M1 Finance is a micro-investing financial management ecosystem that combines a powerful app, automated investing algorithms, and other helpful tools to streamline the investment process. The application has received a lot of attention this year as one of the fastest-growing micro-investment apps. Its intuitive interface makes integrating sophisticated wealth-building strategies easier than ever. As such, demand for M1 Finance shares continues to increase.
M1 Finance has carved out a position as a top-performing financial app with millions of users and a growing list of strategic partnerships. The company hasn’t stated that it will go public. However, the decision would see strong support from the investment community.
Currently, M1 Finance is a privately owned company, meaning that the only way to acquire shares is via pre-IPO options. This strategy requires a nuanced approach that differs from traditional IPO investing. Here’s how you can get your hands on some M1 Finance Pre-IPO shares.
What is M1 Finance?
M1 Finance entered the market in 2015. Its founder, Brian Barnes, recognized that the average person didn’t have the time or desire to learn about the most effective investment strategies.
He created M1 Finance as a comprehensive solution to this problem. The platform enables anyone to start investing across a variety of assets and strategies with no prior experience.
M1 Invest
M1 Finance launched M1 Invest as its first product. This automation software directly connected potential investors with pre-built portfolios, allowing anyone to build wealth. Users set up their accounts to participate in these vetted investments automatically.
M1 Finance Smart Transfers
The Smart Transfers feature takes excess cash you have and automatically invests it into your pre-selected portfolios. This approach is popular as it allows consumers to build up their portfolio without the need to add to it manually. The system integrates a High Yield Cash Account that has an APY of 4.25% APY, Notably, these accounts have FDIC coverage up to $3.75M, furthering user confidence.
Low Fees
M1 Finance gained strong user support for its combination of features and low fee structure. The company doesn’t charge commission, trading, or management fees on its high-yield checking accounts. There are transaction fees, but they are minimal compared to competitors.
M1 Borrow
M1 Borrow offers lending services to users. The system allows you to use your portfolio as collateral and secure additional funds for margin trading. This approach provides higher risk and reward exposure. For professional traders, margin trades can improve returns when accomplished correctly.
Owners Rewards Card
Another unique feature that sets M1 Finance apart from competitors is the owner’s rewards cards. Users can spend their funding at retailers globally and secure cashback rewards for their efforts. The average cashback is 1.5% and is currently capped at $200 per month per user, ensuring the financial stability of the program.
Historical Funding Rounds
Summary of M1 Finance Funding:
- Total Funding: M1 Finance secured $333M across 6 funding rounds.
- Largest Round: M1 Finance’s largest funding round secured $150M on Jul 14, 2021.
- Investors: A total of 7 institutional investors back M1 Finance
- Latest Round: The latest funding round raised $150M and was a Series E round held on Jul 14, 2021.
M1 Finance Funding Rounds Breakdown:
- 3 Early Stage
- 3 Late Stage
Key Investors:
M1 Finance has several prominent investors, including SoftBank Vision Fund, Left Lane, Clocktower Technology Ventures, Coatue, Jump Capital, and Chicago Ventures.
Investor and Funding details sourced from Tracxn
Why Invest in M1 Finance?
M1 Finance offers several benefits to investors who can access pre-IPO shares. For one, the project has a strong following with more than +1M active users and +10B in client assets under its control. Its free-to-download investment app ranks high on both Apple IOs and the Google Play Store, ensuring access to millions of potential users in the future.
Regulatory Support
Another reason M1 Finance continues to entice investors is its strong regulatory support. The platform is registered with the Financial Industry Regulatory Authority (FINRA) and has agreements with the FDIC and other regulatory agencies. These agreements allow M1 Finance to offer protections similar to traditional banking, including insured checking accounts and more.
Upgrades
M1 Finance has a pioneering spirit that helps it continually offer new and exciting projects to its clients. For example, the company recently upgraded its dashboard layout to include more features. This streamlined and simplistic approach is easy to learn and offers advanced options like charting for those with more experience.
Additionally, M1 Finance expanded its investments into the decentralized markets. Now users can add cryptocurrencies to their portfolio, alongside the protocol’s other more traditional offerings. This commitment to client demands demonstrates why M1 Finance was able to secure such a strong positioning in the market in the first place.
Secure
Security has always been paramount for M1 Finance. The company’s checking accounts are FDIC-insured as part of this approach. On a more granular level, the company employs enterprise-grade security procedures including two-factor authentication. Also, all data undergoes military-grade 4096-bit encryption, furthering your protection.
Accolades
This year has been a great one for M1 Finance, which received several accolades for celebrating its achievements. Specifically, the company earned Investopedia’s 2024 Sophisticated Investor Award. It also secured Time magazine’s 2024 Best Investing Award, the Moneywise 2024 Best Money Management Award, and the Traders Union 2024 Best Online Brokers Award. Each reward helps to add consumer confidence and drive pre-IPO share demand up.
