If you are confused about how to invest in private companies, then don’t worry this blog would help you with your things.
Who Can Invest?
Accredited vs Non-Accredited Investors
How to invest in private companies starts with knowing which door you can walk through.
In the United States, the SEC calls high-net-worth individuals “accredited investors.” You qualify if you:
– Earned $200 k+ (or $300 k with spouse) the last two years and expect the same again, or
– Hold $1 M+ in liquid net worth, not counting your primary home.
Accredited status unlocks Rule 506(b) deals—early-stage rounds, growth equity, or pre-IPO secondaries—where minimum tickets usually run $25 k–$250 k. Platforms such as EquityZen, AngelList Rolling Funds, or Forge show these listings after verifying your accreditation letter. Upload a recent tax return or net-worth certificate; approval takes 24–48 hours.
Non-accredited investors have smaller doors, but they are wide enough to start.
Reg A+ offerings
Think of these as “mini-IPOs.” A company can raise up to $75 M from the public each year. You can invest ₹50 k or ₹5 lakh—whatever fits your budget. Shares are delivered in a brokerage account and may list on OTC or NASDAQ later.
Reg CF (crowd equity)
Start-ups cap raises at $5 M per year. Minimum investments start at $100 on portals like SeedInvest, Republic, or Wefunder. In 2024, Indian residents used Liberalised Remittance Scheme limits (currently $250 k per year) to park ₹37 crore into U.S. Reg CF deals, mostly fintech and climate-tech names.
Real example
Anita, 29, Bengaluru, earns ₹18 lakh a year—below the U.S. threshold. She put ₹2 lakh into Reg CF rounds for a B2B payments start-up via Republic. A follow-on Series B valued the firm 3× higher, turning her stake into ₹5.7 lakh on paper within 18 months. Liquidity is still limited, but early signs look strong.
India angle
Domestic start-up investing is restricted to “accredited” or “eligible” investors under SEBI rules. Retail access is coming soon through the proposed “Start-up Equity Crowdfunding” framework. Until then, Indian investors can:
– Back AIF Cat I angel funds (min ₹25 lakh)
– Use LRS to join U.S. Reg A+/CF offers, or
– Buy listed PE/VC ETFs on NSE (e.g., ICICI Pru India Venture, Edelweiss AMC ETFs)
Quick checklist before you wire money
1. Verify platform SEBI or SEC registration.
2. Read the offering circular—note valuation, liquidation preference, and exit timeline.
3. Budget only what you can lose; private holdings can stay locked 5–10 years.
4. Save pdf copies of share certificates and Form D filings for tax time.
5. Track rounds in a simple spreadsheet: date, valuation, IRR target, next funding event.
New to investing basics? See our investing for beginners India guide first, then return here to pick the private-market route that matches your wallet and risk badge.
Ways to Invest in Private Companies
Investment Routes Overview
Understanding how to invest in private companies means exploring multiple paths, each with its own requirements and opportunities. Three common routes include angel groups, private equity (PE) ETFs, and secondary markets.
Angel Groups
Angel investing involves pooling funds with others to back early-stage startups. These groups provide not just capital but also mentorship. Examples include platforms like AngelList and Hiive, where membership standards and minimum investments vary but often start around $10,000. This route offers excitement and growth potential but comes with high risk and limited liquidity.
Private Equity ETFs
For investors seeking exposure to private companies without direct holdings, PE-focused exchange-traded funds offer diversification and liquidity. These funds invest in venture-capital-backed firms or buyouts before they list publicly. Indian investors can access options like ICICI Prudential’s India Venture Fund via the NSE. PE ETFs tend to have management fees around 1% and less volatility than individual startups.
Secondary Markets
Secondary platforms like EquityZen and SeedInvest enable buying shares from existing employees or early investors, often in unicorn startups like SpaceX or Stripe. These markets are limited to accredited investors and require verification. Minimum investments usually start at $25,000 but allow access to private companies closer to an IPO or acquisition.
Each route carries trade-offs between investment size, risk, and liquidity. Using AI-powered tools to analyze deal flow and valuations can help refine choices; for a curated list, see our best AI investing tools.
Exploring these investment methods arms you with more options to shape your private-company portfolio. Careful selection and due diligence will remain your strongest allies. The private market rewards patience and informed decisions over quick wins.
