What is Pre-IPO?

Pre-IPO investing gives you access to shares of late-stage private companies before they become available on public stock exchanges. These are generally well-known, highly sought-after companies that may go public in the coming months or years, though the timing is never certain.

Why invest in Pre-IPO?

Investors are typically drawn to Pre-IPO investing for a few reasons:

• Higher return potential: Companies now stay private longer and do more of their growth before they list, so more of the value creation that once happened on public exchanges now happens before a company ever reaches one. These are late-stage businesses, typically with products in market, revenue, and institutional funding behind them, so the failure risk common to early-stage startups is reduced, though never removed.

• Portfolio diversification: Pre-IPO investments tend to have low correlation to publicly traded stocks and bonds, which can help reduce overall portfolio volatility. Because they are not traded on public exchanges, their valuations are also generally less affected by market sentiment, news cycles, or short-term price swings.

• Exposure to innovation and secular growth themes: Many of the companies shaping major technological and economic shifts, such as artificial intelligence, fintech, and digital infrastructure, remain private and are accessible primarily or exclusively through private markets. Pre-IPO investing provides a way to hold specific companies driving these themes before any public listing.

Pre-IPO vs. IPO

Who can invest

To access Pre-IPO opportunities at Questrade, you must meet all of the following criteria:

• Accredited investor status: You qualify with pre-tax income over $200,000 CAD (or over $300,000 CAD combined with a spouse) in each of the last two years, with a reasonable expectation of the same this year; or financial assets (such as cash and investments), net of related liabilities, over $1,000,000 CAD alone or with a spouse.

• Residency: Be a Canadian resident outside of Quebec (Quebec coming soon) who is not a U.S. person (e.g., a U.S. citizen or U.S. tax resident).

The minimum investment starts at $5,000 USD per order and must result in whole units (no fractional units). Minimums may vary by offering and are disclosed on each offering page.

Before you can invest, you must verify as an accredited investor at Questrade by submitting proof of income or net assets, or auto-qualify via existing net assets at Questrade. Verification can take up to 5 business days. Once verified, your status is valid for 12 months. 

See How to verify as an accredited or eligible investor for details.

Account types and currency

Pre-IPO investments are only available in self-directed individual Cash or Margin accounts. You cannot trade on margin. Joint, corporate, trust, registered, and managed Questwealth accounts are not eligible.

Pre-IPO investments are priced and settled in USD. You can invest using CAD or USD. To place an order, your combined USD buying power must be sufficient to cover the investment amount plus the transaction fee.

Fees

Two one-time fees, fully disclosed on each offering page before you invest.

• Transaction fee: A one-time fee as a percentage of your investment amount, charged at the time of purchase.

• Distribution fee: A one-time fee calculated as a percentage of the fair market value of your investment at the time of distribution, before any taxes and fees. It's automatically deducted from the distributions you're entitled to following a liquidity event (such as an IPO or acquisition) and the end of any lock-up period. The fee percentage reflects the length of time between your investment date and the liquidity event. 

The exact fee percentages are disclosed on the offering page and in the subscription documents.

Key risks

Pre-IPO investments carry risks beyond the general risks of Private Markets investing.

• Your capital is illiquid. You can’t sell or redeem your position until a liquidity event happens. Expect to hold this investment for years.

• Returns aren't guaranteed. The company could decline in value, delay its IPO indefinitely, or fail altogether. You could lose the entire amount you invest.

• Information is limited. You won’t have access to standard financial statements or internal valuations. You are making your move with far less transparency than you would in the public markets.

• Each investment is concentrated in a single company. Any poor performance by that company hits your position directly.

• Even after a successful IPO, share prices can drop. When lock-up periods end, early investors often sell, adding supply to the market and potentially driving the price down.

• Cross-border tax considerations. The U.S. fund structure can mean less favourable tax treatment for Canadian investors compared to holding equity directly. Talk to a qualified tax advisor before you invest.

The bottom line: Only commit capital you are entirely prepared to lose.

How it works on Questrade

Each Pre-IPO offering on Questrade is structured as a dedicated special purpose vehicle (SPV), a Canadian limited partnership created to invest in one private company on behalf of its investors. Rather than buying private shares directly, you buy units in the SPV, which holds the company's shares either directly or through a third-party fund. Each unit represents entitlement to a portion of the underlying shares, which are sourced from existing shareholders such as employees and early investors. This structure lets the fund pool investors and acquire shares in institutional-size blocks, resulting in more favorable economics and investment minimums well below the amount typically required for direct share purchases.

When you place an order, your buying power is reduced by the full order amount, meaning your investment plus the transaction fee. You can cancel your order any time before the offering closes. Once the offering closes, your order becomes a binding commitment. When allocations are made one business day later, cash is drawn from your account for the amount you are allocated and buying power is restored for any unallocated portion.

