Linqto review: Learn if it’s right for you
Linqto connects accredited investors to pre-IPO shares of private companies. Its minimum investment threshold is lower than competitors, making it an accessible option for those who don’t have an enormous amount of cash. But the range of companies it sells might be too limited for some investors’ interests.
Best for:
- Acquiring shares of private companies
- Portfolio diversification
- High-risk investing
Linqto’s motto is “private investing made simple,” and it aims to help ordinary accredited investors access shares of pre-IPO companies, even if those investors have a relatively limited amount of cash to invest with.
Overall it’s a good platform to at least explore if you’re looking to diversify your investments with private shares, though its selection of shares is relatively small compared to other pre-IPO investing platforms with higher minimum investment requirements.
What is Linqto?
When you hear the term pre-IPO (pre-initial public offering), large billion-dollar corporations and Warren Buffet might come to mind. Pre-IPO refers to the stage in which a private company raises funds before going public, i.e., listing on a public exchange.
Pre-IPO was historically inaccessible to ordinary investors, as most investors don’t have the enormous amounts of cash traditionally required to invest in pre-IPO companies. However, that’s all changing. Today, private investing is more accessible thanks to several new platforms, one of which is Linqto.
Founded in 2010, Linqto is an online investment platform exclusively focused on pre-IPO investing. This platform makes it easier to purchase and sell shares of companies before they become publicly tradable.
How does Linqto work?
Investors interested in accessing private company shares can sign up with Linqto via either its website or mobile app.
It’s important to note that in order to purchase its shares, Linqto requires you to have accredited investor status and requests that you upload supporting documents to verify this status. However, you only have to verify once.
To be considered an accredited investor, you must have one or more of the following:
- An income exceeding $200,000 if you’re single, and $300,000 if you’re married.
- A net worth of over $1 million either individually or with your spouse (not including your primary residence).
- A Series 7, 65, or 82 license in good standing.
To start the process, complete the sign-up form and confirm your accredited investor status by uploading the requested documents. Once you sign up and are verified, you’re ready to make your first investment. The funding process is simple, and Linqto provides you with instructions. New customers have ten business days to fund their orders while returning investors have five business days.
Linqto partners closely with Uphold, a digital platform you can use to buy, hold, send, receive, and exchange a variety of currencies and fund your Linqto orders. Once you link your Uphold wallet to Linqto, you can fund your investments instantly.
How much does Linqto cost?
Linqto brands itself as a ‘zero-fee investment management platform,’ and technically it does not charge management or brokerage fees. It does, however, mark up the price of private shares it buys from companies. In that sense, the fees an investor might pay on other platforms are already baked into the share prices listed on Linqto.
Linqto features
Linqto has some notable elements that distinguish it from other pre-IPO investment platforms.
Low minimum investment
Some pre-IPO investment platforms require a minimum investment of $100,000 or more, which is too high an allocation for many investors, no matter how financially comfortable they may be. Other pre-IPO platforms might allow for a relatively low first purchase amount, but then increase their investment minimums for subsequent purchases. By contrast, Linqto’s minimum order requirement is a consistent $10,000. That low minimum not only makes investing in pre-IPO opportunities more accessible, but also allows you to more easily diversify your portfolio of private investments.
Guaranteed approvals
One reservation you may have with pre-IPO investments is the possibility that an investment will fall through if the company doesn’t approve the share transfer. This isn’t a concern with Linqto because investors are actually making purchases directly from Linqto itself, which already owns the shares you buy on its platform. Therefore, every offer you see on Linqto is 100% guaranteed; there’s no risk of the deal falling through.
That said, investing in private companies is still inherently a risky endeavor, so it’s a good idea to do your due diligence and ensure that you’re comfortable with the level of risk before placing an order.
Referral program
Another perk of Linqto is its referral program. For every accredited investor you refer to the investment platform, Linqto will pay them $250 in Linqto Bucks, which can be used to purchase private shares. If your referral makes their first Linqto investment within 60 days of opening their account, you then get $750 in Linqto Bucks.
Mobile app option
Not all pre-IPO investment platforms allow investors to view and buy shares while on the go. But Linqto members can use the platform on either a desktop computer or mobile device (Android or iPhone). You can even use the mobile app to sign up for Linqto. You’ll find summaries of certain pre-IPO offerings to guide you and help you make an informed decision for your investments, and you can track those investments anytime, anywhere.
Global Investor Conference (GIC)
Linqto hosts a quarterly Global Investor Conference that features a variety of panels and industry experts from around the world. This event allows investors to learn about new developments in private equity and venture investments and gain insights meant to help you with your pre-IPO investments.
The 2022 GIC will be held from May 15-20 in Lisbon. It’s a private event for Linqto customers only and is free to attend.
My experience researching Linqto
Linqto appears to be one of the more user-friendly pre-IPO platforms out there. Checking out the share prices for its listed companies is a refreshingly easy process, and requires potential users to merely register via email. Here’s a screenshot of the platform’s share price display (using Linqto’s own shares as an example):
Some key competitors require users to give out a phone number (hello spam) and/or answer a lengthy questionnaire for share pricing info, which is a bit excessive for what should be easily accessible information.