How to Buy M1 Finance Pre-IPO Shares
The hope is high that M1 Finance will announce plans to go public in the coming months. As such, M1 Finance remains a privately held company, meaning that you will need to utilize a specialized approach to get access to shares. Here is what you need to consider.
1. Pre-IPO Secondary Marketplace
Secondary markets are purpose-built exchanges that connect pre-IPO shareholders with potential investors. These marketplaces can offer these assets because they work closely with employees, early-stage investors, and venture capitalists, which are crucial to the company’s pre-IPO growth.
Investing in pre-IPO shares for M1 Finance could open the door for additional ROIs if the company’s valuation is less than when its IPO launches. It’s common for company valuations to increase following an IPO. As such, it makes sense to add pre-IPO shares to your portfolio before the firm announces plans to go public.
Secondary marketplaces have many requirements. Here are some concerns you should be made aware of:
Eligibility: Notably, this approach requires you to be an accredited investor, meaning you will have to show at least $1M in liquid assets to qualify.
Liquidity: Pre-IPO shares can’t be traded like regular shares. They often include some lockup restrictions that prevent you from trading them before the IPO. Some firms have permanent “no sell” clauses that prevent any transfer of the shares following your investment.
Linqto is a reputable investment platform that connects accredited investors with pre-IPO shareholders securely. The network streamlines pre-IPO investing via an easy-to-navigate interface that provides access to all relevant data at a glance. Accredited investors seeking pre-IPO shares in M1 Finance should consider Linqto.
Visit Linqto →
2. Private Equity Firms
Private equity firms gain access to pre-IPO shares during investment rounds. They then offer these shares to high-net-worth accredited investors with a commission. Notably, private equity firms are known to have extra stipulations, including blocking the sale of shares for years in some cases.
3. Employee Equity Sales
Many consider employee equity sales as the best way to acquire pre-IPO shares in M1 Finance. This method of acquiring pre-IPO shares requires you to connect with former employees. It’s common for companies to issue shares as part of an incentive package. Notably, this profit-sharing method has become more popular, leading to more pre-IPO share opportunities for investors.
Private Transactions: there are a lot of hoops you will need to jump through to complete a private pre-IPO transaction, including creating specific legal agreements, conducting valuations, and setting in place any limitations on the transfer of the asset.
Brokerage: Brokers will take a lot of the confusion out of the pre-IPO process. These professionals can guide you through each step, ensuring full compliance and avoiding common errors untrained professionals make.
There are several risks that you should consider before jumping into the pre-IPO shares investment arena. Here are the top concerns:
Liquidity Risk
If you are looking for an asset that you can sell right away, pre-IPO shares are not the best option. These investments can include sales and transfer clauses that prevent the transfer of the asset until certain criteria, such as the IPO’s completion. It’s even common for pre-IPO shares to require you to wait years before gaining the ability to sell your assets.
Regulatory Risk
The blockchain market has seen considerable scrutiny from regulators and lawmakers. While the technology is far better understood than in its early days, there are still many lawmakers who see it as a threat to the traditional financial system. As such, you need to always consider how new regulations could affect the value of your pre-IPO shares.
Market Risk
Purchasing pre-IPO shares in M1 Finance means that you stand behind the project and its team. The company has secured a reputation for excellence and has previously expressed a desire to go public. However, no concrete data has been provided yet. As such, it’s vital to understand that the blockchain market is an active space that experiences strong fluctuations that could result in a different share value between now and any future IPO launch.
Valuation of M1 Finance and Future IPO
M1 Finance has a valuation of $1.45B as of Jul 14, 2021. The company qualifies as a Unicorn. It continues to receive strong inventor support from institutional groups, which see the application as a direct gateway to millions of micro-investors. Impressively, the dapp now has +500K members and manages +$8B in assets.
M1 Finance secured this high valuation due to a combination of providing new and high-demand features coupled with institutional-grade security. The company’s decision to offer FDIC-insured accounts and its addition of cryptocurrency services demonstrates how executives can balance new options with old reliable features clients want.
If M1 Finance announces plans to go private in the coming months, it will be met with a flurry of investor support. Traders have long wanted to get in on this company’s success and its future offerings. As such, a M1 Finance IPO could result in one of the largest IPOs to date.
Investing in M1 Finance Pre-IPO Shares Conclusion
Pre-IPO shares of M1 Finance are in high demand due to the company’s positioning and prospects. The micro-investing sector is on the rise, and M1 Finance has cemented its position as a market leader. Despite these positive qualities, it’s wise to do extensive research on any firm before making pre-IPO share investments.
You should personally review the company’s financials and history in depth. From there, a financial expert should be consulted to ensure the investments remain within your risk appetite. If you complete these tasks and find that the investment is a good fit, M1 Finance Pre-IPO shares present a unique opportunity to those able to obtain them.
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Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. Pre-IPO shares are typically available only to accredited investors and carry significant risk. Always perform thorough due diligence and consult a financial advisor or legal expert before making investment decisions.