Following an IPO and any lock-up period (usually 90 to 180 days), your entitlement is distributed into the Questrade account you used to invest. Distributions may be in the form of public shares, cash, or a combination, depending on offering terms, and are net of applicable taxes and fees.

Full details on the structure, fees, terms, and risks for each opportunity are provided in the deal documents before you invest.

How units are allocated

Units of Pre-IPO offerings are limited and allocated on a first-come, first-served basis by time of order submission, each filled in full where possible. Allocations occur one business day after the fund closes. 

When you submit an order, your buying power is reduced by the total cost (investment amount plus transaction fee). For orders placed on weekends, buying power is reduced on the next available business day.

You can cancel your order at any time before the offering closes. Once the offering closes, all orders are final.

At time of allocation after the offering closes, if not enough units remain to fill your order in full, you may receive a partial allocation. Your original order is marked as rejected and a new order is created for your allocated quantity. If no units remain, your order is rejected. Buying power for any unfilled portion is restored by the end of the next business day (ET).

Questrade Plus  subscribers get first access to place orders, followed by waitlist members for that offering, then all other clients.

You can also join waitlists for upcoming opportunities to express interest and receive early access when those offerings become available.

Tracking your investment

Your Pre-IPO position appears as a Private Markets holding in your account. Net Asset Value (NAV) updates are generally expected quarterly, though timing may vary. Because private companies are not priced daily, the reported value is an estimate and may differ from what you receive at distribution.

What happens when the company goes public

When the company goes public, there is a standard post-IPO lock-up period (typically 90 to 180 days, exact duration by offering) during which shares cannot be sold or transferred. Once the lock-up expires, your entitlement is distributed to your Questrade account proportional to the number of units you hold, net of any applicable taxes and fees.

Distributions may be in the form of public shares, cash, or a combination. Distribution typically occurs 10 to 15 business days after the lock-up expires, though timing varies by offering. Any fractional shares are paid out as cash.

What happens if the company is acquired

If the company is acquired, you receive your proportional share of the acquisition proceeds. Depending on the terms of the acquisition, this may be distributed as cash, public shares (if the acquirer is publicly traded), or a combination. The distribution mechanics are similar to an IPO, with proceeds distributed to your Questrade account net of any applicable taxes and fees.

What happens if there is no liquidity event

A liquidity event, like an IPO or a company sale, is what lets you exit your investment. Until one happens, the fund keeps holding the position. There's no set timeline, and your capital could stay locked up for years. 

Tax considerations

Our Pre-IPO offerings are intended to keep U.S. tax filings at the fund level, so we do not expect you to have to file anything with the IRS yourself. This isn't guaranteed, as it depends on how the liquidity event is ultimately carried out and on the tax laws in effect at that time.

Distributions are expected to be characterized as a capital gain. You'll receive a T5013 tax slip (Statement of Partnership Income) for your Pre-IPO investment. Each fund structure is unique and needs to be evaluated on an individual basis, as different features may give rise to different tax treatments.

Everyone's tax situation is different, so we strongly recommend speaking with a qualified tax advisor before you invest.

Common misconceptions about Pre-IPO investing

"Pre-IPO always means a lower price"

Not necessarily. Late-stage private companies can carry substantial valuations driven by growth expectations, previous funding rounds, and investor demand. Buying before a public listing does not guarantee a lower entry point than the eventual IPO price.

"Pre-IPO investors can sell immediately after an IPO"

No. Pre-IPO investors are typically subject to a post-IPO lock-up period (typically 90 to 180 days) during which shares cannot be sold or transferred. On Questrade, your distribution occurs after the lock-up expires, not on the day the company lists.

"All investors can access Pre-IPO shares"

Pre-IPO investing on Questrade is restricted to accredited investors who meet the eligibility requirements under NI 45-106. Access also depends on offering availability, account type, and residency. See Who can invest above.

"A popular company always makes a good investment"

Public attention and investment fundamentals do not always move together. Valuation, financial performance, competitive position, and execution all influence outcomes. A well-known company can still decline in value, delay its IPO, or fail entirely.

Pre-IPO vs. Private Credit

Both strategies give you access to the Private Markets, but they play very different roles in your portfolio.

• Pre-IPO investing is an equity play. You’re looking for private company growth, with your returns tied to a major liquidity event such as an IPO or an acquisition. Until that happens, your capital is locked in.

• Private Credit focuses on lending. The goal is to generate returns through interest income and principal repayments on a much more predictable schedule. Depending on the fund’s terms, you may also have options for periodic redemptions.

Ready to invest? Browse available offerings (opens in a new tab) on Private Markets at Questrade, or open an account to start investing.

For the step-by-step process, see How to invest in a Pre-IPO opportunity.