Here’s why every investor should invest in private companies

SPONSORED CONTENT – Richard Hickman, director of investment and operations at HarbourVest Global Private Equity Limited, discusses the importance of looking beyond public markets

Financial investment concept – a double exposure of city night and stack of coins

The shrinkage of public markets has been a well-documented phenomenon for many years now. Between their peak in 1996 and 2018, the number of publicly-listed companies in the US fell from 8,090 to 4,397, according to World Bank figures. While the trend reached its nadir in 2012, and the past couple of years have seen IPOs (initial public offerings) make a strong comeback, it seems clear that “going public” is no longer automatically the first port of call, or even the end goal, for ambitious entrepreneurs.

Even those companies that do eventually go public, often come to market at a later stage than might once have been the case. You need only look at the recent history of the tech sector to see this in action – many of the biggest names had already achieved “unicorn” status (a valuation of more than $1bn) before they went public, with their early backers enjoying a substantial proportion of the gains. Yahoo famously bid $1bn for Facebook (or “Meta” as it’s now known) as early as 2006. On the day it went public in 2012, Facebook attained a market capitalisation of more than $100bn.

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This material is solely for informational purposes and should not be viewed as a current or past recommendation or an offer to sell or the solicitation to buy securities or adopt any investment strategy. The opinions expressed herein represent the current, good faith views of the author(s) at the time of publication and are provided for limited purposes, are not definitive investment advice, and should not be relied on as such.

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Certain information contained herein constitutes forward-looking statements, which can be identified by the use of terms such as“may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue”, or “believe” (or the negatives thereof) or other variations thereof. Due to various risks and uncertainties, including those discussed above, actual events or results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward-looking statements in making their investment decisions.

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