You can invest in OpenAI now...sort of

Ever wish you could don a Patagonia vest, unleash a lengthy thread on X, and transform into a venture capitalist yourself?

A growing number of financial platforms are giving retail investors the opportunity to break into the coveted world of private markets, where traders take on heightened risk for a chance at a far greater reward.

Just look at SoFi, which today said it was adding private market funds that give clients access to high-flying companies that don’t trade publicly, like SpaceX, OpenAI, and Epic Games. Until now, SoFi offered private market access to investors who could throw down at least $25,000. Now, you need just $10 to invest. SoFi ticked 3.69% higher today.

Back in March, marketplaces like EquityZen and Forge Global lowered their threshold for individual investors to put money into private companies to just $5,000.

But it hasn’t been a smooth road

Last week, Robinhood took a different backdoor route, offering European investors equity “tokens” of OpenAI and SpaceX. But the plan came under fire when a clearly annoyed OpenAI responded in a statement on X that Robinhood’s tokens “are not OpenAI equity” and warned investors to be careful. Shares of Robinhood sank 6% last Thursday morning after OpenAI shot back. European regulators, too, are scrutinizing Robinhood’s tokenization process, with the Bank of Lithuania saying it is “awaiting clarifications” on the structure.

But investment startup Linqto’s situation makes Robinhood’s kerfuffle look like no big deal. Linqto was one of the first companies to let retail investors trade shares of private companies, but today it filed for bankruptcy and is reportedly under investigation by the SEC and DOJ for securities fraud and aggressive marketing to investors who aren’t eligible to buy private shares.

Zoom out: Regular investors are vying for access to private markets for a reason: Once a successful startup goes public, it’s possible that its days of providing investors with exponential returns are over. And with the IPO pipeline stalled over the past few years, there are more private unicorns than ever.

But as Matt Levine notes, the demand for private company shares far outweighs the supply. Most startups restrict early shareholders, including employees or angel investors, from selling their stock before the firm goes public, forming a gate that platforms like Robinhood, SoFi, and others are trying to unlock.—LB