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Private Securities

Private Securities Should Be a Buyer’s Market, But It Is Not!

Why do people invest their money? We are told that investing involves the risk of loss and that the safest way to keep your earned money is to simply keep it in the bank (or other low-risk alternatives). What is it about investing that draws people in and helps them plan for the future? 

After spending over 20 years in capital markets, my opinion is that people invest for the same reason they purchase any goods or services. People invest to fulfill their needs. In public markets, these transactions occur through a variety of investment products or solutions. However, in the private securities market, those investor needs tend to be considered far less. 

Instead of focusing on investor needs, the private securities salespeople focus on their product and how it works. This is akin to the software salesperson who spends an hour talking about how great their software is and how it can do everything you ever imagined, without even asking what you imagined the software could do for you. 

The sales process, or lack thereof, with private securities, may be hurting everyone. It’s hard for investors to find the deals they are looking for, which leads to a frustrated buyer. It’s also hard for the issuers to find the buyers they are looking for, which makes the seller inefficient and expensive. 

The private securities market continues to grow, and investors continue to demand additional access to private investment opportunities. Yet, to date, there has not been a single solution that properly addresses what we believe is the main issue in the market. The process of “selling” private securities is broken, and this inefficiency restrains one of the greatest sources of capital for entrepreneurs and is creating a market inefficiency. This inefficiency, coupled with regulation that limits many potential investors from even participating, prevents the private securities market from achieving true efficiency, and subsequently liquidity. 

Rather than block potential investors from participating based on arbitrary requirements, I believe we should empower buyers by providing more information and the power to make informed decisions. Instead of blocking out investors, we should be empowering more investors through a transparent and efficient market of investment opportunities. 

Technology levels the playing field in other industries by providing everyone access to the same information that is needed to make the best possible decisions. Whether it comes to buying a car or a toothbrush, the buyer has access to nearly unlimited information about the product, its company, and what other buyers’ experiences have been. Yet, in the private securities market, it’s about whom you know and not what you know. 

This will hurt all market participants in the long run and limit opportunities for innovation and growth. 

I put the investors first in every decision I make regarding the iownit.us platform. I ask our team two important questions every time we consider putting in place a new feature or system: will that new feature or system be additive to the investor? And will it help them make a better investment decision? 

The other question I ask myself: why do most other issuers of private securities not ask their teams and themselves the same set of questions? 

 

IOI Capital and Markets, LLC (“IOICM”) does not provide investment advice, endorse, analyze or recommend any securities. All securities listed on our platform are offered by, and all information included on this site is the responsibility of the issuer of such securities. All brokerage-related activity is conducted by IOICM. IOICM makes no communication that is to be construed as a recommendation for any security offered on the iownit.us investment platform. Investments in private placements, and start-up investments in particular, are speculative and involve a high degree of risk. Those investors who cannot afford to lose their entire investment should not invest in start-ups. Companies seeking startup investments through private equity issuance tend to be in earlier stages of development and their business model, products and services may not yet be fully developed, operational or tested in the public marketplace. Member FINRA/SIPC.

 

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