<p><strong>Pre-IPO</strong> refers to the period before a company's Initial Public Offering (IPO), when it is still privately held but preparing to go public.</p>

<h2>How It Works</h2>
<p>During the pre-IPO stage, a company works with investment bankers to determine the offering price, number of shares, and other details of the IPO. It also prepares necessary documents, such as the prospectus, for regulatory approval. Pre-IPO shares are typically held by early investors, employees, and venture capitalists.</p>
<p>In some cases, late-stage investors may sell their shares in the pre-IPO market to other investors, allowing the company to raise additional capital before the IPO. These transactions are often facilitated by secondary market platforms.</p>

<h2>Why It Matters</h2>
<p>Pre-IPO investing can offer high potential returns, as the shares are often bought at a lower price than the IPO price. However, it also comes with significant risks. Pre-IPO companies are typically less mature and have fewer regulatory disclosures, making it harder for investors to assess their value.</p>
<p>For instance, in 2019, WeWork, a co-working space company, saw its valuation plummet in the pre-IPO market due to concerns about its business model and governance. This highlights the importance of thorough due diligence in pre-IPO investing.</p>