Private Markets: You don't belong!

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Private markets have been designed to make you believe that you don’t belong!

There, I said it. Now you know. Private markets (Venture Capital, Private Equity, Hedge Funds, Private Credit etc.) have been the playground of the wealthy since their inception. And as a result of their makeup, not only have you, the individual investor, been kept on the outside, but it's exactly this structure that has led to a belief that you don’t belong.

We’ve done a lot of thinking on this. And a lot of research. Working in tech meant that we were surrounded by a particular profile of people - Educated, highly skilled, well paid and most importantly, a high interest in financial freedom. Now, I'm not claiming everyone who works in tech wants financial freedom as if we’ve tested it and have the data. But, I mean, who doesn’t?! More specifically, we found that people working in tech display a higher degree of action when it comes to building towards financial freedom than many other profiles.

Why is that? Well, when you work in tech there is a high likelihood that you have access to a decent pension scheme and employee stock option plan. And, in many cases, at least one of these is mandatory (usually the pension of course). This means that employees in tech are exposed to wealth building tools in the workplace. And the knock on effect of that is their financial literacy grows and they graduate to other tools outside of what's available from their employer. All of the points above are the reason why people working in tech are the perfect customer profile for what we’re building at Shuttle and why we validated our thinking using this profile. 

Now, you’re probably wondering what this has to do with private markets and how they’ve been designed. Fair question. You see, private markets have a number of barriers to keep the majority of people on the outside looking in. Regulation, closed networks and unaffordable minimum investments are the main culprits. For now let's focus on regulation. Or, a subcategory of it — accreditation rules.

When it comes to regulation, what tends to be the deciding factor as to whether someone can or can’t invest; and the biggest barrier across most platforms around the world…is net worth!!

Known as ‘accreditation rules’ (Accredited or Non-Accredited Investors, or sometimes known as Sophisticated or Non-Sophisticated Investors), these determine whether someone is “sophisticated” enough to take part in a certain asset class. Now, looking back at the profile we mentioned above, do they not sound sophisticated enough to make the choice as to whether they should or shouldn’t invest in a particular opportunity? Educated, skilled, well paid and already taking part in wealth-building activities. And I want to note, working in tech does not necessarily make you more sophisticated than someone who works in any other industry. And many other sectors have a similar profile of people with similar access to tools that develop their financial literacy. But my point was to show that this profile, our profile, and the profile we validated with, would still not be allowed to invest in most private market assets because the rules are based on how much money you have! What a load of s**t!

There are imbeciles everywhere and the wealthy seem to have more than their fair share. Having money doesn’t mean you’re intelligent…or ‘sophisticated’. So why should this be a leading factor in who can access these opportunities?! 

Now, regulations as a whole are incredibly important as they form the foundations of safety and security that protect the investor. And having just been authorised by the Central Bank of Ireland, we’re very much pro-regulation here at The Unsophisticated Investor and Shuttle. BUT, how people are categorised is an area we believe should be reconsidered.

The result of barriers like this is that the majority of people have never been able to access these opportunities which creates a sentiment that private markets are not for them. And what we’ve recognised is that after decades of hearing the same thing, retail investors subconsciously avoid the space altogether because they have been conditioned to believe it is not a world they can be a part of.

The mass market has grown increasingly sophisticated in the last decade. Investing has never been more popular and advancements in technology and access to information mean that the level of sophistication will continue to rise. Right now, retail investors account for 50% of global wealth and are expected to triple their allocation into alternative assets (private markets) from $4 to $13 trillion over the next 10 years. And while the term ‘Retail Investor’ also accounts for high-net-worths, it's the mass market that makes up the majority of these investors. Maybe not the majority of the capital being invested, but certainly the majority of people. And yet, they can only access a fraction of the opportunities their wealthy counterparts can.

The increased interest in private markets isn’t only a result of technology and education either. It's born from necessity. We’re living in a world where people’s ability to achieve financial freedom is constantly overshadowed by unaffordable housing, job insecurity and inadequate retirement plans. And it’s because of these macroeconomic uncertainties that millions of consumers are now regularly investing.

If you’ve been a part of this community for a while now you’ll know that The Unsophisticated Investor is Shuttle’s community newsletter. And Shuttle was built to enable both accredited AND non-accredited investors to access better wealth-building opportunities across private markets regardless of your knowledge, network, or net worth. I’d like to think that's a vision we can all get behind.

Onwards, friends.

What we’ve been working on at PitchedIt

Hot off the back of our CBI authorisation we’ve been:

• Finalising rebrand 🎭

• With the rebrand comes a redesign of the platform (We’re very excited to show everyone…it looks pretty sexy if we say so ourselves!) 🎨

• Released our launch video which you can view HERE 🎥

The Unsophisticated Investor is brought to you by Scott & Rob, the founders of Shuttle. We’re both sick of private markets being a playground exclusive to the ultra-wealthy so we started a company to challenge the status-quo. Shuttle’s singular focus is to unlock private markets for Millennial and Gen Z retail investors and help them build wealth through the highest performing private market opportunities.

Scott & Rob
Shuttle Co-Founders