Thursday, January 27, 2022

The Democratization of the Private Market

 

This post is part of a virtual book tour organized by Goddess Fish Promotions. Carine Schneider will be awarding a $10 Amazon or B/N GC to a randomly drawn winner via rafflecopter during the tour. Click on the tour banner to see the other stops on the tour.

Facebook, Uber, Robinhood: all were private companies at some point. Historically, there has been no way for investors to easily buy and sell shares in private companies. With the introduction of blockchain technology, digital securities, and decentralized financial solutions, the ability to grow the private market is on the horizon. Regulators around the world are rushing to catch up and understand how to protect investors who want to participate in this market. This book reviews the regulatory, technical, and societal challenges to open this asset class to more investors in the future.



Read an Excerpt

The market is also an asset class better known for its failure rate than for success. About three-quarters of venture-backed firms in the US don’t return investors’ capital, according to recent research by Shikhar Ghosh, a senior lecturer at Harvard Business School. Exposing retail investors to a highrisk investment opportunity calls for caution. Allowing for careful participation could have a very positive impact on the economy, create new companies and jobs, and increase the opportunity for average investors to increase their investment returns. 74 Allowing for more investment capital will also impact the amount of capital available to invest in the “innovation economy.” If investors can use a portion of their retirement savings (in self-directed IRAs or 401(k) accounts) or invest in funds that own private company shares, the increase in investment currency grows significantly. Gallagher shares his views on the present societal concerns with regard to private investments: My current perspective is that the private market is very vibrant and that technology has really helped to provide liquidity and transparency in the private market that didn’t exist historically. We reached a point a few years back where the private market was preferable, especially after the JOBS Act was passed in the United States. Investing in the private market was preferable to investing in the public market, but that trend has certainly changed over the last year due to the number of IPOs and SPAC transactions. Right now, I think there’s some more equilibrium between the public and private markets, as far as raising capital is concerned. I still think there’s a vibrant ecosystem here for the private market. It’ll be interesting to see how we will enter a new regulatory climate with respect to accredited investors here in the United States. They’ll probably be revisiting that standard and tightening it, which will limit the number of investors who can participate in the private market.

About the Author:
Carine Schneider, FGE (Fellow of Global Equity) is an experienced and well-connected leader in the private market and global compensation industry with deep experience working in consulting, technology, and financial services. She is the President of AST Private Company Solutions (AST PCS). She was named one of the 100 Influential Women in Silicon Valley by the Silicon Valley Business Journal and one of 17 “Women to Watch” in 2017 by Brown Brothers Harriman Center on Women and Wealth. Carine was formerly the President, Nasdaq Private Market and has been the founder and CEO of Global Shares, CEO of Certent, and Partner at PwC. She has also held senior level positions at Morgan Stanley and Willis Towers Watson. She was the founding Executive Director of the National Association of Stock Plan Professionals (NASPP) and founded the nonprofit Global Equity Organization (GEO) where she is now Chair Emeritus, after serving as Chair for eighteen years. She 103 started her career as Manager of Shareholder Relations at Oracle Corporation where she assisted in the IPO. Ms. Schneider was born in The Netherlands and received her degree in psychology and sociology from the University of California, Santa Cruz. She is a frequent speaker at conferences around the world, including at President Obama’s 2016 Global Entrepreneurial Summit, and has authored various articles and chapters in industry publications. She currently serves as a member of the Board of Professional Business Women of California (PBWC). In 2019, she received the UK ProShare Award for Service to Employee Share Ownership.

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2 comments:

Goddess Fish Promotions said...

Thanks for hosting!

Debbie P said...

This sounds like a great book.