Last Updated: January 2026
What Are Unlisted Shares?
Unlisted shares are stock in private companies not traded on public exchanges like the NYSE or NASDAQ. Also known as private stock, pre-IPO stock, or unquoted shares, these securities represent ownership in companies that have chosen to remain private rather than go public.
The market for unlisted shares has exploded in recent years. Companies now stay private for an average of 12 years compared to just 4 years in 1999. This shift has created a $4.7 trillion private market opportunity where investors can access high-growth companies before they IPO.
Think of companies like SpaceX, Stripe, and Databricks—all valued in the tens of billions but still private. Unlisted shares allow accredited investors to buy into these companies years before the general public gets access through an IPO.
Who typically holds unlisted shares?
- Founders and co-founders
- Early employees with stock options or equity grants
- Venture capital and private equity firms
- Angel investors who backed the company early
- Strategic corporate investors
- Secondary market investors (individuals and institutions)
Why Invest in Private Companies?
Investing in unlisted shares offers several compelling advantages for qualified investors:
Potential for Outsized Returns
Early investors in companies like Uber, Airbnb, and Facebook saw returns of 10x, 50x, or even 100x+ their initial investment. While these results aren't typical, the opportunity to invest at earlier valuations can lead to significant gains if the company succeeds.
Portfolio Diversification
Private company stock provides exposure to asset classes and growth stages unavailable in public markets. This can enhance portfolio diversification beyond traditional stocks and bonds.
Access to Innovation Early
Invest in cutting-edge technology, breakthrough biotech, and transformative business models before they become mainstream. You're not just buying stock—you're backing the future.
Important Risks to Understand:
- Illiquidity: You may not be able to sell your shares for years
- Information asymmetry: Private companies disclose far less than public ones
- Total loss possibility: Startups fail frequently—you could lose your entire investment
- Limited rights: As a minority shareholder, you have little control or influence
- Valuation uncertainty: No daily market price means valuation is subjective
How the Secondary Market Works
The secondary market for private stock connects sellers (typically employees or early investors) with buyers (individuals and institutions) who want exposure to private companies.
Here's the typical transaction flow:
- Buyer identifies a company they want to invest in via platforms like Forge Global, EquityZen, or Hiive
- Seller lists shares they want to liquidate (often employees exercising stock options)
- Platform facilitates due diligence, matching, and transaction infrastructure
- Company approves the transaction (most private companies have Right of First Refusal)
- Transaction settles, typically taking 30-90 days from start to finish
- Shares transfer through the company's transfer agent
Platforms typically charge 3-5% transaction fees and may structure deals as direct purchases or through Special Purpose Vehicles (SPVs) that pool multiple investors.
Learn the complete process in our How To Buy guide →
Who Can Invest?
To invest in unlisted shares, you generally must be an accredited investor as defined by the SEC. This requirement exists to ensure investors have the financial sophistication and resources to handle the risks of private securities.
You qualify as an accredited investor if you meet any of these criteria:
- Income test: $200,000+ individual annual income (or $300,000 joint with spouse) in each of the past two years with expectation of the same this year
- Net worth test: $1,000,000+ net worth excluding your primary residence
- Professional certification: Hold Series 7, 65, or 82 licenses
- Knowledgeable employee: Work at the private fund you're investing in
Entities such as trusts, LLCs, and family offices can also qualify if they meet asset thresholds or are owned entirely by accredited investors.
See complete accredited investor requirements and verification process →
Key Considerations Before Investing
Due Diligence Is Critical
Unlike public companies with extensive SEC filings, private companies disclose minimal information. You'll need to conduct thorough research using:
- Company presentations and pitch decks (if available)
- Financial statements (often limited to recent snapshot)
- Cap table analysis to understand share classes and preferences
- Market research on competitive position and industry trends
- Background checks on leadership and major investors
Minimum Investment Amounts
Secondary market platforms typically require minimum investments of:
- $10,000-$25,000 for most retail investors (EquityZen, Hiive)
- $100,000+ for broader company selection (Forge Global)
- $250,000+ for institutional platforms (Zanbato)
Lock-Up Periods and Liquidity Constraints
When you buy unlisted shares, expect to hold them for years. Liquidity events include:
- IPO: Average time from late-stage funding to IPO is 2-4 years, with 6-month lock-ups post-IPO
- Acquisition: Timeline unpredictable, and you may receive acquirer stock instead of cash
- Secondary sales: You can potentially sell to other investors, but finding buyers isn't guaranteed
- Company buybacks: Some companies run tender offers, but these are irregular and at company-set prices
Information Limitations
Private companies are not required to disclose:
- Quarterly financial results
- Executive compensation details
- Risk factors and MD&A (Management Discussion & Analysis)
- Insider trading or major shareholder transactions
You're investing with significantly less information than you'd have for a public stock. Factor this into your decision-making and position sizing.
Featured Resources
How To Buy
Step-by-step guide to purchasing pre-IPO stock through secondary markets, platforms, or direct transactions.
Read the guide →Platform Comparison
Compare fees, minimums, and company availability across Forge, EquityZen, Hiive, and other platforms.
Compare platforms →Valuation Guide
Understand how private companies are valued, what 409A valuations mean, and how to assess pricing.
Learn about valuation →Glossary
100+ definitions of key terms from 409A valuations to QSBS tax exemptions and everything in between.
Browse the glossary →Current Market Snapshot (Q1 2026)
The private markets remain robust despite public market volatility. Key trends include:
Trending Sectors:
- Artificial Intelligence: OpenAI, Anthropic, and other AI infrastructure companies seeing massive valuations
- Fintech: Stripe, Plaid, and Chime continue growth despite regulatory headwinds
- Aerospace: SpaceX dominates secondary market trading volume
- Enterprise Software: Databricks, Canva, and other SaaS unicorns preparing for potential 2026-2027 IPOs
Market Dynamics:
- IPO market showing signs of recovery after 2022-2023 slowdown
- Down rounds less common as valuations stabilize
- Secondary market liquidity improving with more institutional participation
- AI companies commanding premium valuations