In today’s market, modern companies are staying private for much longer than they used to. The median age for tech companies going public in 2000 was 4-5 years compared with 12 years in 2018. The returns generated by these companies during their growth phase are only achievable by accessing the private share market. As an investor, this makes it essential that you gain an earlier entry point to these companies by investing in private company shares.
Institutions worldwide are increasingly turning their attention to the private markets. Every major category of institutional investor sees themselves as being under-allocated to private markets. In a world starved for yield, where traditional assets are forecasted to provide muted returns over the next 5-10 years, private companies can provide the yield pickup needed to reach your investing goals.
Private markets are also not subject to many of the difficulties associated with investing in public equity markets. Flash crashes, quarterly reporting moves, indexing and ETFs - these are facets of the public markets which directly affect investors, yet have little to do with the underlying performance of a given company. Private markets are insulated from these concerns.
Linqto is provides ordinary investors easy access to these private share markets. They also provide existing shareholders the ability to easily liquidate and monetize their shares.
Founders, VCs and employees can realize early returns and liquidity without waiting for an IPO or trade sale. Companies can stay private longer by using Linqto’s ability to provide liquidity on an on-going basis, not just at exit.
How you make money
Currently, Linqto allows investors to gain exposure to the stock of private companies. However, this is only the first part of Linqto’s vision. The second part is to create a venue where these investments can be freely traded.
This sort of venue doesn’t currently exist, as regulations have made it too cumbersome. With the development of Linqto’s platform and the growth of the private markets, this is starting to change. Linqto is actively working with regulators to develop this sort of an exchange, and they believe it will be an incredibly important development in the private market, for Linqto and their investors.
For the time being, until this sort of venue becomes possible, investors will not have the ability to liquidate their positions before an exit. At Linqto, they do their best to feature companies which, based on their research, are actively working towards an exit.
How Linqto makes money
Linqto charges a 0.5% annual management fee, based on the original amount that you invest.
Is it safe?
Ultimately Linqto cannot guarantee that all of their investments will experience an exit, which means (as with most asset classes) that you are not guaranteed a return on your investment.