Introduction
Over the past few years, a movement has been underway to democratise private assets, opening up investments like private equity, venture capital, private credit, and infrastructure to a broader audience.
These private assets were historically the domain of the wealthy elite – think high-net-worth individuals, family offices, university endowments, and institutional investors.
Until recently, ordinary retail investors had little or no access to this world.
The rationale was partly regulatory and practical: private market opportunities often came with steep minimum investment requirements.
They were limited to “accredited” or qualified investors.
Under U.S. regulations, roughly 80% of private fund offerings have traditionally been available only to so-called qualified purchasers (investors with >$5 million in investable assets).
This exclusivity created a stark divide between those who could tap into high-growth, alternative investments and those confined to public stocks and bonds.
Why have private investments traditionally been so restricted?
The answer lies in their fundamental characteristics: private assets are inherently illiquid, lack transparent pricing, and are designed to be highly exclusive.
Unlike publicly traded stocks, which are priced in real time through open markets, private investments don’t have a continuously updated market value.
Instead, valuations are typically derived from infrequent appraisals or the last funding round, making it difficult to determine an accurate, up-to-date price.
Moreover, investors usually cannot freely sell these assets on a whim – they’re often locked in for years until a company is acquired or a fund winds down.
High barriers to entry (both in terms of wealth and knowledge) kept the crowd out.
These traits were thought to make private assets unsuitable for the general public.
As a World Economic Forum report bluntly put it, private market investments are “inherently complex, are less transparent than public market equivalents and are typically illiquid with long lock-up periods”.
In other words, without transparent pricing or easy exit options, these investments demand a level of patience and risk tolerance that many everyday investors may lack.
Yet today, financial innovation and technology are cracking open the gates to private markets.
Retail investors are being courted with opportunities to buy slices of startup equity, units in private real estate funds, or shares in infrastructure projects.
Proponents argue that this democratisation will level the playing field, allowing individuals to enjoy the superior long-term returns and diversification benefits that private assets can offer.
However, alongside the promise lies a potential dark side.
History warns us that when asymmetries in information and power exist, less experienced investors often end up on the losing side of the trade.
This blog post will explore the risks and challenges emerging as private assets open to retail investors. We’ll examine whether we might see a repeat of past patterns – where professional insiders profit at the expense of the public – and what can be done to ensure fair and responsible democratisation of private markets.
From Exclusive Club to Widening Access
For decades, investing in a private equity fund or a venture capital deal was akin to joining an exclusive club.
The historical status quo was that only large institutions or ultra-wealthy individuals got the invite. They could write the million-dollar checks required and had the sophistication to evaluate opaque deals.
Ordinary investors, in contrast, were kept out for their own “protection,” relegated to public markets.
This meant missing out on the rapid growth phases of companies (which often stay private for far longer now) and on asset classes like private credit or infrastructure that never even touch public exchanges.
Key characteristics of private assets that kept retail investors out were:
- High Illiquidity: Once invested, your money is locked up. Early withdrawal or sale is usually impossible or comes at a steep discount. This illiquidity was too risky for those needing quick cash access.
- Opaque Valuations: Unlike stocks with real-time pricing, private assets lack transparent pricing. Valuations are periodic and based on estimations, which can obscure the actual value and risk.
- High Minimums & Exclusivity: Investment minimums often ran into six or seven figures, and by law, many deals could only be offered to accredited investors. This law kept the “unqualified” public out by design.
- Limited Regulatory Oversight: Private deals don’t face the exact disclosure requirements as public offerings. Less oversight can mean a higher risk of errors or fraud, as unscrupulous actors might exploit the opacity.
- Complex Structures: Private funds and deals come with complex terms (capital calls, performance fees, etc.) that are difficult to navigate without expertise
These factors contributed to an uneven playing field. As a result, for many years, only the well-connected and well-capitalised could enjoy the outsized returns that a successful private equity buyout or a hot startup investment might deliver.
The flip side is that these wealthy investors also shouldered the extra risk and lock-up, which regulators believed Mom-and-Pop investors couldn’t afford.
There was a paternalistic logic: better to protect retail investors from risks they don’t fully understand.
Indeed, even today, industry veterans caution that the playing field remains uneven and that individual investors must approach private markets with great caution.
The Democratization Trend
In recent years, a combination of technology, market innovation, and regulatory shifts has started to erode these barriers.
The “democratisation of private assets refers to making these investments more accessible to a broader set of investors (including retail), and it’s happening through several channels:
Data and Transparency Initiatives
One significant development is the surge in data availability about private markets.
