The most searched questions in private markets are also the least well answered. Tens of thousands of people each month search for the share price of companies that have no share price, the ticker of companies that have no ticker, and the method of buying equity in companies whose registers are closed by design. The volume of that demand has produced an industry of intermediaries positioned to meet it, and the quality of that industry ranges from properly regulated to outright fraudulent.
This page is a permanent reference on what is actually purchasable, through which routes, and on what terms. It names no platform, recommends no transaction and carries no view on whether any specific company is worth owning. It sets out the structures, because the structure is what determines whether an exposure is real, what it costs, and what the buyer is actually holding when the company finally lists.
Route One, Direct Secondary Purchase
The first route is a direct purchase of shares from an existing holder, typically an employee or an early investor, executed with company approval and recorded on the register.
This is the cleanest structure available. The buyer holds the shares, appears on the register, and receives whatever information and voting rights attach to that share class. It is also the least accessible route. It requires accreditation, it requires a minimum size that generally excludes retail participation, and it requires the company to approve the transfer, which is the step that most often fails. Direct secondaries in the most sought after private companies are usually arranged for institutions and existing relationships rather than sourced by outside buyers.
Route Two, The Special Purpose Vehicle
The second route is the one most retail investors actually encounter, and the one most frequently misdescribed in the marketing that surrounds it.
A special purpose vehicle is an entity formed to hold a single asset. A sponsor acquires shares from an eligible seller, places them in the vehicle, and sells units in the vehicle to investors. The investor's exposure tracks the shares economically, but the investor holds a unit in a fund, not a share in the company.
Four consequences follow, and each should be confirmed in writing before any commitment is made.
The first is the fee stack. The sponsor charges a management fee and takes a carry above a return threshold. The second is layering. It is common for one vehicle to hold units in another vehicle rather than holding shares directly, and stacks of two or three layers exist in the market. Each layer carries its own fee and its own carry, and a stack can absorb a material share of the eventual return before anything reaches the end investor. Establishing how many layers sit between the investor and the underlying shares is the single most valuable question available, and a sponsor who is unwilling to answer it in writing has answered it.
The third is information. The vehicle holder receives what the sponsor chooses to pass through. Private companies of this profile share limited financial information even with direct holders, and the sponsor is under no obligation to relay what it does receive.
The fourth is control of the exit. At an initial public offering the vehicle receives public shares, holds them through the lock up, and then either distributes shares in kind or sells and distributes cash. The timing is the sponsor's decision rather than the investor's, and that choice can materially change the realised return.
Route Three, Forward Contracts
The third route carries the most counterparty risk and discloses it the least. In a forward contract the buyer pays now for delivery of shares, or of their cash value, at a defined future event, typically an initial public offering. No shares change hands at the point of payment.
What the buyer holds is a contractual claim against the seller. If the seller's shares are subject to a transfer restriction, if the seller's employment ends and unvested equity lapses, if the company withholds approval, or if the seller's own financial position deteriorates before the event, the claim may prove unenforceable in practice regardless of what the document says. Forward contracts are legitimate instruments used by sophisticated parties who understand and price counterparty risk. They are also frequently sold to retail buyers who have been told they are buying shares.
Route Four, Listed Proxies And Listed Funds
The fourth route requires no accreditation, no minimum size and no lock up, and it is the one least often presented to people searching for pre-IPO access.
A listed proxy is a publicly traded company whose value is materially driven by a stake in, or an economic dependence on, the private company of interest. The exposure is partial and diluted by whatever else the listed company does, which is a genuine limitation and also a genuine reduction in concentration risk.
A listed fund is a publicly traded investment trust or closed end fund that holds private positions, including in the largest private technology companies, and discloses those holdings in its periodic reports. These vehicles trade on an exchange at a price that can sit at a discount or a premium to their stated net asset value, which introduces a dynamic of its own, but they are liquid, they are regulated, they publish their holdings, and they can be bought in any size.
For the large majority of people searching for a way to own a piece of a private company before it lists, this is the route that actually fits their circumstances. It is rarely marketed to them because it generates no placement fee for an intermediary.
What A Headline Valuation Actually Means
A recurring source of error is treating a company's reported valuation as though it were a share price.
