Why You Shouldn’t Invest in the Most Exciting Startup

Privately held companies doing disruptive things – startups as they’re called – have long been the domain of venture capitalists. And for good reason. Somewhere around 90% fail which means investors take a large hit or perhaps even a total loss. Equity crowdfunding and SPACs have shown us that retail investors who don’t invest alongside professional investors will likely lose money even faster. Up until now, the only way for a retail investor to buy shares in a startup would be through a secondary market.

Revisiting Secondary Markets

It’s been over six years since we wrote about How to Buy Shares of Stock in Startups, a piece that highlighted three secondary markets that allow accredited retail investors to buy shares in private companies. Since then, Equidate renamed to Forge (FRGE) and purchased their rival SharesPost. They then went public using a SPAC and predictably saw shares lose 88% of their value so far. With a $100,000 investment minimum, the platform has seen marketplace revenues fall off a cliff over the past several years.

The third firm we covered previously, EquityZen, provides a more palatable minimum investment of $20,000 per company (or around $10,000 for the first two compa