A striking example is BlackRock’s 2023–2025 acquisition of Preqin, a leading private markets data provider.
Preqin’s platform tracks over 210,000 private funds and has hundreds of thousands of users, providing information on fund performance, valuations, and benchmarks.
BlackRock’s CEO, Larry Fink, described this move as pivotal because “the whole ecosystem is pivoting… You are looking at intermixed private and public markets”.
By integrating Preqin’s data and analytics into its systems, BlackRock aims to make private markets more transparent and accessible for investors of all types.
The logic is that better data can reduce information asymmetry and enable products like private market indices or ETFS, bringing liquidity and price discovery to this arena.
In short, sunlight is being let in on an opaque corner of finance, which could empower smaller investors with information that was once the preserve of insiders.
Secondary Marketplaces
Another game-changer is the emergence of organised secondary markets for private assets.
These are platforms where investors can buy and sell stakes in private companies or funds, providing a measure of liquidity before the typical end of a fund or an IPO.
Alta Exchange in Singapore is a prominent example. Alta (formerly Fundnel) operates as a regulated digital securities exchange, allowing investors to trade tokenised securities backed by private equity, private credit, funds, and luxury assets.
Through Alta’s marketplace, an investor who owns a slice of a private company or fund can potentially sell it to another investor, rather than remaining locked in indefinitely.
This secondary trading is still in its early stages. Still, it represents a critical infrastructure for democratisation– it provides retail investors a potential escape hatch (“liquidity option”) if they need to cash out.
Other platforms worldwide, such as ADDX (Singapore-based) and Forge or EquityZen in the US, similarly facilitate trading private shares or fund interests.
The presence of these venues addresses one of the historical weaknesses of private assets by at least partially answering the question, “How do I get my money back out?”
Fractional Ownership via Fintech
The fintech revolution has introduced creative ways to fractionalise investments, lowering the minimum ticket size.
Through digital platforms, a $100,000 slice of a venture fund can be broken into 100 pieces of $1,000 each, for example, and distributed among many small investors.
Blockchain technology has been one enabler here, as it tokenises asset ownership.
The result is that an individual with a few thousand dollars can now get exposure to assets that used to require millions.
Funds Europe notes that fintech platforms are “developing solutions that allow fractional ownership and streamlined access to private market products”.
We also see new fund structures designed for retail–interval funds, tender offer funds, and evergreen funds, which offer periodic liquidity and lower minimums to accommodate smaller investors.
In the U.S., regulators have slightly broadened the definition of accredited investor (e.g., to include certain professionals), and Europe’s ELTIF 2.0 regulation now encourages more retail participation in long-term investments.
All these shifts make it easier for individuals to participate in previously off-limits opportunities.
The private markets are swelling with new participants and capital thanks to these trends.
Industry estimates forecast private assets could grow from about $13 trillion today to over $20–30 trillion by 2030, fueled partly by this inflow of retail money and the expansion of private credit and other alternative strategies.
This influx is reshaping the market’s makeup and raising important questions. Is this democratisation an unequivocal good?
The upside is clear: more people can share in the returns and diversification benefits, private businesses gain a larger pool of funding, and the financial system becomes more inclusive.
However, experience and research suggest caution because wider access also brings new risks and challenges, especially for those least equipped to handle them.
The following sections delve into the potential dark side: the information imbalances, liquidity traps, and unfair practices that could disadvantage retail investors if private markets are open to “everyone.”
Information Asymmetry and Adverse Selection
Information asymmetry is one of the biggest concerns when opening private assets to retail investors.
In this situation, one party (typically the seller or the professional fund manager) has far more information than the retail investor.
Private markets have always been opaque; detailed financials of a startup or the risk profile of a private debt deal are not publicly disclosed the way public companies’ information is.
Even sophisticated institutional investors sometimes struggle with due diligence in this arena.
Retail investors, who often lack access to extensive research, databases, or expert advice, are disadvantaged even more.
The lack of transparent information can lead to retail investors making decisions “in the dark,” potentially overpaying or underestimating risks.
The World Economic Forum warns that “the lack of transparency associated with private investments can make them unsuitable for retail investors”.
In other words, while the returns might allure, you must know what you’re buying, which is not always possible for outsiders in private deals.
This information gap can manifest in a problem economists call adverse selection.
