The Growth of Private Markets

The value of private markets is on the rise. However, many people still have little understanding of private markets and what they entail. How…

The value of private markets is on the rise. However, many people still have little understanding of private markets and what they entail. How do they differ from public markets? Why are they growing and what does this mean? Last but certainly not least, how can investors gain access to them?

What are private markets?

Private markets refer to investments not traded on a public exchange or market. Businesses have a variety of options for raising capital and attracting investors. Generally, the two most common options are debt and equity — each of which can be structured in various ways.

Equity allows a company to give investors a share of the business for which they earn returns as the business grows. Companies of all types account for equity on their balance sheet in the shareholder’s equity category. As such, balance sheet equity is a driver of a firm’s net worth, which is calculated by subtracting liabilities from assets.

Private markets, then, refer to investing in this type of equity.

Companies are staying private longer

In the past, when private companies outgrew the funding private investors could provide, they made their debut on the public stock exchange with an IPO (initial public offering). In this way, companies could quickly raise a high amount of capital from public shareholders which they then put back into their company.

However, this approach has undergone a shift over the past ten years. On the whole, companies are staying private longer, with venture capital or private equity firms providing several rounds of funding in some cases – for example, Airbnb has received funding from investors 11 times, raising $4.4 billion since it was founded in 2008. The company is now valued at $31 billion and has offices in over 15 countries, a feat that would not have been possible without an IPO in the past.

More investors see the opportunity

Investors have been flooding into private markets in ever increasing numbers. In 2017, according to PitchBook, there were 3,953 active private equity investors, a 51 percent increase from 2007, and 4,589 active venture capital investors, a whopping 163 percent increase from 2007.

The growth of the private markets, globally

Source: PitchBook Private Markets Guide

The number of private-equity backed companies during this period also rose by 63 percent and the total venture capital, private equity and M&A deal went up 56 percent. The result? The more money that flows into private markets, the more they grow in value and scope for both investors and companies.

Access to private markets is changing

Although private markets have gone from niche to an increasingly attractive alternative investment opportunity to public markets, due to seven figure minimums, they have mainly only been within the reach of institutional investors. However, this is also undergoing a change.

Wealth managers, for example, help provide individual investors access to booming private markets. Technology is also transforming the industry. New digital investment processes enable both wealth managers and individual investors to invest in private markets at a fraction of the traditional cost. As private markets continue to grow and surpass public markets, these new developments will grow alongside them, opening up private markets to a larger section of the population than ever before.

To find out more about how Moonfare is disrupting private market access for individual investors, please see here.

Important notice: This content is for informational purposes only. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Don’t invest unless you’re prepared to lose all the money you invest. Private equity is a high-risk investment and you are unlikely to be protected if something goes wrong. Subject to eligibility. Please see


White paper


White paper


White paper


Related Content

Join Moonfare Now.

Benefit from what institutional investors already know: the greatest shareholder value comes from private markets, and funds like those offered on Moonfare have generated an average IRR of 19% — outperforming the S&P 500 by 13%.*

Sign up now

Join The Satellite.

Weekly updates on Investment and Finance.

Subscribe now

* Past performance is no guarantee of future returns.

{ "@type": "Person", "name": "Zeke Turner", "jobTitle": "Fund Marketing Specialist", "sameAs": [""], "knowsAbout": ["Private Equity", "Venture Capital", "Investing", "Journalism"], "alumniOf": [ { "@type": "CollegeOrUniversity", "Name": "INSEAD", "sameAs": "" }, { "@type": "CollegeOrUniversity", "Name": "Dartmouth College", "sameAs": "" } ] }
{ "@type": "Person", "name": "Jason Feder", "description": "Jason is a member of Moonfare’s legal team, with experience in financial regulation and white collar litigation. He holds a B.A. from UCLA and a J.D. from Indiana University.", "jobTitle": "Senior Legal Counsel", "sameAs": [ "" ], "knowsAbout": [ "Law", "Financial Law" ], "alumniOf": [ { "@type": "CollegeOrUniversity", "Name": "University of California, Los Angeles", "sameAs": ",_Los_Angeles" }, { "@type": "CollegeOrUniversity", "Name": "Indiana University Maurer School of Law", "sameAs": "" } ] }