A Glimpse Into Private Markets & Venture Capital

Investing in a company's earliest stage has long been a best-kept secret among Silicon Valley's most exclusive investors. Now that the secret is out and the startup journey has become romanticized by Hollywood, there is one major problem for the outsiders of Silicon Valley elites - access.

Venture capital funds are proliferating, given the explosive growth in startups seen in the last few years, and they are the ones who can access the best deals. 

Private companies are choosing to stay private longer, so retail investors continue to miss out on these explosive returns, while venture capitalists and institutional investors take advantage of this growing industry. In a report by Hamilton Lane in April 2022, 87% of US companies with revenue above $100m were private. At the start of 2000, there were 7,810 publicly listed companies, compared to just 4,814 at the end of 2020. According to a study by the University of Florida on Initial Public Offerings, tech startup companies used to IPO at an average age of 4.5 years, compared to 12+ in 2020. Venture capital funding has drastically increased in the last few years, explained in part because of this phenomenon. 

Why Are Companies Staying Private Longer?

• Regulatory headaches: SEC and other administrative hurdles make companies think twice about the value of selling equity to public investors, traditional capital markets are losing ground.

  
  

• Growth in private capital: The emergence of the venture capital industry and other secondary funding options make raising from public investors less of a necessity for building a hyper-growth business, so private investors are increasing their allocations.

  
  

• Strategy: Wall Street has been known to have brutal expectations and crippling consequences if those expectations aren't met. Companies may think twice about wanting to strategize based on public market demands. 

  
  

How Can Investors Access Private Startup Investments?

Investors who are accredited (net worth above $1,000,000 excluding primary residence, annual income of over $200,000, or other specified qualifications) may invest directly in private startups or through venture capital funds that will invest for them. 

Investing in startups through regulation crowdfunding has become an increasingly popular option for non-accredited investors since the law enabling was passed in 2016. Platforms have emerged to facilitate these investments, providing an accessible and convenient way for small investors to put their money into early-stage companies. However, these platforms are not without flaws; investors may be limited in how much they can invest, and the nature of the platform may lead to adverse selection bias. Perhaps most importantly, they still need to catch one of the most well-known portfolio construction strategies - diversification.

How You Can Diversify Your Portfolio With Venture Capital

aVenture is building a platform that allows fund managers to launch private-public crossover funds, giving accredited and non-accredited retail investors access to exclusive venture capital funds. The platform is being made to bridge the gap between the backdrop of fewer companies going public and more going private via private equity-backed deals. "They're missing out because there is no easy way for investors to responsibly invest in private assets today in a way that's properly diversified and liquid with less than $10 million, but aVenture changes that", explained Mr. Callahan, CEO and founder of aVenture. We are helping retail investors in becoming venture capitalists.

aVenture is here to democratize access to venture capital investing; our investment platform will be available to select investors in early 2023.

Investors and fund managers interested in using the platform are welcome to join our waitlist. We invite you to read the newest articles on startups and venture capital on our blog.