If the most high-quality private investments are scooped up by pension funds and endowments (who have the connections and clout to get in early), what’s left for the new retail-focused funds or platforms may be the lower-tier opportunities.
Top-tier private equity and venture capital firms often prefer to stick with large institutional investors who can commit big checks and be patient capital.
As a result, funds that cater to retail (with lower minimums and shorter durations) might end up investing in deals that the elite managers passed over.
A recent analysis pointed out that retail-oriented vehicles might have access only to “lower-quality deal flow or less experienced managers” because the best general partners remain choosy about their investor base.
The danger is that unwary retail investors, eager to join the private market boom, could unknowingly be funnelled into subpar investments.
In a worst-case scenario, democratising private assets could create a two-tier market: seasoned insiders get the cream of the crop, while newcomers get the leftovers.
This dynamic has a historical parallel in some public market events.
For example, during stock market booms, insiders or early investors often sell shares to the public at high valuations – think of certain IPOs where initial private backers exit at a lofty price, only for late-arriving public investors to see the stock languish afterwards.
Similarly, many SPAC (special purpose acquisition company) deals in 2020–2021 enriched their sponsors and early investors, but those who bought in late (often retail traders) suffered losses when the hype faded.
The concern is that “democratised” private markets might repeat this pattern, with professionals using new liquidity avenues to offload assets at inflated prices to less-informed retail buyers.
There’s evidence that this risk is not just theoretical.
A World Economic Forum white paper on broadening access to private markets noted that “key risks arise from information asymmetries and competition for high-performing assets, leaving average retail buyers exposed to less compelling” opportunities.
In plainer terms, if everyone is chasing the next big private equity deal, the big fish will get it, and the small fish might end up with whatever didn’t interest the big fish.
Furthermore, retail investors lack the negotiating power and insight that big investors have. Institutions often get better fee terms or more disclosures via side letters; retail investors generally have to take standard terms or even pay extra feeder-fund fees for access.
Another aspect of information asymmetry is the potential for predatory practices.
Suppose unscrupulous operators know that a wave of less sophisticated money is coming into the market. In that case, they might create products that seem attractive on the surface but are loaded with hidden risks or excessive fees.
High-pressure sales of “exclusive” private deals to retail investors could become akin to the boiler-room penny stock scams of old, but dressed up in FinTech clothing.
As one industry commentary said, “private market investments are illiquid, opaque, and often complex.
Retail investors may lack the financial literacy or experience to evaluate these assets, leaving them vulnerable to poor decision-making or predatory practices.
This statement underscores that simply opening the gates without levelling the informational playing field could expose mom-and-pop investors to serious pitfalls.
In summary, information is power in investing, and currently, the power in private markets lies with those on the inside – fund managers, institutional allocators, and company executives.
Retail investors entering this arena must recognise that they are playing an away game.
The decks aren’t necessarily stacked against them by intention, but by the nature of private markets, they start with a handicap.
Overcoming this requires improved transparency (which we will touch on later as a solution) and a healthy dose of scepticism.
Retail investors should demand clear information and be wary of deals that look too good to be true.
Without that, democratising private assets could simply mean democratising the risk of being the last one holding the bag.
Illiquidity and “Lock-Up” Traps
Another dark side of private market investing – even for seasoned pros – is illiquidity.
By their nature, private assets do not offer the easy in-and-out trading that public stocks or mutual funds do.
When you invest in a private equity fund, your capital might be locked up for 7-10 years.
When you buy shares of a pre-IPO company on a secondary platform, you may not find a buyer readily if you want to sell those shares later.
This is a serious issue for retail investors, who typically have less wealth to buffer an illiquid investment (and might need cash for emergencies, etc.).
Democratisation or not, “liquidity risk” is an ever-present shadow in private investments.
A World Economic Forum study highlighted that investing in private assets usually means an investor “can’t liquidate quickly” and often faces “longer lock-up periods”, which many individuals are unable or unwilling to bear.
Unlike an affluent investor with a large portfolio, an average person who ties up a substantial chunk of savings in an illiquid asset could face hardship if they suddenly need those funds.
If a medical emergency or job loss happens, you can’t easily sell a private equity fund stake to pay the bills.
This mismatch between the long-term nature of the investment and the shorter-term liquidity needs of some retail investors can lead to what we might call an “illiquidity trap.”
What does an illiquidity trap look like?
Imagine a retail investor, Alice, who buys a small stake in a private infrastructure fund through a new online platform.