A headline valuation is derived from the most recent primary funding round, and it reflects the terms negotiated in that round. Preferred shares issued to institutional investors typically carry liquidation preferences, anti dilution protection and other rights that common shares do not have. A valuation computed by applying the preferred share price to the entire share count therefore overstates what a common share is worth, sometimes substantially.
Secondary transactions reflect this. Trades in the same company can clear at a discount to the implied common price when sellers need liquidity, or at a premium when demand is intense and available supply is constrained. The quoted valuation is a reference point set by a negotiation between two parties, not a market clearing price available to a third.
The Lock Up Is The Step Most Buyers Overlook
The event that most pre-IPO buyers are underwriting is the listing itself, and the listing does not deliver liquidity to them.
Shares held before an offering are almost always subject to a lock up, conventionally one hundred and eighty days, during which they cannot be sold. The buyer therefore holds an illiquid position throughout the period in which the public market is establishing a price, and the expiry of a large lock up is itself a well documented source of downward pressure as previously restricted supply becomes tradeable.
An SPV holder sits one step further removed again. The vehicle holds through the lock up and then decides when and how to distribute. A buyer who assumed the listing was the exit may find that the actual exit falls a year or more later, at a price bearing little relation to the one that appeared on the first day of trading.
Distinguishing Legitimate Offers From Fraud
Regulators publish investor alerts on unregistered pre-IPO share sales because the category attracts fraud reliably. The markers are consistent across cases.
Urgency is the most common. A legitimate private transaction does not expire this week, and an allocation described as reserved and closing shortly is a sales technique rather than a market condition. Opacity is the second. A legitimate sponsor will state in writing the identity of the underlying seller, the number of vehicle layers, the full fee and carry schedule, and the specific conditions under which the transaction can fail. Anything less than that should end the conversation. The third is any suggestion that accreditation requirements can be worked around, which is an invitation to participate in a regulatory breach with no recourse when it goes wrong. The fourth is a quoted price presented without reference to the share class it applies to.
Where The Money Actually Goes
A useful exercise before committing to any vehicle is to trace a hypothetical unit of return from the company back to the investor, because the number of hands it passes through is the number of times it is reduced.
Assume a vehicle holds shares that double in value over a four year hold. A single layer vehicle charging a two per cent annual management fee and a twenty per cent carry above the invested amount returns materially less than double to the investor, because four years of management fees are deducted from the committed capital and a fifth of the gain is taken by the sponsor. Add a second layer with the same terms and the deduction happens twice, on the same underlying gain. Add a third and the investor is paying three managers to hold one asset.
None of that is improper when it is disclosed, and sponsors perform real work in sourcing, diligence and administration. The problem in the retail segment of this market is that the layers are frequently not disclosed at all, and the marketing describes the exposure as though the investor were holding the shares directly. An investor who models the fee stack explicitly, layer by layer, is in a position to judge whether the exposure is worth the structure. An investor who does not model it is relying on the sponsor to have priced it fairly on their behalf.
The same exercise applies to the listed alternatives. A listed fund holding private positions charges a management fee, which is disclosed in its annual report, and it may trade at a discount to net asset value, which is a cost or a benefit depending on the entry point. The comparison worth making is not vehicle against nothing. It is vehicle against the listed alternative, on a fully loaded basis, over the same holding period.
The Institutional Reading
Demand for private company exposure is rational. Companies are staying private for far longer than the previous generation of listings did, and a substantial share of the value creation in the current technology cycle has occurred entirely before any public market participant could access it. That is a real structural change in how equity value is distributed, and it is reasonable to want a position on the other side of it.
The mistake is not wanting access. The mistake is accepting a structure without establishing what it contains. For most people the honest answer is that the appropriate route is a listed fund or a listed proxy, purchased in a size that reflects the concentration risk, held without the fee stack and without the lock up. For accredited investors with the capacity to absorb a total loss and the patience for a multi year hold, a single layer vehicle with fully disclosed terms is a legitimate instrument, and a three layer vehicle with undisclosed terms is not.
The LUMINAIRE editorial desk does not recommend transactions, does not endorse platforms and does not forecast listing outcomes. It publishes the structure, because in private markets the structure is the investment.