How to Invest in Pre-IPO Companies Before They Go Public | Neil Kayal

Neil Kayal (00:00)
the other goal is to help people avoid the biggest mistake that investors can make.

which is waiting. People who say, I’ll look at the next one are the ones who missed SpaceX as $50 a share, which is right now trading in the secondary markets at $800 a share. People, same people who you know, who missed the open AI before the chat GPT moment, missed all of it, not because they couldn’t afford it, but because they didn’t act when the window was open. So our goal is to make sure that we are able to

also communicate in that and do that broader education teach ins so that people understand that private markets are not infinitely patient, allocations fill up, companies go public, and that opportunity is gone.

Michelle Kesil (02:22)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Neil Kayal of Grain Ventures, who helps bring people together who are interested in private market investments. So excited to have you here today, Neil.

Neil Kayal (02:25)
Thank

Good to meet you, Michelle, and I’m happy to be here.

Michelle Kesil (02:47)
Perfect, let’s dive in. First off, for those not familiar with you and your work, can you share what your main focus is?

Neil Kayal (02:54)
Yeah. So again, I’m Neil Kayal. I’m the founder of Grain Ventures. It’s a curated investor network that gives investors access to private market pre IPO opportunities. Think of companies like SpaceX, OpenAI, Kalshi. These are category defining businesses that are still private. And most people assume that that kind of investing is only available.

to hedge funds or institutions. Grain Ventures kind of exists to change that narrative. And yeah, I spent the first chapter of my career at a Fortune 30 company, evaluating, executing, and doing a lot of ⁓ acquisitions in aerospace, semiconductors, life sciences, which is primarily my background.

I looked at hundreds of companies, learned how to underwrite businesses from inside out and got trained in the first principles, very disciplined first principles approach to doing the right due diligence and looking at value creation. Throughout the journey, I keep noticing something, which is the most extraordinary returns in investing weren’t happening in public markets.

They were happening years before a company ever went public. And access to those opportunities was almost entirely locked behind the big institutional walls. So I built Grand Ventures. It’s a way to bring that institutional underwriting mindset to a group of investors who want to participate in private markets before the IPO.

and we do this on a deal by deal basis, Michelle, with full transparency and no blind commitments.

Michelle Kesil (05:36)
Awesome. And so how does the process work? How, like, what is the criteria for an investor and what is the criteria for the investments themselves?

Neil Kayal (05:50)
Yeah, so maybe something to think about is, you know, the core idea that we have is we use a investment vehicle called SPVs or special purpose vehicles. These are the most investor friendly structures in private markets and most people have never heard of them. That’s the interesting part of it.

What the SPBs do is they help you operate on a deal by deal basis. Each SPB is a single legal entity that is created for one individual investment. So the investors, they get to review each opportunity individually, and then they get to decide if that makes sense for them. ⁓ And you invest only if you want to. There are no blind commitments. There are no fund lockup. And the minimum

is always accessible. Like if you look at large venture capital funds or large institutional, you know, they’re almost asking you for a million plus in commitment to even get access to these opportunities. For us, since we do, we don’t do a fund basis, we do an SPV basis, which is essentially like starting an LLC with some of your friends and family. The minimum is very accessible. It’s typically like 25,000.

So we focus on very late stage private companies, often through secondary transactions, getting shares from existing employees or earliest investors who have a lot of shares and are willing to liquidate. And we focus on these late stage companies because these companies have already proved their model, but they’re still private. They’re at the cusp of deciding whether they want to stay private or they want to go public and file an IPO.

So, most investment funds are like a tasting menu. You come into the whole meal before you know what’s being served. And for some folks, that’s great. But what we do is more like ordering a la carte. You see the dish, you decide if you want it, and you only pay for what you choose. And ⁓ what to say about our sectors.

as I was telling you earlier, Michelle, it’s like we focus on sectors that are starting the next industrial cycle. AI infrastructures, the picks and shovels of AI, energy and compute, aerospace, defense, and deep technology. These are not speculative bets. These are areas where the government is spending today, where the corporate organization

are doing a lot of capital equipment there. So CapEx is flowing and where the next generation of category defining companies are being built right now. So that’s essentially how we kind of work.