She’s told the investment will be locked in for at least 5 years, but there might be some liquidity via a quarterly redemption program or a secondary market.
Two years in, Alice needs to cash out due to personal circumstances.
She goes to the platform and finds that the secondary market has few buyers – the only offers are at 30% below the fund’s last appraised value.
Alternatively, the fund’s terms only allow 5% of shares to be redeemed every quarter, and redemption requests are backlogged for a year.
Alice is effectively stuck: she can sell at a fire-sale price (taking a significant loss) or remain locked in and hope things improve.
This scenario isn’t hypothetical – it mirrors real incidents in the market.
For example, in late 2022, Blackstone’s $60+ billion non-traded real estate investment trust (BREIT), a vehicle open to individual investors, had to gate redemptions because withdrawal requests overwhelmed the allowed limits.
BREIT permits investors to redeem up to 2% of its net asset value per month (with a 5% quarterly cap), but in November 2022, investors rushed for the exits and hit those limits.
Blackstone prorated and limited withdrawals, meaning many investors could not get all their money out when they wanted.
This situation took months to resolve – in fact, BREIT only resumed full liquidity for redemption requests in late 2023 after market conditions stabilised.
The lesson for retail investors is clear: even if a fund or platform claims to offer periodic liquidity, that liquidity can evaporate in a crunch. You may find the gate closed just when you want to exit.
The valuation of private assets compounds this problem.
Because there’s no continuously quoted price, investors rely on periodic reports or estimates of value.
These can lag reality, especially in times of stress. During the COVID-19 crisis in 2020 or other downturns, public markets plunged.
Still, many private asset funds didn’t report comparable drops in their net asset values until much later (or only in subtle ways).
If you are a retail investor, you might see a steady, smooth valuation on paper and think your asset is holding up fine, when in reality, its actual market value (if you tried to sell) could be significantly lower.
This valuation uncertainty can lure investors into a false sense of security. In public markets, volatility is evident and prompts people to react (sometimes rashly); in private markets, volatility is hidden, which can be dangerous in a different way – you don’t know there’s a storm until it’s passed.
Retail investors might buy at an inflated valuation (for instance, late in a funding cycle when assets are priced high), only to later discover that those values were optimistic.
We saw this with some high-flying “unicorn” startups: late-stage investors (including some retail via secondary markets or pre-IPO funds) bought in at peak valuations in 2021, and by 2023 many of those companies had slashed valuations or even gone bankrupt (e.g., consider the fate of WeWork, which had a $47 billion private valuation at one point and ended up near worthless).
Illiquidity also ties into psychology and timing.
If you realise you made a bad investment in public markets, you can sell and redeploy your capital (albeit perhaps at a loss).
In private markets, you’re stuck with that mistake for years.
This can lead to opportunity cost – your money is tied up in a poorly performing private asset, whereas you could have invested it elsewhere.
Retail investors, who typically cannot build as broad a portfolio of private assets as institutions can, are more exposed to this kind of risk concentration.
If an endowment invests 5% of its portfolio in a struggling private fund, it can live with it. But if an individual puts 50% of their savings into a few private deals that go south or get stuck in limbo, the impact is far more devastating.
To be clear, illiquidity is a double-edged sword.
One reason private assets can deliver higher returns is that investors demand a premium for giving up liquidity.
Long-term investors are often rewarded for weathering illiquidity.
The danger is when investors who cannot truly bear that illiquidity are enticed into these investments.
If democratisation allows people who need liquidity to lock themselves into illiquid assets, it could end in hardship.
Thus, one of the ethical considerations in democratising private assets is ensuring that investors understand the liquidity constraints fully and that, where possible, mechanisms are in place to provide exits.
We will discuss later how the industry might address this (for example, by developing more robust secondary markets or funds with built-in liquidity provisions).
Still, the takeaway here is that illiquidity remains a critical risk.
The old saying goes, “invest only what you can afford to lose.” In private markets, we might amend that to, “invest only what you can afford to forget about for a long time.”
Echoes of Past Pitfalls: Will Retail Be the Exit Liquidity?
When surveying the rush to include retail investors in private deals, some sceptics raise a pointed question: Are we seeing a replay of the age-old pattern where retail investors end up as exit liquidity for the pros? In other words, are the current owners of private assets – the private equity firms, venture capitalists, and early investors – looking to sell to new retail entrants at high prices, securing their gains and leaving the newcomers with mediocre prospects?
This cynical view has roots in financial history. Time and again, we’ve observed that professionals and insiders often time their exits to coincide with bullish waves of public enthusiasm.
