Pre IPO Investment presents thrilling chances for portfolio diversity, early access to rapidly expanding businesses, and large rewards. However, there are serious hazards associated with it as well, including issues with liquidity and a lack of transparency.
Pre-IPO investing has become an attractive avenue for investors looking to capitalize on the growth potential of companies before they officially enter the public market. This investment strategy allows individuals and institutions to purchase equity or convertible debt in a company prior to its Initial Public Offering (IPO).

Investors who participate in pre-IPO rounds should hold their shares for a minimum of six months following the IPO date. This holding period also known as lock-in period helps to stabilize the stock price post-IPO, as it prevents an influx of selling immediately after the shares become publicly traded.
Since pre-IPO opportunities are typically limited to a select group of investors, there is less competition compared to buying shares during an IPO.
The purchaser gets the shares at a discount from the IPO price. The discounted price is compensation for uncertainty.

For Business
It also is a way to offset the risk that the IPO price will prove to be optimistic, and the price will not go up immediately after it opens.
By raising funds before the IPO, companies can offset the risk that the IPO price may be set too high, which could lead to a decline in stock price once trading begins.