Over the last two years, more people than ever have become interested in investing. Both public and private markets have seen the effects of this new flow of capital and interest.
Private markets, specifically venture capital and private equity have outperformed public markets since 2000. The amount of venture capital investment reached $643B just last year, whilst more and more people focus on becoming entrepreneurs.
This novel interest in investing – much of it concentrated around Web 3.0 innovations – is hugely exciting. If, however, we are serious about widening access within the private investment world, and therefore providing genuine opportunities for more people, there is a fundamental problem to be solved first.
Private markets don’t have the infrastructure to accommodate new capital flows
Given public markets are not open to everyone on equal terms, it’s no surprise that private investment markets also fail to provide people with broader representation and equal access to opportunities.
One reason for this is the stringent regulations in place to ensure individuals do not fall prey to poor or highly risky investments. Another is the archaic investment process that has remained largely the same for decades.
The solution to this problem starts with bringing standardisation to the private markets, unifying investment networks on shared standards and information database, and helping people to scale their investments and value creation.
What are the advantages of a market with standardisation?
- Information flows freely between investment networks in a standardised format
- The information available on global networks would reduce investment costs and timelines
- Investors and founders could access a distributed deal network from one centralised point
- A universal reputation system would help the market hold players accountable
Ultimately, democratised access to information and the ability to participate in the market on a level playing field would help fight income inequality everywhere, and spread the wealth generated more evenly between global communities.
Markets need standardisation to solve their biggest problems and create greater value
Markets are working across fragmented networks that are not interoperable. That’s why many good deals remain invisible to thousands of professional investors while founders struggle to distribute their deals efficiently.
92% of UK and 90% of American populations are being denied access to this high-performance asset class because of regulations. Although regulators are keen to provide more people with access to investment opportunities, they’re struggling to find a standardised and transparent information flow to be able to protect market participants.
Only 11% of global venture capital investment went to founding teams with women in 2021 while black founders receive only about 1%. Many early-stage founders struggle to understand what it takes to raise capital, what makes an investor tick and how to access the best networks to distribute their deals. Not only do they lose their chance to raise money but also many investors often lose on good deals that are badly pitched.