In this day and age, it is quite common to encounter headlines highlighting the incredible returns that early-stage start-up investors have experienced. Moreover, it is no secret that in order to fund development without ample cash on hand, many start-ups opt to offer equity to employees as the primary form of compensation. In many cases, when companies do not develop as expected, this form of payment equates to employees receiving valueless shares. However, in the rare instances in which start-ups develop into tech “unicorns” (i.e., private tech companies with valuations over $1 billion), those shares suddenly hold immense value.
For retail investors who are accustomed to investing in publicly traded companies, yet interested in opportunities to invest in these aforementioned “unicorns,” you are in luck. There is a multitude of companies now offering opportunities to purchase shares in private companies.
These days, companies such as EquityZen, Equitybee, and Yieldstreet offer such opportunities. However, there is one caveat: investors must be accredited, which means that investors need to meet certain criteria to be eligible. Of course, as previously mentioned, these investments are certainly not “sure things,” as is the case with countless companies that close their doors each year.
For investors who are not accredited, all hope is not lost! Recently, Ark Invest CEO, Kathie Wood, launched the ARK Venture Fund ETF, which invests in private companies. Although this fund does hold some publicly traded companies, it also owns shares in Epic Games, Freenome, Flexport, MosaicML, and the newly private Twitter.
Ultimately, there is an abundance of investment opportunities in private companies available for retail investors—you just need to know where to look.