team
• Prioritize AI startups that use unique datasets
• Diversify your investments

Common mistakes to avoid:

• Chasing AI hype
• Ignoring illiquidity
• Failing to read the fine print

Through Indirect Public Investing

Another way to invest in pre-IPO AI startups is through indirect public investing. This involves buying shares of publicly traded holding companies, closed-end funds, or specialized ETFs that hold private startup equity in their portfolios.

How this method helps: It spreads your risk across multiple private and public tech companies instead of betting everything on a single volatile startup.

Best practices:

• Check the underlying holdings
• Compare the public share price to the actual Net Asset Value
• Evaluate the core business

Common mistakes to avoid:

• Buying at high premiums
• Expecting a direct correlation
• Ignoring management fees

Using Secondary Marketplaces

Specialized private secondary market platforms create opportunities to invest in AI startups before an IPO. These platforms connect current shareholders with approved buyers. Existing employees or early backers can sell their private shares before the public sale.

How this method helps: It offers early access and lets you invest in established private companies rather than brand-new, unproven ideas.

Best practices:

• Use trusted platforms
• Ensure you meet the requirements
• Diversify your picks

Common mistakes to avoid:

• Ignoring high minimums
• Falling for hype
• Tying up needed cash

Here are some secondary marketplaces for investing in pre-IPO AI startups:

EquityZen

Pre-IPO/secondary market definition and mechanics: EquityZen operates a marketplace that facilitates the sale of pre-IPO shares by AI startup employees to accredited investors, providing liquidity without direct involvement from the company.

Accredited investor requirements and verification: To invest on EquityZen, you must have an annual income of at least $200,000 or a net worth over $1 million.

Pricing/fee structure: EquityZen charges a 2.5% transaction fee for both buyers and sellers, though this fee may decrease for investments or sales exceeding $1 million

Share transfer process and company approval: Selling shares on EquityZen involves submitting equity details, working with a specialist, and navigating a closing process that requires company approval.

Valuation methods for private company stock: EquityZen determines private company stock valuations by analyzing proprietary secondary-market transaction data, current supply and demand, and company-specific fundamentals.

Use cases: Diversifying financial portfolios, funding personal milestones for employees, and providing access to late-stage private companies with lower minimums than traditional venture capital.

Kin Insurance specifics: Accredited investors can buy or sell private, pre-IPO shares of the Chicago-based home insurance provider Kin Insurance through the EquityZen marketplace.

Regulatory framework: The company is registered with the SEC and is a member of FINRA and SIPC.

EquityZen is an online financial marketplace that connects accredited investors with shareholders of private, late-stage companies. The platform gives accredited investors access to pre-IPO investments in AI startups. It also enables early investors, former decision-makers, and startup employees to sell private company stock. It essentially opens access to the global secondary market, which reached a transaction volume of $240 billion in 2025.

Pros

• Lower investment minimums
• Offers multi-company funds

Cons

• Limited investment transparency

Hiive

Pre-IPO/secondary market definition and mechanics: Accredited investors can place bids, while sellers, including employees and early investors, can list shares through a dedicated, free interface on Hiive.

Accredited investor requirements and verification: Hiive requires investors to have a net worth over $1 million or an annual income exceeding $200,000 or $300,000 for couples. Verification involves initial self-certification.

Pricing/fee structure: Hiive charges a one-time commission on successful transactions, with buyer fees up to 5% and seller fees ranging between 5.75% and 6.80%. These fees decrease for larger trade sizes.

Share transfer process and company approval: The process on Hiive requires a signed Share Transfer Notice. Transactions are subject to company approval and a potential Right of First Refusal.

Valuation methods for private company stock: Investors on Hiive determine the value of private company stock by analyzing real-time secondary market data, public market comparables, recent funding rounds, and third-party 409A appraisals.

Use cases: Providing liquidity for employees, enabling investors to access private shares, and allowing companies to control secondary trading.

Kin Insurance specifics: Kin Insurance is listed on Hiive as a private, venture-backed company. This means that accredited investors can browse live orders and analyze historical price trends.

Regulatory framework: Registered with the SEC as a broker-dealer and is a member of FINRA and SIPC.

Hiive is a liquidity platform for private companies and their shareholders, according to its LinkedIn profile. It supports investments in different companies, including AI startups. This platform provides access to unicorn companies, which are up 1,290 in 2025. Hiive offers company reports to allow for better investment choices. For instance, potential investors can review the Kin Insurance liquidity analysis before making an investment decision.

