How does investing in private markets differ from public markets?

Investing in private markets is different from investing in public markets in several ways.

Firstly, private market investments are typically only available to accredited or institutional investors, whereas public market investments are available to retail investors as well. This is because private market investments are considered to be riskier and require a higher level of investment expertise, knowledge, and experience.

Secondly, private market investments are typically illiquid and have a longer investment horizon compared to public market investments. This means that investors in private markets may have to commit their capital for several years before realizing any returns. In contrast, public market investments can be bought and sold on stock exchanges, providing investors with liquidity and the ability to exit their positions quickly.

Thirdly, private market investments are generally less transparent than public market investments, with limited publicly available information on the underlying assets and investment performance. Investors in private markets rely on the fund managers and investment teams to provide information and updates on the investment performance.

Lastly, private market investments typically have higher minimum investment requirements compared to public market investments, making them inaccessible to most retail investors. Private market investments require larger amounts of capital, which can limit the number of investors who can participate in these investments.

Overall, investing in private markets requires a different set of skills, knowledge, and expertise compared to public markets, and investors should carefully evaluate the risks and rewards before making any investment decisions.