Unlock the Potential of Private Market Investing

Private market investing has long been valued by family offices and institutional investors for its enduring investment qualities: reliable income, competitive returns, inflation protection, and portfolio diversification.

The results highlight the potential of a private markets-enhanced portfolio to deliver superior returns across diverse macroeconomic conditions. The portfolio allocated to private markets has achieved a cumulative return of 128% since inception, significantly outperforming the public portfolio's 46% return.

A blended portfolio, with a 50% allocation to both private and public markets, shows how adding private market investments can enhance returns compared to a purely public markets portfolio. This underscores the potential of private market investments to outperform public market portfolios, offering superior returns and greater wealth creation for investors who embrace substantial private market exposure.

_{Sources: Hamilton Lane, McKinsey & Company.}‍

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What is Private Market Investing?

Private market investing, also called alternative investment, encompasses investments in assets not traded on public exchanges. These investments can include real estate, private equity, venture capital, private debt, and more. Unlike public markets, private investing provides access to a broader range of opportunities, often reserved for sophisticated investors and high-net-worth individuals.

Characteristics of the Private Market

Private markets are marked by several distinctive features:‍

• High return potential: Private equity often outperforms other assets, with a 10.48% return over 20 years versus the S&P 500's 5.91% (McKinsey & Company Private Equity & Principal Investors Insights).  
• ‍Diversification: Access to unique investments like real estate and venture capital reduces risks and enhances portfolio resilience.  
• Access to Niche Opportunities: Exposure to high-growth companies and unique ventures can potentially lead to significant returns.  
• Long-Term Focus: This investment strategy emphasizes sustainable value creation over longer horizons, resulting in more stable outcomes than volatile public markets.  
• Relaxed Regulatory Environment: Fewer regulatory restrictions allow companies to raise capital more flexibly without the burdens of public reporting.  
• Illiquidity: These investments are not easily sold for cash, often requiring longer holding periods before realizing their value.  
• Longer Investment Horizons: Holdings may need to be kept for years, allowing for potential growth and compounding over time.  
• Complexity: Due diligence is crucial due to limited public information, especially for startups where financials and market potential are often not disclosed.  
• High Entry Barriers: Typically requiring higher minimum amounts, access is often limited to accredited investors, restricting participation to high-net-worth individuals.

Comparing Private and Public Market Investing

Private Market

• Access: Limited to professional investors.
• Information: Less transparency and publicly available data.
• Liquidity: Typically illiquid with longer lock-up periods.
• Returns: Potential for higher returns but with increased risk
• Growth: Opportunities for growth opportunities
• Diversification: Expanding beyond public markets

Public Market

• Access: Open to all investors.
• Information: High transparency with regular disclosures.
• Liquidity: Generally high, allowing for quick buying and selling of assets.
• Returns: Potentially lower compared to private markets.
• Exposure: Direct exposure to macroeconomic trends
• Volatility: Market volatility and frequency of prices moving up or down.

Why Invest in Private Markets?

Investing in private markets can offer several benefits:

• Diversification: Adds non-correlated assets to your portfolio, reducing overall risk. Private markets allow investors to spread their investments across various types of assets such as private equity, venture capital, real estate, or private debt, thereby mitigating the risk associated with any single investment or sector.
• Potential for Higher Returns: Once again, private market investments have significantly outperformed public assets, with the US Private Equity Index showing a 10.48% return over 20 years, compared to the S&P 500's 5.91% over the same period.
• Exclusive Opportunities: Access investments not available in public markets, offering potential for larger gains. Stocks can be high-performing but costly at the same time. The same investment in private companies can yield higher returns. OR Diversifying investment portfolios between private companies and high-performing stocks can yield higher returns.
• Generally Lower Volatility: Private markets are usually less volatile than public stocks and bonds because they are less exposed to macroeconomic trends and events.
• Protection During Downturns: In the last 20 years, private markets have usually outperformed public stocks during economic downturns.

What Does Investing In Private Markets Entail?

To invest in private markets, you must:

1. Conduct Due Diligence: Thoroughly investigate potential investments. Review financial statements, market conditions, and the track record of management teams to make informed decisions.
2. Understand the Risks: Acknowledge the illiquidity and long-term nature of these investments. Consider how these factors align with your financial goals and risk tolerance.
3. Follow Regulatory Requirements: Ensure compliance with regulations governing private investments. Stay updated on changing laws to avoid legal pitfalls and protect your interests.
4. Engage Professionals: Work with financial advisors, legal experts, and investment professionals. Their expertise can provide valuable insights and guidance throughout the investment process.

The Risks of Private Market Investing

While private markets offer significant potential rewards, they come with risks:

• Illiquidity: Difficulty in exiting an investment before its maturity. This means you might not be able to sell the investment quickly without a substantial loss.
• High Volatility: Greater fluctuation in asset values. This implies that the value of the asset can change dramatically in a short period.
• Limited Information: Less regulatory oversight and fewer disclosure requirements. Investors have access to less data, making it harder to make informed decisions.
• Potential for Loss: Higher risk of losing the invested capital. This indicates a greater chance that the entire investment value could be lost.

Accessing the Private Market

Begin your private market investing journey with us and explore our extensive resources and tailored investment opportunities to diversify and enhance your portfolio.

Vennre helps investors navigate private market complexity and mitigate associated risks through:

• Expertise & Due Diligence: We conduct thorough research & analysis and limit our selection to the top 2% of hand-picked asset managers and opportunities.
• Growth Strategies: We collaborate with asset managers who possess operational experience, capability, and depth to maximize returns and enhance asset value over the investment period.
• Diversification: We strategically select leading managers across mature markets like the US, UK, and Europe, ensuring top decile opportunities that yield superior financial returns while minimizing downside risk.
• Access to Exclusive Deals: Our platform now allows high-net-worth individuals to access selected private market deals, offering qualifying investors the opportunity to invest with minimums as low as €/$/CHF 25,000.