If you’ve ever wondered how you could own shares of the world’s most compelling pre-IPO businesses, look no further.
These privately held companies aren’t publicly traded like many well-known stocks, so you can’t simply buy shares through a stock exchange using your normal brokerage account.
Previously, access to invest in these businesses was limited to a select few company insiders, ultra-wealthy individuals, institutional investors, and venture capital funds.
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But retail investors’ appetite for alternative investments has grown quickly in recent years, leading some investment platforms to think outside the box for ways to give everyone the ability to put their money to work in privately held businesses.
In a bold move to democratize access to such private market investments, SoFi Technologies (SOFI) recently announced a new offering that allows individual investors to gain exposure to previously inaccessible private companies.
The initiative is part of SoFi’s broader expansion into private equity and venture capital investing through new partnerships with alternative asset managers Cashmere, Fundrise, and Liberty Street Advisors.
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These partnerships provide SoFi’s more than 10.9 million users with streamlined access to funds that hold stakes in many of the world’s most coveted pre-IPO companies, notably including Elon Musk’s SpaceX, OpenAI (the owner of ChatGPT), and Epic Games (the developer of Fortnite and Unreal Engine).
Over the past year, SoFi has also expanded its “Alts” (alternative investment) platform to introduce investment funds managed by ARK, KKR, Carlyle, and Franklin Templeton, providing exposure to private credit, real estate, and other pre-IPO companies.
SoFi recently relaunched its robo-advisor offering in a collaboration with BlackRock as well, providing members access to a variety of real estate and multi-strategy funds.
“Expanding access to private markets is a critical piece of our mission to help members get their money right,” said SoFi CEO Anthony Noto. “Historically, the private markets have been out of reach for most individual investors, despite outperforming public markets over the past two decades.”
What’s available through SoFi’s new partnerships
Among the highlights of SoFi’s expanded offerings is Liberty Street Advisors’ Pre-IPO Innovation Fund, which holds stakes in high-profile private companies including SpaceX, the Musk-led aerospace and satellite communications giants with a rumored valuation of as much as $400 billion, according to a recent report from Bloomberg.
Other offerings include Cashmere’s growth fund, which invests in fast-scaling, design-centric startups and brands that appeal to younger demographics, and the Fundrise Innovation Fund, which focuses on late-stage tech companies with strong exit potential via IPO or acquisition.
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Why SoFi’s offerings matter for retail investors
SoFi’s move taps into a growing trend of retail interest in alternative assets. As public market returns become more volatile and institutional investors increasingly allocate capital to private equity, retail investors have clamored for ways to access similar opportunities.
To that end, SoFi users will be able to invest with minimums starting at $10 and varying depending on the specific fund they intend to purchase. Those minimums are far below the standard $250,000+ often required by venture and growth equity funds.
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For investors in SoFi stock, this also signals the neobank’s continued evolution from a fintech startup into a full-service financial institution.
From the company’s genesis as a student loan refinancer to its subsequent moves into mortgages, stock and cryptocurrency trading, and consumer banking services, expanding private equity access strengthens its investment product suite and may help attract and retain high-value customers as they seek more streamlined, sophisticated wealth-building tools.
This also fits well within SoFi’s broader strategy of owning more of the financial value chain by embedding differentiated offerings into its app-centric ecosystem.
Over the long term, the success of this initiative will depend on a combination of user adoption, fund performance, and SoFi’s ability to educate retail investors on the minutiae and risks of private investments.
If successful, it could positively reshape how millions of people build long-term wealth, and potentially prove to be a watershed development in the democratization of finance.
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