Investor interest in early-stage private companies will build as new crowd-sourced equity funding (CSEF) rules take effect in late September. But as more people invest directly in private companies, another option is gaining exposure though specialist Listed Investment Companies (LICs).
Investing in private companies is not for everyone. Risks are elevated because earlier-stage companies are, by their nature, speculative. They are not subject to the same level of compliance, disclosure and governance as ASX-listed companies.
Liquidity is another issue. Those who value price discovery on exchanges and the ability to buy and sell shares quickly when needed will find less joy in early-stage private companies. Their liquidity events can be sporadic and often revolve around capital raisings.