Lesson 4 of 8 · About 5 min read · By Lane Kawaoka, PE · Updated November 2026 · Course home

Pre-IPO Shares, SPVs and Access Funds: What You Actually Own

Your question: “When I write the check, what do I hold?”

This is the question promoters tend to skip and the one I’d spend the most time on. Two investors can both say they “own” the same famous private company and hold completely different things with different costs, rights and odds of ever getting paid.

Two Common Ways to Get Pre-IPO Exposure

A primary investment buys newly issued shares as part of a company’s funding round. Your money goes to the company.

A secondary investment buys shares that an employee, founder or earlier investor already owns. Your money generally goes to that seller, not the company. One of our podcast guests compared it to buying a concert ticket from the official box office versus buying one from another fan on a resale site. Same seat, different seller, different price.

A higher resale price doesn’t automatically mean the deal is overpriced. The company may have grown a lot since the seller bought in. But the asking price alone doesn’t prove fair value either. Private secondary shares may also be restricted, need company approval to transfer and be hard to resell.

Access Is Only the First Layer

Getting into a private company is one question. Knowing what you’re buying is another. Many investors don’t hold company shares at all. They hold an interest in a vehicle that holds the shares, or holds an interest in another vehicle that does.

Here’s how the layers can stack up:

Every step in that chain is a layer with its own documents, its own manager and possibly its own fees. Some deals have one layer. Some have three. You want to know exactly how many sit between you and the company.

SPVs and Access Funds

An SPV is an entity set up to make one investment, usually in one company. Investors buy interests in the SPV, and the SPV buys the shares. It’s common because companies don’t want hundreds of small names on their shareholder list.

An access fund is our term at The Wealth Elevator for a private investment vehicle through which investors may get exposure to a sought-after private company. It may hold the company interest directly or through another structure, depending on the transaction. This can open opportunities that need larger checks or established relationships. The tradeoff is that you own an interest in the fund rather than the company shares directly, so the value depends on both the company and how well the vehicle is set up and run.

For any vehicle, ask what it will own, which share class or security it will receive, where it sits in the ownership chain, every layer of fees, how much the manager is investing, your voting and information rights, transfer restrictions, and who controls the timing and terms of an exit.

What Is an Anchor Investor?

An anchor investor makes a meaningful early commitment that helps a fund or allocation reach the size needed to access an opportunity. It works like the large store that gets a shopping center built: its commitment helps get the broader group in the door and can improve the group’s negotiating position.

An anchor’s participation doesn’t prove the deal is priced well or right for you. Ask how much the anchor is investing, whether the commitment is binding, and whether the anchor gets the same economic terms as everyone else. Also find out whether the anchor did independent diligence, receives special rights or is being paid in any way to participate.

Investing Individually vs. Through a Pooled Fund

An individual investor evaluates an opportunity and negotiates whatever terms are available to them alone. A pooled fund combines anchor capital with subscriptions from many investors into one fund. The fund then seeks an allocation and negotiates the economics for the underlying exposure.

Pooled capital doesn’t ensure better terms or access. It can change the size of the conversation a fund manager is able to have with the other side.

Share Classes: Common vs. Preferred

Private companies usually have at least two kinds of stock. Founders and employees mostly hold common stock. Investors in funding rounds usually get preferred stock, which comes with extra rights.

The most important of those rights is the liquidation preference. In a sale, preferred holders typically get their money back before common holders get anything. Hypothetical illustration, not a projection: with a standard 1x preference, a preferred investor who put in $100 million gets the first $100 million of sale proceeds attributable to its shares before common shares share in the rest.

That matters a lot in a disappointing exit. If a company sells for less than it raised, common holders can receive little or nothing while preferred holders are made whole. Many secondary deals sell common stock bought from employees. Know which class you’re buying, and ask how much preference sits ahead of it.

Transfer Restrictions and the Right of First Refusal

Most private companies limit who can own their shares. Common restrictions include:

• Company approval for any transfer, which the company can refuse or delay.
• A right of first refusal, which lets the company (or its investors) step in and buy the shares at the agreed price before you can.
• Blackout periods before an IPO, when no transfers are allowed at all.

Some secondary deals avoid a formal transfer by using forward contracts or other arrangements that promise you the economics of shares later. Those carry extra risk, because the shares may never actually move to you or your vehicle.

How a Sponsor Shows the Shares Really Exist

In secondary deals especially, ask for proof that the vehicle owns what it says it owns, or will own it at closing. Reasonable things to ask for include:

• The share purchase agreement or transfer documents, with confidential terms redacted if needed
• Evidence of company approval for the transfer, or an explanation of why none is needed
• A capitalization or stock ledger statement from the company or its transfer agent showing the vehicle as holder
• Confirmation from the fund administrator or auditor

If a sponsor can’t or won’t show reasonable proof of ownership, that tells you something.

Watch: A Conversation on This Topic

If you would rather listen than read, this episode covers much of this lesson. Use the timestamps to jump to the parts that matter most.

Here is how a pre-IPO offering describes its structure: [paste the description]. Explain what I would actually own, how many vehicles sit between me and the company's shares, what rights and information I would and would not have, and which documents I should ask to see. Use the lessons at thewealthelevator.com/home/resources/angel/ as background. Do not recommend a specific investment, and list what I should confirm with my CPA.

The podcast behind this course

Listen to the Angel Investing podcast

Many people who find this course don’t realize there’s a whole podcast on this topic. Each month I walk through angel and pre-IPO deal terms, due diligence questions and lessons from real conversations with investors.

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