shadow stock markets are private, unregulated markets in which investors can purchase shares in non-publicly traded companies prior to an ipo launch. to participate in a shadow market, the securities and exchange commission requires investors to have a net worth greater than $1 million. these "accredited" investors have an early bird investment opportunity before average investor demand increases the share price; however, the accredited investor is exposed to greater risk and uncertainty, as well as lack of liquidity and disclosure requirements from the company.
a very recent and relevant example was when goldman sachs teamed up with russian investor yuri milner and pumped $500 million into facebook.
ah, the russians. of course.