Consider the IPO market: companies often go public after a run of high growth and hype, allowing early private investors to sell shares to the public at a rich valuation.
Studies have shown that the average long-run performance of IPOs tends to lag the broader market, implying that public investors often overpay at the offering and see subpar returns thereafter.
A similar phenomenon occurred during the dot-com bubble of the late 1990s – insiders of tech startups cashed out via IPOs or secondary sales.
At the same time, many retail buyers of those stocks incurred steep losses when the bubble burst. Fast forward to the late 2010s and early 2020s, and we saw waves of venture-backed companies going public (or being sold via SPACs) at sky-high prices, only for their valuations to collapse later.
Who bore those losses? In many cases, retail investors bought the story. The insiders and sponsors had already taken their profit off the table.
The democratisation of private assets could, if not managed carefully, facilitate a similar risk transfer.
Picture a scenario where a private equity firm has a portfolio company that hasn’t found a traditional exit (no attractive IPO or buyer in sight).
Now, with secondary marketplaces and tokenised fractional shares, they might slice that investment into pieces and sell it to thousands of retail investors on a platform, achieving a liquidity event for themselves.
The price set for these transactions might be based on optimistic projections (after all, it’s not a public market with many independent buyers setting the price—often the platform or the seller has a hand in pricing).
Retail investors might jump in, thinking they finally have access to a coveted asset class.
But down the road, if the company’s fortunes wane, those small investors could end up with losses that would have otherwise been the private equity firm’s problem. Essentially, the risk gets transferred to the less-informed party.
Another angle is what happens when markets turn south. In a booming economy, many private assets look like winners.
But in a downturn or recession, private markets can seize up.
If retail ownership of private assets becomes widespread, one could imagine a scenario where, during a market panic, these investors either cannot sell (hitting the liquidity issues discussed) or, worse, they panic-sell on secondary markets for cents on the dollar.
Who might be on the other side of those fire sales? Potentially, savvy institutional investors are waiting to scoop up bargains. In other words, retail investors could buy high and sell low, which is the opposite of success in investing.
This is not unlike what happens in public markets at times – recall how many individual investors bought tech stocks or crypto near their peaks, only to sell in despair after crashes, often with hedge funds or other institutions buying at the bottom.
The concern is that broadening retail access without safeguards might inadvertently set up retail investors to absorb losses in volatile times, providing a buffer for more sophisticated players who can take advantage of dislocations.
It’s important to note that not all democratisation efforts are cynical or malicious. Many players genuinely believe in broadening access and want to do so responsibly. Yet, the incentives in play can lead to problematic outcomes if not monitored.
Private fund managers eager to tap retail money might be tempted to market their strategies aggressively, glossing over the downsides.
If a fund’s performance is lacking, expanding the investor base to retail could bring in fresh capital and perhaps allow earlier investors to exit.
There’s also the issue of valuation mark-ups: without public market pricing, there is latitude in how assets are valued when sold.
A platform could present an asset to retail investors at a valuation that assumes a best-case scenario outcome (because there’s no active market to say otherwise), thus embedding a rich price that favours the seller.
The phrase “dumb money” is an unfair slur sometimes used on retail investors.
Still, the democratisation trend will test whether the industry wants retail to prosper or simply to participate (on the other side of the trade).
Ethical practices and alignment of interest (which we will discuss next) are crucial to prevent exploitation.
Otherwise, the worst-case vision of democratisation is one where it becomes easier for those in the know to offload risk onto those less in the know.
The onus will be on industry leaders to prove the sceptics wrong by ensuring democratisation doesn’t devolve into a series of pump-and-dump schemes targeting retail.
Ensuring Fair and Responsible Democratisation
Is there a way to reap the benefits of democratising private assets while mitigating the risks we’ve outlined?
Responsible practices and market-driven solutions that promote fairness and transparency are the answer.
Rather than relying solely on regulators to police the process, many experts argue that the industry – fund managers, investment platforms, data providers, and advisers – must uphold ethical standards and best practices to protect retail investors.
Here are several key pillars that could ensure a fairer democratisation of private markets:
Enhanced Transparency and Data Sharing
Information asymmetry can be reduced by giving retail investors better decision-making tools and data.
This means providing transparent, standardised reporting on private investments – for example, regular updates on fund performance, portfolio holdings (where possible), and independent valuations of underlying assets.
