Investing in Prove | How to Buy Pre-IPO Shares

Prove operates as a unified identification systems provider. It combines proprietary authentication protocols with enterprise-level security to enhance both the business and consumer experiences. Today, it’s one of the leading providers of authenticators, enabling companies to bring data from across the mobile ecosystem into a single, easily understood interface.

Prove continues to expand its operations, with the company currently offering services to over 1,500 leading institutions across 200 countries, spanning more than 30 billion authentication events. Additionally, it manages over 1 billion identity tokens, with new clients joining the network daily.

All of these factors continue to drive demand for Prove shares. However, the company is privately owned and hasn’t released any plans to host an IPO. Consequently, you will need to learn how to navigate the secondary markets if you want to secure access to these in-demand assets.

What is Prove?

New York-based Prove entered the market in 2008. Its founders, Rodger Desai and Mike Brody, launched the platform to provide support for web identification demands. They understood that, unlike previous generations, Web3 identifiers needed to span across multiple platforms and media.

Today, Prove’s identity verification and authentication solutions enable firms to validate and track users across all client touchpoints. It leverages a mobile-first approach that allows users to leverage their smartphones to fully verify their identification.

This approach is far more streamlined than requiring additional documentation, selfies, or third-party systems. It was built from day one to make the onboarding and integration processes as simple as possible while still supporting the latest technologies like AI.

Prove’s Prove Key

At the core of Prove’s approach is the Prove Key. This cryptographic token provides clients with an immutable and universal method to access sites and services. It’s designed to operate across multiple channels, including desktops and smartphones, and can be used in brick-and-mortar applications as well.

The system integrates email and barcode verification systems as additional options. Also, it combines vital identifiers like biometric information, public data, and document verification systems to ensure the person is who they claim to be without requiring additional steps.

Prove Pre-Fill

The Prove Pre-Fill feature is a powerful way for businesses to improve their onboarding success. This feature uses the stored customer information to pre-populate application forms with verified data. This strategy means that your clientele can get to the action pages faster, reducing consumer friction.

Impressively, this system can include KYC and AML background compliance. According to company officials, the service enhances onboarding responses by 35% and reduces abandonment. Consequently, this feature saves your potential customers time and effort, allowing for more receptive users.

Prove Identity Network (PIN)

The Prove Identity network operates as a single KYC solution that includes several features, like vendor consolidation to prevent future regulatory backlash. For example, you can have a potential business checked against all major global sanctions.

Source – Prove

The features provide global coverage and employ advanced multilayer verifications to provide 95% match accuracy. This strategy helps to reduce false positives, saves time, and lowers the cost of researching and doing business globally. Additionally, the service is available in 14 languages, making it accessible to the majority of users.

Behavioral Analysis

One of the most unique features of Prove is its behavior analysis tools. These real-time trackers can provide you with updated information on your clients that can help executives make strategic business maneuvers or plan effective campaigns.

They can easily manage any changes to their clients’ phone numbers and other identity attributes as they progress through their lifecycle changes. Notably, the network employs several metrics to accomplish this task, including a Trust Score. Additionally, all of these services are provided while still upholding enterprise-level identity and security protocols.

Fraud Prevention

Prove has found a home among businesses that seek to reduce fraud. The network’s unique cryptographic identification options, like identity tokenization, allow for faster verification. Also, it can be used to ensure that you avoid doing business with clients whom you flag, even if they alter some of their original login credentials, such as emails, phone numbers, and names.

Compliance is King

The compliance features that Prove provides offer a real-time registry of phone identity tokens and full support for KYC requirements. They combine key security options that were built to seamlessly verify ID and reduce fraud. Today, these systems offer full support for the Web3 ecosystem.

Developer Portal

Businesses seeking to add Prove’s features to their model will find that the developer portal offers direct access to all the features they need to get started. This simplistic interface was designed to make issuing and integrating Prove features easy.

Historical Funding Rounds

Summary of Prove Funding:

Total Funding: Prove secured $268M across 14 funding rounds

Largest Round: Prove’s largest funding round secured $100M in June 2022.

Investors: A total of 27 institutional investors and 5 Angel investors back Prove

Latest Round: The latest funding round raised $43.9M and was a Series F round held on August 7, 2023.

