SPVs and the Shadowy World of Pre-IPO Trading
Private company share trading is booming, with accredited investors increasingly accessing pre-IPO shares through platforms like EquityZen and Forge Global. However, these trades often involve Special Purpose Vehicles (SPVs), which own shares of the operating company, bypassing securities laws designed to limit the number of investors. This allows companies to stay private longer and raise capital, but it also exposes investors to opaque funding vehicles with hefty fees and limited transparency. The underwhelming IPO of CoreWeave highlights the risks, suggesting that reliance on private markets isn't sustainable without a robust public market for accurate valuation. The system exposes moderately wealthy retail investors to significant dangers.