How to safely invest in a Startup?

A penny stock guy I know is always telling me about these companies he has help start up, and how he's made a fortune doing this. He telling me about one now that I can buy in for a minimum of $1000.00. I believe it's not public yet. I need to buy and file a PPM for the IPO.
He says it's going to to go big. How do I know if this is a scam or not

Given that the majority of startups fail, even if this isn't a scam I'd strongly advise to invest only if you are happy to lose the money.

Some suggestions on your due diligence:

1. Ask for as much documentation as you can get (preferably vetted by a third party): business plans, audited accounts, company filings etc. You shouldn't need to pay any money to see them - if the company is looking for capital they should be happy to give you all the info you need for free.
2. Find out why they are raising capital. Is it to expand? Cover their operating loss? Knowing this will give you some indication of whether this company is going to be around for long.
3. Research the company and its products. Does it have a website or physical presence? Is there activity on the site? Is the shop open? Does it have product brochures? What do they do? Do you understand what they do and how they make money?

Before you invest any money, you should know the basic math for angel investing, which I outline in this blog post. Specifically, if you want to invest $1,000 right now and you expect to make money from the asset class, you should have about $50,000 that you are planning to invest over 20 different small companies in the coming couple of years. That's the proper way to do it. Otherwise, you're going to Vegas and rolling the dice.

My second concern is that you are telling us all about 'this penny stock guy I know' rather than 'this business I know'. You are buying shares in the business. It would be reassuring if you were talking about the business, not the person.

Having said that, having an expert early stage investor involved can be reassuring, but only if they are investing their own money in the business themselves. Do you know how much this guy is putting into the business? Is he taking a commission from your money, or does he only make money at the same time as you make money? Is he risking as much as you are? That will make his recommendation worth more.

Lastly, the penny stock game is very much a public market game. I know very little about it: I know private investing much better. You may be better off asking this question on a public markets forum, to get their feedback as well.