Integrating data platforms like Preqin is a step in this direction; as BlackRock’s initiative suggests, melding vast private market datasets into user-friendly analytics can arm investors (and their advisors) with previously hard-to-obtain knowledge.
Private market players should embrace transparency even if not legally required to the same extent as public markets.
This could include voluntary disclosures, third-party audits of valuations, or publishing indexes and benchmarks that help contextualise performance.
Larry Fink’s vision of private market indexes or ETFs is notable – if achieved, it imposes transparency and pricing efficiency, as an index/ETF would require regular valuation and arbitrage mechanisms.
While we’re not there yet, even interim steps like marketplaces publishing transaction data (price levels at which private shares changed hands) can add sunlight.
The goal is to level the information playing field so that retail investors know what they’re getting into and can gauge fair value, rather than buying blind.
Investor Education and Guidance
Empowering retail investors to navigate private assets responsibly involves a strong emphasis on education.
These investments are more complex, and expecting everyone to understand them as a professional is unrealistic.
However, the industry can provide better guidance. Platforms that offer private investments to individuals should include robust educational resources – explain the risks in plain language, provide scenarios of best and worst-case outcomes, and clarify the unique terms (for instance, how an interval fund works, or what it means that a private REIT can gate withdrawals).
Financial advisors also play a critical role here. The World Economic Forum found that many retail investors would benefit from better-informed financial advisers who understand private markets.
If advisors lack experience with private assets, they can’t properly advise their clients on suitability.
Thus, part of democratisation must be to “rehaul education to be fit-for-purpose” for both individual investors and the advisors guiding them.
Industry associations and firms could offer training programs or certifications focused on alternatives for the wealth management community.
In addition, clear investor suitability assessments should be in place – not everyone should be investing in these products.
Firms are responsible for ensuring they are marketing to investors for whom these risks are appropriate (taking into account net worth, income, time horizon, etc.), much like how risk-profiling is done for other complex products.
Responsible Product Design and Distribution
To truly democratise fairly, private market products aimed at retail should be designed with the investor’s welfare in mind.
This means aligning incentives and building in safeguards. For example, if a private equity firm launches a feeder fund for retail, the managers could co-invest significant capital or implement a longer lock-up for themselves, signalling confidence and ensuring they don’t simply use it as a dumping ground.
Fee structures should be reasonable – one of the criticisms of interval funds and other retail-focused vehicles is that they often layer additional fees (for distribution, liquidity, etc.) on top of already high management and performance fees.
These extra costs can erode returns for retail investors, essentially charging them more for a diluted version of a strategy.
The best practice would be to streamline fees so that retail investors get cost-effective access to the product, not an overpriced one.
Additionally, disclosure of all risks must be candid
Suppose there is a possibility that an investor may not be able to redeem for X years, or that valuations are estimates, or that specific conflicts of interest exist.
In that case, these should be plainly stated, not buried in fine print. Responsible distribution also means refraining from overselling or overhyping.
Firms should avoid presenting private assets as a surefire way to get higher returns – yes, they can offer higher returns, but only with commensurate risk.
Setting realistic expectations is key. Internal policies and codes of ethics at firms that venture into retail distribution can foster a culture of treating retail investors as long-term partners rather than exit targets.
Liquidity Provisions and Secondary Market Development
Since illiquidity is such a big issue, market-driven solutions to improve liquidity can greatly benefit retail participants.
This doesn’t mean promising full liquidity where it isn’t feasible (that would be a false promise), but instead taking steps to mitigate the liquidity crunch.
For instance, funds can incorporate periodic redemption windows with clear rules and perhaps reserve liquidity buffers to meet some redemptions (acknowledging that these might be oversubscribed in a crisis, but even partial liquidity is better than none).
Some newer funds aimed at individuals use structures like tender offers (fund offers to buy back a certain percentage of shares periodically) to give investors an out.
More innovatively, the industry can support the growth of secondary marketplaces.
Earlier, we discussed platforms like Alta – for such exchanges to flourish and provide fair prices, they need volume and participation from a mix of investor types (not just retail, but also institutional buyers who come to find bargains).
Private market players can encourage this by allowing or even syndicating some deals to trade in these venues.
The World Economic Forum’s research calls explicitly for “improving the management of liquidity and developing a secondary market” as a crucial component of responsible retail access.
If a big private equity firm partners with a secondary platform to make a slice of its fund transferable, that could set a precedent.
Another idea is creating centralised bulletin boards or trading windows where interested buyers and sellers of private fund interests can meet (under the sponsor’s oversight to ensure fairness).