Michelle Kesil (08:51)
Awesome. And how do you find these companies that you work with?

Neil Kayal (08:58)
Yes, so a lot of this, it’s a combination of institutional relationships. So for the last 15 years, I’ve been working with a lot of folks in the investment community, some of the largest venture capital funds, some of the largest private equity funds, and you know.

I also work as a healthcare executive sitting at a Fortune 10 company today, where I get to work with a lot of these investment community on a day-to-day, on a daily basis. ⁓ And I have developed these institutional relationships that lets you have this access, lets you in the room to have these conversations. There also, it’s a network that is built over doing these &A and corporate development.

work that I’ve been doing in the last 15 years. And these deals don’t come from cold emails. They come from a place of trust and track record. ⁓ And that’s the core of what Grain Ventures offers. We offer access, access that most individual investors simply cannot get on their own.

Michelle Kesil (10:48)
Yeah, absolutely. And what do you feel are some of the main keys that have allowed your business to grow and run successfully?

Neil Kayal (10:55)
Yeah, know, some of the things that, know, so passive income is something that comes up, right? ask me like, is this a passive income? Is it a financial independence angle? I think the core idea is that private market investment or investing isn’t a replacement for cashflow. It’s, we should think about it as a wealth building layer.

that sits beneath it and it’s aligned with financial independence. And that’s a mindset that most people realize. The truly passive income audience thinks about financial independence to cash flow like rental income, dividends or business systems. Private markets are the world accumulation layer that makes that cash flow possible at scale.

So you don’t need to actively manage a private market investment. You invest once, you hold it, and you wait for the liquidity event, like an IPO or acquisition. It’s almost like, this is why I love talking to real estate investors is because they get it because everybody you ask, they want to get into a neighborhood before the neighborhood takes off. And that’s the same thing here is like, you’re not actively managing a private market investment. You’re investing it once.

before it becomes public and you’re waiting for the liquidity event to happen. And it’s not a question of either or either. The most sophisticated wealth builders layer multiple sort of asset classes. You have your real estate for cash flow, you have your public markets for liquidity, and you have your private markets for getting that asymmetric upside, an upside that you have.

that upside that you get before a company takes off. So the people I talked to who have built real financial independence, it’s not just income replacement, but it’s genuine freedom. And almost all of them have some exposure to private markets. It’s the asset class that got them from being comfortable to the generational aspect and Real Estate got them in the game.

private markets help them change the scale of it. you know, ⁓ fine point here is like, you know, once you invest in an SPV, there is nothing to manage. You’re not a landlord. You’re not monitoring the stock ticker. You’re not making quarterly decisions. You invest, you get the updates from your general partner and you wait for the event. That’s about as passive as investing gets.

Michelle Kesil (13:39)
Yeah, that makes sense. And how are you focused on solving or scaling to the next thing in this business?

Neil Kayal (14:29)
Yeah, you know, ⁓ so like more of the things is it’s a mind shift that comes into play, you know. The barrier to private markets isn’t is in capital, it’s always awareness and access. Most people don’t invest here because they don’t know that they could. So one of the things that I’m trying to work very meaningfully

spending a lot of time on it is changing that misconception that it’s only for people with a lot of high net worth. You need to be a accredited investor, but people misunderstand what that means. An accredited investor is more accessible than people think because if you have $200,000 in annual income, you’re an accredited investor.