Funding Rounds Breakdown:

• 1 Seed,
• 2 Early-Stage
• 10 Late-Stage
• 1 Debt

Key Investors:

Prove secured investment capital from MassMutual Ventures, Capital One Ventures, Stack Capital Group, Apax, Synchrony, Wellington, BVF, Sandbox Insurtech Ventures, TAEVAST, TransUnion, Relay Ventures,  RRE Ventures, Opus Capital, Early Warning, Verizon, Rogers Venture Partners, TNS, American Express Ventures, IDology, BlackBerry Partners Fund, Rogers Ventures, and more.

Why Invest in Prove?

Several reasons make investing in Prove a smart option. For one, the company offers services that enable businesses to be proactive in their authentication strategy. It offers persistent authentication solutions that ensure the company remains in touch with its clientele and is updated on crucial lifecycle changes.

Prove Offers Bank-Grade Security

Security is another main reason that Prove continues to see growing usage. Many businesses see the platform as an affordable method to gain an extra layer of non-intrusive protection. The platform supports encryption, authentication tokens, and other fraud mitigation strategies.

Faster Onboarding

The fast onboarding solutions provided to clients are one of the biggest factors behind the company’s success.  These strategies can improve onboarding speeds by 79% by eliminating the need to gather additional documentation or fill out online forms.

Flexibility

Prove’s focus on the Web3 space has paid off greatly. The company’s flexible features provide frictionless authentication from any channel. Companies can decide whether to integrate passive and persistent verification options that can validate users across sessions, devices, and lifecycle changes over multiple sessions.

Integration

Prove’s integration protocols were designed to take around 5 minutes to implement. This service leverages an advanced API to ensure secure access to core features without the need to code. This strategy makes integrating Prove ID client and server-side options much easier than competitors.

Low Cost

Prove’s clients enjoy lower costs and easier setup compared to competitors as well. Additionally, the protocol can scale to meet the needs of massive organizations and global enterprise-level customers while remaining competitive.

Funding and Investor data sourced from Tracxn

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, who are crucial to the company’s pre-IPO growth.

Investing in pre-IPO shares of Prove could offer strong returns if the company’s valuation increases following its IPO. 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: This approach requires you to be an accredited investor, meaning you will have to show at least $1M in liquid assets to qualify for access.

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 Prove. 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, are met. It’s even common for pre-IPO shares to require you to wait years before gaining the ability to sell your assets.

Finding a Broker

If you meet the requirements and are comfortable with the risks, several platforms offer access to pre-IPO opportunities:

Forge Global: One of the largest private stock marketplaces, offering shares in late-stage startups like SpaceX, Stripe, and Databricks. Minimums typically start around $100,000.

EquityZen: A popular platform allowing accredited investors to buy into private companies with minimums as low as $5,000. Past offerings include companies like Discord and UiPath.

Rainmaker Securities: A full-service broker that helps source and negotiate private share sales, including opportunities in companies like OpenAI, Stripe, and Palantir.

Hiive: A newer platform with live bid/ask pricing for hundreds of private companies. Transparent and low-fee, with minimums starting around $25,000.

MicroVentures: Offers pooled access to late-stage companies through special purpose vehicles (SPVs), including past investments in SpaceX and Instacart.

EquityBee: Allows investors to fund employee stock option exercises at startups, often at discounted valuations, with minimums around $10,000.

Augment: A digital-first marketplace showing real-time pricing for pre-IPO shares, targeting tech-savvy investors and offering lower transaction fees.

StartEngine Private: Launched in late 2023, this platform offers accredited investors access to Regulation D offerings in later-stage, venture-backed companies. In its first nine months, it generated $16.5 million in revenue, with average investments of around $32,000

Important: Always perform thorough due diligence and consult a financial advisor before investing in private company shares.

Valuation of Prove and Future IPO

Prove secured Unicorn status after it received a $1B valuation on October 17, 2023. The company secured this valuation by building up consumer and investor confidence. It has strong institutional support and continues to expand its features and ecosystem.

Currently, Prove ranks 9th among 366 active competitors, demonstrating its strong market positioning in the competitive sector. Those holding Prove shares seek to capitalize on its positioning and trajectory. Notably, if the company can continue to grow along its current trend, there could be significant upsides in the future.

Investing in Prove Pre-IPO Shares | Conclusion

Investing in Prove opens the door for future opportunities. For one, the company has years of experience and major backing. Additionally, their services leverage advanced technology, like cryptographic tokens, to streamline vital onboarding and authentication procedures.

However, you should consult a financial expert before making any pre-IPO investments. These shares can come with certain restrictions that could make them higher risk for individuals. As such, you should conduct further research before making a final decision. For those who complete their homework and can qualify for Prove Pre-IPO shares, there’s a lot of room for upside growth in the foreseeable future.

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.