While none of these completely solve the liquidity problem, they at least prevent the scenario of a retail investor having nowhere to turn.
The presence of a secondary market also imposes a form of discipline. If an asset consistently can only be sold at a 50% discount, that’s a signal that something is off with its valuation or structure, alerting both investors and sponsors to address it.
Alignment and Ethical Standards
Perhaps the most intangible but essential aspect is the ethical commitment of industry players to treat retail investors equitably.
This involves an internal mindset shift for firms used to dealing with institutions. It means recognising the trust smaller investors place in them and honouring that trust by not taking advantage of informational or power imbalances.
For example, if a private company allows its employees or retail investors to buy shares, it should also provide them with the same key information that big investors get.
If a fund’s manager marks down the value of an asset, all investors should be informed simultaneously (avoiding selective disclosure). Industry groups can establish best practice guidelines for retail alternative investment, covering everything from marketing language to fee transparency to handling of conflicts.
Self-regulation in this way can often be more nimble and nuanced than government regulation, and it shows good faith.
Moreover, keeping the “spirit of democratisation” genuine means continuously asking: Are we delivering real value to these new investors?
If a product consistently underperforms or offers a raw deal to retail participants, it may be retooled or even pulled from the market.
Fairness might also involve investor feedback mechanisms, where firms solicit input from their retail clients and make improvements.
In a democratised market, retail investors should ideally have some voice (even if small) rather than being passive capital providers.
Market-Led Responsibility vs. Regulatory Reaction
It’s worth noting that regulators are not entirely out of the picture – they are monitoring this trend closely.
There may indeed be new rules or adjustments (for instance, adjustments to who qualifies as an accredited investor, or oversight on crowdfunding and tokenised assets).
However, as per the brief of this discussion, the emphasis is on market-driven solutions and ethical best practices.
These can often address issues proactively before they become scandals or crises that compel regulatory crackdowns.
For example, if secondary marketplaces develop robust standards for fair pricing and fraud prevention, it reduces the need for heavy-handed regulation of those markets.
If fund managers voluntarily simplify disclosures such that an average person can understand them, it heads off the possibility of regulators forcing a particular disclosure format.
Essentially, the private market industry now has an opportunity to shape democratisation's narrative and practice in a positive way – to prove that this isn’t a gambit to dump risk, but rather a good-faith effort to include a broader population in wealth-generating opportunities.
How Kilde Is Addressing the Perils of Private Asset Democratisation
While the democratisation of private assets holds great promise, it is clear that retail and individual investors can be exposed to significant risks without careful structuring and responsible stewardship.
Recognising these challenges, Kilde has designed its platform and processes specifically to overcome many of the perils outlined earlier.
Focusing on fairness, transparency, and appropriate investor profiling, Kilde aims to set a new standard for how sophisticated investors should offer private market access.
Here’s how Kilde addresses the main risks:
Same Deals for All Investors
One of the traditional problems with private markets has been unequal access, where larger, more connected investors secured better deals or superior terms than smaller participants.
Kilde rejects this model entirely. On our platform, every investor, whether a professional asset manager, a family office, a fund, or a high-net-worth individual, accesses the same investment opportunities on the same terms.
There are no preferential side deals, hidden structures, or insider advantages.
By levelling the playing field this way, Kilde ensures that no investor is disadvantaged by their size or profile.
This commitment to fairness directly counters the historic pattern of retail investors receiving lower-quality or less favourable allocations than institutional players.
Detailed Information at Every Step
Another significant peril for individual investors in private markets is information asymmetry.
To mitigate this, Kilde embeds transparency deeply into every investment opportunity.
Investors receive a comprehensive Information Memorandum detailing the structure, risks, and expected returns for every deal listed.
Moreover, Kilde provides regular updates on the underlying portfolio and loan performance metrics, giving investors a continuous view of how their investments progress.
This ongoing communication and transparency approach reduces the uncertainty that often clouds private market investing.
Investors on Kilde’s platform are never in the dark; they are empowered with the data they need to make informed decisions and monitor their portfolios over time.
Early Redemption Rights Baked into the Deals
Illiquidity remains one of the most significant challenges of private asset investment, particularly for individuals.
Kilde addresses this by directly embedding early redemption and liquidity rights into the deals wherever possible.
These structured exit options provide investors with defined pathways to access their capital before the final maturity of an investment, reducing the risk of being locked into an asset with no viable exit.
