Three questions to ask before buying a stake in a private company

Before buying a stake in a private company, answer three questions: where its latest valuation came from, whether its shares can be transferred, and how long ago it last raised money. A listed stock has a live price; a private company only has its last known valuation, and that single number can reflect very different events.

Where did the valuation come from?

A private company's latest valuation has three possible sources: a funding round, a secondary sale or ongoing talks. Compare valuations of the same kind: a round with a round, a secondary sale with a secondary sale.

Revolut shows a valuation set in the secondary market. In its 2025 annual report the company says the $75 billion figure was the price of a secondary share sale in which more than 2,144 current and former employees sold part of their vested equity. The $115 billion valuation in July 2026 also came from a secondary sale, not from a round that brought in new money.

Lambda shows a valuation from talks. According to The Wall Street Journal, as reported by TechCrunch, the company is raising up to $4 billion at a $14.5 billion pre-money valuation. As of October 26, 2026, no closing of this round had been reported. The difference between valuations before and after the money is explained in our article on pre-money and post-money.

Can the shares be transferred?

Not always. Late-stage companies keep their shareholder register under control: a sale needs board approval, and the company holds a right of first refusal (ROFR).

In its Setter 30 ranking for Q3 2026, the secondary marketplace Setter Capital notes that Applied Intuition, Neuralink and Stripe have limited supply, while Anduril, Databricks and Revolut have strict transfer restrictions that make direct secondary transactions challenging. All three are still among the 30 companies buyers want most.

The stricter the restrictions, the more it matters who holds the shares, which structure the investor uses to enter the deal and how the position can be exited before an IPO. How stakes like these change hands is covered in our guide to the secondary market.

How fresh is the last round?

A valuation ages with its round: the longer a company goes without raising, the further secondary prices drift from its last valuation.

Forge data cited in the Q3 2026 PitchBook-NVCA Venture Monitor show that shares of companies that last raised in 2023 trade on the secondary market at a median 45% discount to that valuation, and those that last raised in 2021 at a median 59% discount.

The extreme case is a sale of the whole company. According to the same PitchBook report, Bending Spoons acquired or agreed to acquire Miro and Airtable, once valued at $17.5 billion and $11.7 billion, at discounts of nearly 90% to their private marks.

How do you apply the three questions?

Write the answers down as a short card for each company before deciding to buy.

• Nature of the valuation: a round, a secondary sale or talks — and who reported the number.
• Share transfer: whether board approval is needed, whether there is a right of first refusal or other restrictions.
• Freshness: the date of the last round and whether there have been secondary trades since.

What risks remain?

The three questions do not remove risk; they show what the price of a stake is made of.

• The next round or the IPO may price below the latest valuation.
• Transfer restrictions can prevent a sale of the stake before an IPO or a sale of the company.
• Private companies disclose less than public ones, and secondary-market statistics reflect trades on individual platforms rather than the whole market.