Investing Beyond the Public Markets

For decades, individual investors have built portfolios around public equities and bonds. But today, private markets – in the form of angel investing, equity crowdfunding and venture capital – are where innovation and outsized returns increasingly reside.

These asset classes were formerly reserved for only wealthy individuals or those with specialised knowledge. However, with new investment platforms democratising access, the opportunity is bigger than ever. Now that private companies (which account for ​​nearly 9% of global equity, up from just 2% a decade ago), are staying private longer, and unicorns like SpaceX, Stripe, and OpenAI are generating huge value long before going public – it is an opportune time to diversify an investment portfolio with private company holdings.

Investing in private markets can help lower portfolio volatility and potentially achieve better returns. Private equity has outperformed public markets by 38% over the past 3 years. Over a 20 year timeframe, $1 in the private markets in 2003 would now be worth almost $2 – versus $1.42 in public equity.

Institutional research confirms that private equity, private credit, and real assets often deliver returns approximately 3-4% higher on an annual basis than public markets, while exhibiting lower correlation to equities – offering inherent portfolio diversification.

So, why should retail investors like you add private markets to your portfolio?

1. 1. Diversification due to lower correlation

   Private investments tend to move independently of public stock fluctuations, acting as a potential hedge during public market volatility – especially during inflationary or geopolitical uncertainty.

2. 2. Access to innovation & high growth potential

   Platforms like Republic Europe enable retail investors to fund private, early-stage companies long before they go public – allowing the opportunity to invest in disruptive sectors such as AI, fintech, climate tech and more.

3. 3. Potential for out-sized returns

   Historical equity crowdfunding success stories include Revolut (400× return), Oddbox (>200×), demonstrating how early exposure to high growth firms can yield substantial gains (though extremely high risk).

For retail investors seeking to diversify, invest in innovation, and open themselves up to the potential for outsized returns, private markets offer a compelling complement to public equities. While higher risk and illiquidity require diligence and caution, the potential upside makes diversifying beyond public markets both attractive and increasingly accessible. Investing into crowdfunding campaigns on the R Europe platform is an excellent place to start!

Megan King, founder of Economic Muse, a financial media company, discusses investing beyond the public markets