Pre-IPO investing for qualified investors: Switzerland, the EU and the US
Who is a qualified investor in Switzerland? Professional and institutional clients, under Swiss law. Since 1 January 2020 the Financial Services Act (FinSA) has also let wealthy private clients ask to be treated as professional clients, a step known as opting out, provided they hold at least 2 million francs in eligible assets, or at least 500,000 francs plus the knowledge to understand the risks. Many private and pre-IPO offerings distributed in Switzerland are open only to qualified investors.
Key takeaways
- Private offerings are generally reserved for qualified, professional or accredited investors.
- Each country sets its own test, and the tests change. Check the current rules and get advice.
- The US talks about accredited investors, the EU about professional clients, Switzerland about qualified investors.
- The point of the restrictions is to keep complex, hard-to-value products away from investors who may not be equipped for them.
What follows is a general overview, not legal advice. Rules change, and your own status has to be confirmed with a qualified adviser.
United States: accredited investors
Regulation D private offerings are generally limited to accredited investors, who qualify through income or net worth tests or certain professional credentials. The SEC's investor education site sets out the definition.
European Union: professional clients
MiFID II makes firms sort clients into three groups: retail clients, professional clients and eligible counterparties. Complex products usually go to professional clients, or to retail clients only with extra protections.
Switzerland: qualified investors
Swiss rules split clients into retail, professional and institutional, and let certain wealthy or experienced individuals ask to be treated as professional clients (opting out of retail client status); how a product may be distributed depends on the product. If you live in Switzerland, check the current criteria and where the provider stands.
Practical steps
- Establish which investor category you fall into and keep the documents that prove it.
- Check that the provider is authorised, or exempt, for what it is doing.
- Ask for the offering documents and read the restrictions on transfer and exit.
- Get independent legal and tax advice before you commit.
Unicorn Club, the investor club of Unicorn Private, offers club deals in pre-IPO companies through a dedicated vehicle (SPV), for accredited and qualified investors, from 100,000 dollars.
Frequently asked questions
How can a private investor become a qualified investor in Switzerland?
- By opting out of retail client status under FinSA. The client tells the provider it wants to be treated as a professional client and shows, credibly, assets of at least 2 million francs, or at least 500,000 francs plus the training or experience to understand the risks. The provider must explain what that means, because professional clients get fewer protections.
Is a Swiss qualified investor the same as a US accredited investor?
- No. The US accredited investor test under Regulation D rests mainly on income, net worth or certain professional credentials; Swiss status depends on how FinSA segments clients. Qualifying in one country does not qualify you in another, and an offering follows the rules of the country where it is distributed.
Can a qualified investor in Switzerland invest in pre-IPO companies?
- Qualified status opens the door to many private offerings. Each deal still depends on the provider's authorisation, the product's distribution rules and the company's approval of the transfer. Investing involves the risk of losing capital. The Unicorn Academy pre-IPO course explains how these transactions work, step by step.
Related guides
- What is pre-IPO investing?
- Pre-IPO due diligence checklist
- SPV vs direct purchase vs fund in pre-IPO investing
- Unicorn Club
About the publisher
This guide is published by Unicorn Private Research, the research arm of Unicorn Private LLC, a Delaware private equity firm that acquires secondary stakes in late-stage private technology companies before their IPO. The firm invests only in established companies already valued above one billion dollars, not in early-stage start-ups, and its founders have been active in private equity and startup investing since 2005.
Unicorn Private is the first firm in the pre-IPO secondary market to create an open research centre in sixteen languages: guides, a tracker of the largest private technology companies, a glossary, and a frequently asked questions section, open to every reader, with every figure carrying a date and a link to a public source.
Sources
- Accredited investor, Investor.gov glossary
- Informed Investor Advisory: Unicorns, NASAA
- Federal Act on Financial Services (FinSA), SR 950.1, Fedlex, in force since 1 January 2020
This page in other languages
- Investimenti pre-IPO per investitori qualificati: Svizzera, Unione europea e Stati Uniti (Italiano)
- L'investissement pré-IPO pour les investisseurs qualifiés : Suisse, Union européenne et États-Unis (Français)
- Pre-IPO-Investments für qualifizierte Anleger: Schweiz, EU und USA (Deutsch)
- La inversión pre-IPO para inversores cualificados: Suiza, la UE y Estados Unidos (Español)
- Investimento pré-IPO para investidores qualificados: Suíça, UE e EUA (Português)
- Инвестиции pre-IPO для квалифицированных инвесторов: Швейцария, ЕС и США (Русский)
- 合格投资者的上市前投资：瑞士、欧盟与美国 (中文)
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