The misconception is, and there’s another misconception that comes up in my dialogues with potential investors is they think it’s too risky. Late stage private companies, they have already proven their business. They’re not early stage startup. It’s not a company that Neil and Michelle just started and trying to scale. These are mature companies, weeks or months from

a public liquidity event. So we try to navigate around that to help the business grow. And then a third misconception I also run up is I need to understand venture capital. That’s not true. You do not need to understand that. You just need to understand the opportunity that is being presented to you, which is exactly what we walk the investors through every single time. So yeah, for us, it’s a mindset frame. Most people spend

40 some years working to save enough money to retire. A smaller group of individuals spends 10 to 15 years deploying capital intelligently in the right asset classes, like public markets, real estate, and private markets, and achieve the same outcome in half that time. So the difference isn’t luck. It’s just access and information. And what

How we have been successful is we have helped people understand that there are ways around these misconceptions that they have. And the other thing we have done is we have done a, intentional sort of impact is the companies we invest in aren’t just financially interesting. They’re doing things that matter. SpaceX is building an interplanetary

infrastructure. Neuralink is working on restoring function for people with paralysis. XAI is building AI that actually serves humanity. So when you invest in these companies early, you’re not just building wealth, you are participating in the construction of the future. And that’s a different kind of return.

Michelle Kesil (17:34)
Yeah, absolutely. And how do you navigate the conversation of risk with these investors?

Neil Kayal (17:40)
Yeah, it’s a fair question. The way we manage risk is by focusing on these late stage companies, businesses that are already generating revenue, already have institutional backing behind them, and are already on a clear path towards the liquidity event. We are not betting on startups. We are buying into proven companies.

at the final private stage of their journey. Their risk profile is very different from an early stage venture.

Michelle Kesil (18:15)
Yeah, that makes sense. And what are your goals for where you want this business to grow into and move you?

Neil Kayal (18:24)
Yeah.

know, I mean, like we were just talking about this earlier, like financial independence is important, right? you know, most people I talked to who have built real financial independence, it’s not just income replacement for them. And my goal is to help people understand that

They can have genuine freedom almost and it’s like a complimentary piece to what they’re doing in real estate. It’s a complimentary piece to what they’re doing in public markets. it’s the, my primary is like, if you have capital to deploy and you’re wondering where to put it to get that asymmetric sort of investment return, this is…

what the message of our message is like, you invest, you get updates and you wait for that event and you’re investing in companies that are building for the future. that’s what one of our goals are is to help people understand that. And

the other goal is to help people avoid the biggest mistake that investors can make.

which is waiting. People who say, I’ll look at the next one are the ones who missed SpaceX as $50 a share, which is right now trading in the secondary markets at $800 a share. People, same people who you know, who missed the open AI before the chat GPT moment, missed all of it, not because they couldn’t afford it, but because they didn’t act when the window was open. So our goal is to make sure that we are able to

also communicate in that and do that broader education teach ins so that people understand that private markets are not infinitely patient, allocations fill up, companies go public, and that opportunity is gone.

So we want to make sure that we are educating people as well.

Michelle Kesil (20:25)
Yeah, absolutely. That makes sense. Thank you for sharing.

Well, before we begin to wrap up here, if someone wants to reach out, connect, and learn about what you’re up to, where can people find you?

Neil Kayal (20:37)
Yeah, if anything I’ve said today resonated with the listeners or anybody, if you’re an investor who is curious about private markets, but don’t know where to start, I would love to connect. The best place to learn more is our website, is grain-ventures.com.

You can also find me on LinkedIn under Neil Kayal. You can also look up our LinkedIn page, which is Grain Ventures. We share opportunities on a deal by deal basis, so there’s no commitment required. There’s no commitment required to just start a conversation. Come learn how it works and you just go on from there.

Michelle Kesil (21:24)
Perfect, well appreciate your time and your story. Thank you for being here.

Neil Kayal (21:27)
Thank you for having me. It was really good talking to you and the listeners here as well.

Michelle Kesil (21:31)
Of course and for those tuning into the show, you got value, make sure you’ve subscribed. We have more conversations with operators like Neil who are building real businesses and we’ll see you on our next episode.