Pros

• It is a centralized marketplace
• Allows user anonymity

Cons

• Strict accredited investor requirements

Carta (Carta Liquidity/CartaX)

Pre-IPO/secondary market definition and mechanics: Carta supports secondary transactions by integrating cap table management with liquidity tools to enable verified and structured sales, including tender offers.

Accredited investor requirements and verification: To qualify as an accredited investor on Carta, individuals must have a net worth exceeding $1 million or earn more than $200,000 per year.

Pricing/fee structure: Carta utilizes a tier-based, custom-quoted pricing structure for cap table management charged to early-stage companies.

Share transfer process and company approval: Transferring shares on Carta requires initiating the process in the cap table, entering transaction details, and uploading documents such as transfer deeds. Company administrators must review the request first.

Valuation methods for private company stock: Carta uses market-based, transaction-based, and asset-based approaches to determine the fair market value (FMV) of private company stock.

Use cases: Cap table management, 409A valuations, and fund administration.

Kin Insurance specifics: Kin Insurance is not listed on Carta.

Regulatory framework: Carta operates as a registered transfer agent with the SEC and complies with AML regulations, including the Bank Secrecy Act and OFAC.

Carta, formerly CartaX, is a platform that primarily enables private companies and investment funds to manage equity, valuations, and capitalization tables digitally. The platform facilitates secondary market transactions, allowing accredited investors to purchase pre-IPO stock in AI companies. This is in line with the fact that 87.5% of venture capital investments went to AI in the first half of 2026.

Pros

• Automates cap table management
• Provides real-time portfolio visibility

Cons

• Issues regarding data privacy

Caplight

Pre-IPO/secondary market definition and mechanics: Caplight provides price discovery, live market sentiment, and proprietary data modeling for the secondary markets.

Accredited investor requirements and verification: To trade private-market shares on Caplight, users must verify their accredited investor or institutional status. This requires meeting SEC standards for income, net worth, or professional licensure.

Pricing/fee structure: Caplight operates on custom institutional subscriptions and negotiated transaction spreads, rather than standard pricing.

Share transfer process and company approval: Share transfers on Caplight rely on matching through partner broker-dealers. They are heavily dependent on issuer consent, Right of First Refusal (ROFR) rules, and board approval.

Valuation methods for private company stock: Caplight determines private company stock valuations by using data from primary funding rounds, live secondary markets, and order book analysis.

Use cases: Managing secondary trading, valuation, and research, as well as conducting liquidity and price discovery.

Kin Insurance specifics: Caplight lists an estimated price for Kin Financial Services.

Regulatory framework: Caplight Markets LLC operates as a registered broker-dealer under the SEC and FINRA.

Caplight is a financial platform that provides pricing data, analytics, and trading infrastructure for private market and venture-backed assets. This platform allows accredited investors to access early-stage companies, including pre-IPO AI startups. Since the median age of companies at IPO is now 13 years, this platform provides a dashboard to track them and execute trades while they remain private.

Pros

• Offers real-time pricing
• Provides anonymous trading conditions

Cons

• May not reflect exact execution prices

Comparing These Private Secondary Marketplaces

While several platforms offer accredited investors access to shares in pre-IPO companies, they offer varying features. For instance, some platforms have lower minimums while others charge standard fees. Here is how they compare:

Conclusion

You now know how to invest in AI startups before they IPO through equity crowdfunding, indirect public investing, and private secondary marketplaces. You must balance accessibility, diversification, costs, investor requirements, and potential risks before investing.

Next Steps

• Compare investment methods based on your eligibility and budget
• Review fees, minimums, and liquidity restrictions
• Evaluate the underlying companies and investment risks
• Choose an approach that best fits your financial goals and risk tolerance

FAQ

Can non-accredited investors invest in pre-IPO AI startups?

Some equity crowdfunding platforms allow retail investors to participate with smaller amounts. However, many private secondary marketplaces require accreditation.

What risks should investors consider before investing?

Investors should consider illiquidity, limited financial information, uncertain valuations, and high fees. They should also pay attention to the company’s approval requirements and the risk of losing their investment.

What happens if a private company rejects a share transfer?

Transactions often require company approval or are subject to a Right of First Refusal. When companies reject share transfers, they potentially prevent or delay the intended secondary-market sale.