ETF Spotlight: The Destiny Tech100 — Investing in pre-IPO companies – The Average Joe
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    ETF Spotlight: The Destiny Tech100 — Investing in pre-IPO companies

    victorlei

    October 19, 2021

    investing in pre-ipo companies

    Source: Destiny XYZ

    The founders of Forge Global, a marketplace for private companies, are launching a new exchange-traded fund (ETF) — Destiny Tech100 — which lets investors access private tech companies.

    Just like the SPDR S&P 500 Trust ETF (NYSE:SPY) — which invests in 500 of the largest public US companies — the Destiny Tech100 will invest in 100 high-growth private tech companies.

    • ETF management fee: 2-2.5%.
    • Current portfolio: Instacart, Superhuman and Public.
    • Looking at companies with valuations that can still grow 10-50x.

    The trend: Companies are staying private longer — opting to go public when they’re already massive. This leaves the majority of their growth inaccessible to everyday investors.

    Comparing returns of companies before they go public and after:

    • Before IPO (during the last funding round before going public): Affirm (967%), Airbnb (229%), Doordash (333%).
    • After IPO (when shares were available to retail investors): Affirm (55%), Airbnb (18%), Doordash (9%).

    The new ETF will give investors access to these companies earlier.

    But investing in pre-IPO companies comes with higher risk, often only available to accredited investors — those with $2M+ in assets or $200k+ in annual income.

    • The Destiny Tech100 will be structured so that anyone can invest.
    • Risk will be spread out by investing in 100 different companies.

    When is the ETF coming? The ETF hasn’t officially filed to register — we also don’t know what the ETF ticker will be or on what exchange it’ll be traded. We’ll update you when it does. Join the waitlist here.

    Another way for everyday investors to access fast-growth private companies? Via StartEngine — who’s also raising an investment round for its own company right now.

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