The SEC decided retail investors don't have enough ways to light their money on fire. So they're opening up private markets. You know, the place where sophisticated investors park capital in companies that might go public in seven years or might just send you a fruit basket and a bankruptcy notice.
OpenAI and Anthropic are the bait here. Two companies that have never turned a profit but somehow convinced venture capitalists that chatbots are worth more than the GDP of Portugal. Now you get to play too.
Private markets used to require accreditation. You needed a net worth over a million dollars or income above $200,000. The idea was you could afford to lose it all. Quaint. The SEC looked at that barrier and thought, why should rich people have all the fun watching their Series B shares get diluted into oblivion?
Here's what you're buying: no liquidity, no transparency, and valuations determined by whatever number the last guy was willing to pay. Companies can stay private longer now. They rack up losses for a decade while insiders cash out through secondary markets you'll never access. Then maybe they IPO. Maybe they don't. Maybe the founder buys a yacht and pivots to Web3 dog treats.
The hype around tech darlings going public is doing heavy lifting in that summary. Going public used to mean something. Now it means the early money found an exit and you're holding the bag at $43 per share while they bought in at $0.0003.
Plenty of potential reward and risk. That's one way to describe it. Another way: you're giving your savings to a company that's never filed a 10-K so you can feel like you're friends with Sam Altman.
But sure, send your Roth IRA into a Series C round for an AI startup that's definitely not just three McKinsey guys and a Python script.
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