The revolution starts with Robinhood
With demand comes supply. Sooner or later, technological advancements will catch up to the demand for increased investing opportunities. While some small investors have turned to speculating on cryptocurrencies, many remain steadfast in their dream of value-based investing by latching on early to the next Amazon or Tesla.
New investment platforms are emerging to meet this rising demand, offering small investors access to pre-IPO companies and the golden years of growth ahead.
These platforms also connect small investors to alternative investments that were previously out of reach. New asset classes like private equity, private debt, and luxury real estate projects are becoming democratized.
Not only this, but the new investing platforms are lowering the entry threshold for small investors and making alternative investments accessible and gamified.
The platforms are typically run by a team of industry insiders who take on the role of brokers between alternative investments and groups of small investors. These insiders tend to have large investment networks that secure them invites to the best deals, which they then pass on to their own smaller investor clients. Another benefit they offer is that they possess the tech and marketing savvy needed to bring a critical mass of small investors together from around the world.
Consequently, these upstart trading platforms have carved out a niche in the Venture Capital economy.
Three examples of such companies are Cadre, Moonshot, and Seedrs.
Cadre is a US-based commercial real estate platform offering small investors the opportunity to invest in institutional-level commercial real estate. Previously, the due diligence and management required for large-scale commercial products were daunting for even the wealthiest of investors. Cadre solves that part of the equation. As its advantages, Cadre appoints at its low correlation with the stock market, its ability to serve as a hedge against volatility, and a stable, predictable cash flow.
Moonshot allows smaller individual investors to participate in pre-IPOs and top-tier private equity deals — the exclusive realm of the ultra-wealthy until now. The company sources the deals through its global network with offices in Zurich, New York, and Hong Kong, and focuses primarily on late-stage, senior deals, and private real estate. To date, Moonshot’s investments have all been exceptionally successful: by using the platform, investors could have invested in SpaceX since August 2021 when the company was valued at USD 46 billion. Even though its current valuation is north of USD 100 billion, the new investors keep subscribing in anticipation of the next funding round, says Moonshot.
Seedrs is a leading UK-based equity crowdfunding platform specializing in Series A funding of hot startups. Since its inception, Seedrs has provided small investors with the opportunity to invest in over 250 startups, including fintech success Revolut. Notably, Seedrs invested GBP 4 million in Revolut in 2017 when it was valued well below USD 1 billion, and today, the company is valued at USD 27 billion.
These three innovators are just the start. Given the growing investment appetite, Cadre, Moonshot, and Seedrs are likely to be joined by more platforms looking to meet the growing demand for alternative investments from small investors. While these new platforms cannot turn back the tide of the major institutional investors that have occupied the public markets for over 70 years, they are creating new, disruptive channels of investments for smaller investors to cut a slice of the cake for themselves.
Keep a close eye as this segment truly takes off.