Need for “public” private equity
With such volatility in the public market I wonder why there isn’t better access for the general public to invest in private companies via some online app/network ie. Yieldstreet etc. Why isn’t this more of a thing? Someone educate me.
Becasue the general public is stupid.
Because generally you need to be an accredited investor to invest privately. Private cap tables and share structures aren't the same as they are in the public markets, and private companies don't have the same governance requirements, like having to be audited. I wouldn't advise anyone to make an equity investment in a private company without engaging their own lawyer and accountant to perform diligence first. That makes your proposal not feasible for the majority of the public.
I don't know anything about yieldstreet but I'm guessing it functions more like a debt product so theres a more predictable cash yield backed by real assets. A startup or a small business equity investment is just fundamentally different.
Completely agree, one of the key difference is access to information and/of information quality.
The fact that public companies (and companies with bonds outstanding) need audited financials is mainly to avoid potentially misleading investors and that’s why it would be tricky to democratise investing in private companies
yeah anything really feasible is investing in PE firms that are public eg KKR, essentially trusting that they will do all the work vs. individual investors doing the work like that.
Maybe it should look more like an online community where you can form investment committees with other people that can pool capital and maybe folks can offer FDD and legal services within the community.
Cmon Patrick at WSO - figure this out! You already connected likely the largest online community of investors and finance professionals already, let’s put it to use.
It's really stupid accredited investor requirements are a thing when idiots are allowed to buy craptocurrency.
Key difference though is cryptos are still very liquid.
Shitcoins are often so thinly traded that they aren't liquid at all, or if you do manage to sell any amount of shares, it's at a much much much lower valuation than you paid when the stock promoters are done.
You do see my point though right? Why can someone legally invest in shitcoin but not shit-startup? An arbitrary amount of assets is a really dumb way of looking at it.
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