While private investments will always require some degree of patience, Kilde believes that offering precise, contractually embedded liquidity mechanisms is critical to responsible democratisation.
These rights give investors greater flexibility and peace of mind, knowing they are not entirely dependent on uncertain secondary markets or sponsor discretion to recover their capital.
Kilde is a Supplement, Not a Substitute for a Balanced Portfolio
Finally, Kilde is committed to ensuring that private asset investments are appropriately positioned within an investor’s broader financial strategy.
Kilde clearly communicates that investments through the platform should be seen as a supplement and diversification tool, not a single, core portfolio bet.
Kilde focuses on working primarily with funds, family offices, and high-net-worth individuals—investors who have already built the core of their portfolios across traditional, liquid asset classes.
In our philosophy, private assets make sense only for investors with sufficient scale in their wealth and can afford to take on the longer time horizons and illiquidity that these opportunities entail.
By maintaining a disciplined approach to investor selection and education, Kilde helps prevent the dangerous overexposure when less experienced investors put too much of their savings into illiquid alternatives.
Conclusion
In conclusion, democratising private assets for retail investors is a double-edged sword.
On one edge, it promises inclusivity and the chance for individuals to diversify their portfolios and enjoy returns that were once out of reach.
On the other hand, it carries the risk of mis-selling, mis-pricing, and misalignment that could hurt those very investors it aims to help.
The “dark side” of this trend manifests in information imbalances, liquidity lock-ups, and the potential for retail to be left holding the short straw in transactions.
By acknowledging these risks and actively working to mitigate them through transparency, education, fair product design, and ethical conduct, the financial industry can shine a light on the dark corners and ensure that democratisation truly benefits everyone involved.
As one veteran investor noted, it will take structural changes, a robust secondary market, and educated investors to navigate the challenges of private assets.
In other words, all stakeholders must play their part. Retail investors venturing into private assets should do so with their eyes wide open, armed with as much knowledge as possible.
And the stewards of this democratisation – be they BlackRock integrating data, fintech platforms enabling access, or funds creating retail share classes – should strive to uphold the highest standards of fairness.
If done right, democratising private assets can be a transformational positive in finance, narrowing the gap between Main Street and Wall Street.
If done poorly, it could shift who bears the risk when things go wrong, undermining trust in the idea of investment democratisation.
The coming years will be crucial in determining our path. Still, a commitment to transparency, integrity, and investor-centric practices will surely tilt the outcome toward a more equitable future in private market investing.
Sources:
- World Economic Forum. 2023. Broadening Access to Private Markets. White paper, November 1, 2023. https://www.weforum.org/publications/broadening-access-to-private-markets
- The Buyside Journal. 2024. “Why the Democratisation of Private Markets Isn’t What It Seems.” The Buyside Journal, October 9, 2024. https://the-buyside-journal.beehiiv.com/p/why-the-democratization-of-private-markets-isn-t-what-it-seems
- Latham, Mark. 2025. “The Democratisation of Private Markets: A Double-Edged Opportunity.” Funds Europe, January 14, 2025. https://funds-europe.com/the-democratisation-of-private-markets-a-double-edged-opportunity
- Basar, Shanny. 2025. “BlackRock Says Preqin Acquisition Could Transform Markets.” Markets Media, March 4, 2025. https://www.marketsmedia.com/blackrocks-preqin-acquisition-to-transform-markets
- Alta. 2025. “About Alta.” https://alta.exchange/about-alta
- ANTARA News. 2025. “Stableton Partners with Alta to Expand Access to Global High-Growth Pre-IPO Investments.” Press release, January 8, 2025. https://en.antaranews.com/news/340578/stableton-partners-with-alta-to-expand-access-to-global-high-growth-pre-ipo-investments
- Rogers, Jack. 2024. “Blackstone Fulfils All Redemption Requests.” GlobeSt, March 4, 2024. https://www.globest.com/2024/03/04/blackstone-fulfills-all-redemption-requests
- Blewitt, Steve. 2024. “The Democratisation of Private Markets and Closing the Information Gap.” CAIA Association, January 23, 2024. https://caia.org/blog/2024/01/23/democratization-private-markets-and-closing-information-gap
- Andrews, Meagan. 2023. “Private Markets Have Been the Domain of Institutions and the Wealthy; Could They Open to Retail Investors?” World Economic Forum, November 1, 2023. https://www.weforum.org/stories/2023/11/future-capital-markets-private-retail-investors
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