The term “democratization” is used liberally when discussing alternative investments. But it is also a fitting one.
Over time, American democracy evolved to ensure all citizens have an equal right to buy and own land. Now, other areas of the US economy are seeing a similar evolution, as companies
work to make it easier for investors to participate in private markets — and, by extension, build wealth.
Private investments — such as private equity (PE) and venture capital (VC) — have traditionally been reserved for institutional investors, high-net-worth individuals, or company insiders, due to high minimum investment thresholds and long investment horizons.
But the rise of private stock marketplaces is breaking down those barriers.
Emerging platforms like Augment* allow investors to buy and sell existing stakes in private companies or funds before a traditional exit event, such as an IPO or acquisition.
By law, these private secondary markets are open only to accredited and institutional investors. However, they still increase the accessibility of private investments by exposing these opportunities to a wider pool of players and lowering their risk profile.
In secondary markets, individuals and smaller institutions like pensions or endowments can gain exposure to PE funds or VC portfolios from which they may otherwise be excluded, due to high capital requirements.
Augment provides a platform for investors to connect with sellers of pre-IPO company shares. This allows individual investors to purchase fractional shares in private companies before they go public, offering potential exposure to private companies that may present different investment opportunities compared to public markets, though with correspondingly different risks. This has created an alternative to traditional venture capital investment which typically requires larger capital commitments.
However, investing in pre-IPO shares involves significant risks, including lack of liquidity, limited information availability, and potential loss of principal. Past performance does not guarantee future results. Investors should carefully review all offering documents and consider their investment objectives, risks, charges, and expenses before investing.
Secondary marketplaces also improve liquidity for private investments.
Unlike in public markets, where shares are regularly bought and sold on regulated exchanges, investors in private companies are typically left without an easy way to sell their stakes until the company matures or is sold. This can create a liquidity crunch for private investors: they may theoretically hold great wealth but have little to no control over when they are able to access it.
Secondary marketplaces aim to expand the potential pool of buyers and sellers in private markets by providing a technology platform where interested parties can discover potential counterparties. While there is no guarantee of finding a match or completing a transaction, these platforms can provide visibility to opportunities that might otherwise be difficult to discover through traditional networks.
*Augment is a registered Alternative Trading System (ATS). All securities transactions are conducted through Augment Capital, member FINRA/SIPC. Augment Capital serves as the broker-dealer for transactions executed on the Augment ATS platform.
Important Disclosures: Investing in private securities involves substantial risk, including the potential loss of principal. Private securities are typically illiquid, have limited pricing transparency, and often require longer holding periods. These investments are available exclusively to qualified accredited investors and offer no guarantee of returns. Additionally, past performance of private securities does not indicate or predict future results.
Minimums have generally come down significantly, particularly through pooled vehicles like SPVs, making private company exposure accessible to a broader range of accredited investors than direct deals alone historically allowed.
Access and risk are somewhat separate. While more investors can now participate, the underlying illiquidity and company-specific risks of private investing remain unchanged regardless of how accessible the entry point is.
They remove the need for personal relationships or insider access that historically gated private company investing, letting qualified investors participate based on platform access rather than networking alone.
Better access to pricing history and company information helps investors outside traditional networks make more informed decisions than they could with the limited, relationship-based information flow of the past.
It expands opportunity, but it also means more investors are exposed to illiquidity and loss risk that institutional investors have historically borne with more resources to absorb it. Broader access cuts both ways.
Get started today — explore pricing, offerings, and submit your first order.
FOR QUALIFIED INSTITUTIONAL AND ACCREDITED INVESTORS ONLY: Under federal securities laws, private market investments on this platform are available exclusively to Institutional and Accredited Investors. Verification of status required before investing. Private investments involve significant risks including illiquidity, potential loss of principal, and limited disclosure requirements. "Augment" refers to Augment Markets, Inc. and its affiliates. Augment Markets, Inc. is a technology company offering software and data services, not a bank or financial institution. Cash Accounts are provided by Modern Treasury Corp. financial institution partners and through Augment's technology. Augment does not act as a money services business, provide money transmission, or serve as a custodian of funds. Funds held in your Cash Account are not FDIC insured unless expressly disclosed. Full terms available in the Augment Cash Account Agreement.Brokerage services are offered through Augment Capital, LLC, an affiliated broker-dealer and member FINRA/SIPC. “Investment accounts” are not brokerage accounts and do not hold customer funds or securities. Investment advisory services are offered through Augment Advisors, LLC, an SEC-registered investment adviser. Registration with the SEC does not imply a certain level of skill or training. Augment and its affiliates do not provide legal or tax advice; consult your attorney or tax professional regarding your specific situation. For additional information, please refer to Augment Advisors, LLC’s Form ADV Part 2A (Firm Brochure) and FINRA BrokerCheck.