My biggest complaint about Linqto is that the number of pre-IPO companies it sells is very limited. That said, the shares it does sell are spread out across a surprisingly wide range of emerging verticals, ranging from companies that manufacture autonomous medical supply delivery drones to FoodTech startups specializing in sustainable lab-grown proteins.
Who is Linqto best for?
Newly accredited investors
The low minimum investment might be very attractive to accredited investors with a more limited pool of cash to invest with, or who are looking to diversify their portfolio of private shares across a wide spectrum of companies and industries. A low minimum is also great for those who are relatively new to pre-IPO investing and looking to try it out in a low-stakes framework.
Those who favor a simple approach to investing
Linqto’s terms are very simple and straightforward. The minimum investment level is consistent, and fees are already baked into the share prices they list. So it’s a streamlined approach for those who don’t want to spend extra time calculating the fees they’ll have to pay or keeping track of their minimum purchase tier.
Who shouldn’t use Linqto?
Those looking for variety
Linqto sells shares from a rather limited number of pre-IPO companies. If you’re looking to invest in a more niche industry, it’s quite possible that Linqto isn’t partnered with a company in that field and that you’ll need to look elsewhere to invest.
Investors who aren’t accredited
Most pre-IPO investment platforms, including Linqto, require their users to be accredited investors. If you don’t yet meet the accreditation requirements you can keep investing in publicly tradable companies until your income or net worth grows enough to qualify for platforms like Linqto.
Pros and cons
Pros
- Low minimum investment — $10,000 is a relatively low purchase price for private shares, which makes this a very accessible and inclusive platform for accredited investors.
- Flexible payment methods — You can pay for your orders with either cash or cryptocurrencies, with added flexibility when using Uphold to fund your investments.
- Guaranteed sales — Your purchases won’t fall through, as Linqto already owns the shares it advertises.
Cons
- Limited number of companies — Linqto users can purchase shares from around 40 or so companies at the time of writing this review. There are larger pre-IPO platforms with more companies on offer.
- Accredited investors only — Other platforms may offer a mix of investment options (like crowdfunding early-stage startups) for those who aren’t yet accredited investors.
- Limited customer support — Contact with Linqto support appears to be limited to email only. That said, the company has several social media accounts, like Twitter, which investors could potentially use as an unofficial method of contact.
- Potentially long investment hold times — It might take years before private investments go public (if at all). You must be certain that you’re okay with this potential outcome before investing with any pre-IPO platform.
Linqto vs. competitors
| Linqto | EquityZen | Forge | |
|---|---|---|---|
| Minimum transaction/order | $10,000 | $10,000–$20,000 | $100,000 |
| Fees | Included in share prices | 3%–5% per investment | Typically 5% |
| Companies served | 40+ | 350+ | Thousands |
| Other features | Referral program and global investor conference | Knowledge Center | Share purchases may be subject to first refusal |
EquityZen
EquityZen is similar to Linqto in many respects, in that it sells pre-IPO shares to accredited investors. But its fee structure and minimum investment policy is more convoluted than Linqto’s policies.
EquityZen investments below $500,000 are charged a 5% fee; investments between $500,000 to $1 million are charged a 4% fee; and investments in excess of $1 million are charged a 3% fee. These may be more or less than the fees charged by Linqto, and the only way to compare the fees is to compare a total transaction price from EquityZen (factoring in the fees) with the flat price listed by Linqto for the same company shares.
Minimum investment amounts are similarly tiered: New EquityZen investors can make their first share purchase at a $10,000 minimum. After that each investment minimum is $20,000, until you’ve made five investments or more, at which point the minimum switches back to $10,000.
One clear advantage EquityZen has over Linqto is its catalogue of company shares available to investors—EquityZen offers over 8x as many companies to purchase.
Forge
Forge’s very high minimum investment amount ($100K) makes it far less accessible than Linqto or EquityZen, and it’s likely only a good fit for high net worth individuals who don’t mind investing a substantial amount in one pre-IPO company.
That said, Forge users certainly have no shortage of potential investments to choose from. Scrolling through its list of available shares is like scrolling through Netflix titles—the options feel endless. This is potentially bad news if you’re not sure what vertical you’re interested in investing in, but it’s good news if you have a specific industry or company that you’ve heard about and want to check out. Chances are pretty good that Forge has shares to sell of a startup with strong growth potential in any given field.
Its fee policy is simple, and seemingly comparable to competitors. The flat 5% fee is far more transparent than Linqto’s fee policy, in which fees are included in the share price itself (and it’s therefore not entirely clear how much each investment fee is).
Summary
Linqto simplifies pre-IPO investing and fills the longstanding gap between everyday accredited investors and private companies. If you want to participate in the private market but have a limited investment budget, Linqto is a platform worth exploring.
Linqto itself is a growing, pre-IPO company, and at the moment it has a fairly limited selection of shares to buy compared to its competitors. But there’s no telling where this company might go and what its share portfolio might look like in the future. It’s worthwhile to at least register with the platform to check out the companies it’s currently selling. Perhaps one of them aligns nicely with your own investment interests?
Featured image: M M Vieira/Shutterstock.com
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