Investing in Companies Pre-IPO

**SPEAKER_1** (0:01)
Welcome to the Money Tree Investing Podcast.

**Kirk Chisholm** (0:04)
Stock market, wealth, personal finance, value stocks.

**Christine Healey** (0:08)
Invest in your life.

**Kirk Chisholm** (0:11)
Hello, Smart Money Tree Podcast listeners. Welcome to this week's show. My name is Kirk Chisholm, and I'll be your host. So today, I'm joined with Christine Healey. How are you doing, Christine?

**Christine Healey** (0:19)
Thanks so much for having me, Kirk.

**Kirk Chisholm** (0:20)
I'm doing great. Glad to have you on. So Christine, tell us a little bit about your background.

**Christine Healey** (0:23)
I've been full-time the past eight years or so in this exciting world of pre-IPO investments.
So helping people, institutional funds, et cetera, to invest in companies like Stripe, Anthropic, SpaceX, OpenAI before the public listing. So a little bit different from public investing, but it's a really fun area for the right type of investor, and I've been full-on focused on that space the past almost decade now.

**Kirk Chisholm** (0:50)
That's cool. I remember when I started, you were royalty if you could get access to IPOs. Everyone wanted your attention, but now only the big top warehouses got IPOs. Now it seems like it's not the case, is it?

**Christine Healey** (1:01)
I think access is growing more and more. It used to be very much just you had to know a person, or you had to be a billionaire or a professional venture capital investor to get access to some of these top companies.
There's more access than ever, but also more and more people are rushing to this market as service providers, so quality is very hit or miss. So I also think a lot of people are just trying to figure out who they can trust in this market. Maybe they're getting an offer for SpaceX now, but it's some cold offer in their email inbox. It seems a bit spammy, so that's a new phenomenon, even though there's a bit more access than there used to be.

**Kirk Chisholm** (1:35)
I think the interesting part is people just don't understand the new space. Like you said, even advisors like myself, I had to hunt around to find somebody who knows what they're talking about, and even then access is very limited.
Talk a little bit about the space and the kinds of investors that are investing in the space now.

**Christine Healey** (1:54)
For starters, I think the reason why the space is so interesting, which might not be obvious to the average investor, is that these high-tech companies are staying private longer and longer, where now it's not uncommon that a company could be close to 20 years old, in the case of Reddit, by the time they IPO. In the past, IPOs might happen at year five or at some point much earlier in the life cycle. What happens when these super exciting pioneering companies like SpaceX, like the AI companies are kept private so long, is they can in some cases be trillion dollar companies by the time they actually list and are available to the everyday person.
If the everyday person can't find them on their brokerage app and invest until they're already a trillion dollars, then all of that growth and that reward really from zero to in some cases, one trillion dollars is only kept in the hands of those professional investors, those billionaires and those insiders that were able to invest while it was private. Sometimes it's the leftovers in terms of growth cycle that are actually available to the average public investor. That's why it's really so exciting and so important in a lot of ways to get more people realizing this and getting more involved in the private markets so long as this phenomenon continues and that's where a lot of the growth is staying.

**Kirk Chisholm** (3:23)
I think it's been great in the last 20 years that people have more access than they used to.
But why are these companies waiting longer? You got these huge trillion dollar companies, why are they waiting? Why don't they just go public earlier?

**Christine Healey** (3:35)
It mostly comes down to control, in my opinion. If you are an Elon type figure, you're trying to achieve some moonshot goal, whether it's building human civilizations on Mars, or some of these really intensive AI companies, or robotics with the goal of having humanoid robots in every home doing all of our chores and errands.
These are really big goals that require laser focus, that are moonshots, that are maybe not probable, but considered important to humankind. These CEOs want to keep tight control over everything from their financials and keeping those secret and not blasted out everywhere to their cap tables and not having just anyone as an investor in their company. And the appeal of an IPO is probably not what it used to be. If you can access robust private capital markets, is there really enough upside of going public to justify all the extra labor and distractions that going public would involve, like quarterly disclosures and things like that? So if I were sitting in the CEO seat of one of these pioneering companies, personally, I would be thinking about staying private a lot longer as well to make sure that I can stay laser focused on my mission.