The small investor — what should we think of?
“Companies that want to grow need more liquidity, in other words capital to finance investments. This does not only apply to large listed companies, but especially to startups, scale-ups and many SMEs that are not listed on the stock exchange. Think not only of local shops, but also of new innovative companies with strong growth potential. These companies want to expand and need capital to do so. Traditionally, institutional investors provided this capital, but today wealthy individuals can increasingly participate as well.”
How accessible is this market?
“Until recently, investing in private markets was mainly something for institutional investors. Many private investment structures were closed-end funds: they had long investment horizons (usually 10–15 years), high minimum investment requirements, investors had to commit additional capital through so-called capital calls, and their money was largely locked up. This made access for retail investors practically impossible. However, the market is changing.”
What has changed?
“New structures and regulations are making private markets more accessible. For example, evergreen or open-end funds typically offer more flexible entry and exit opportunities, such as monthly subscriptions and quarterly redemption windows for a portion of the capital. Minimum investment amounts have decreased significantly — now often in the thousands rather than the millions. In addition, the ELTIF 2.0 regulation has improved retail access and transparency.
That said, liquidity has improved but will never be fully comparable to public market investments. Investors must still take into account less frequent valuations, potential limits on redemptions, and therefore a longer investment horizon.”
That sounds as if everyone can participate.
“With the introduction of the ELTIF 2.0 framework, evergreen funds offer more opportunities for retail participation. Of course, these conditions do not mean that such investments are suitable for everyone. Investors need the right level of knowledge and must understand how the product works. They need to be aware of both the benefits and the risks. Knowledge and careful fund selection therefore remain crucial. It is a different asset class that can provide diversification within an investment portfolio. To help spread this knowledge, I became active in the new DUFAS working group. Our main objective is education.”
What is currently happening in the market?
“Companies increasingly see private investments as an effective way to raise capital for growth. It is crucial, however, to identify high-quality companies to invest in. The private market is expanding rapidly, which means funds must carefully select strong businesses for new investors to enter. You want to avoid excessive risks and situations where investors could suddenly lose their money.
That is why maintaining a diversified portfolio is important. A large part of the economy could benefit from funding provided by private investors. This truly represents an enormous market with significant potential.”
