It’s part of the American dream—find a growing private company or startup that’s doing exciting things, invest early in the hopes of seeing the company gain market acceptance and grow, and hold on to reap the benefits of having invested on the ground floor.

Unfortunately, that dream is proving to be increasingly elusive, as private companies wait longer and longer before going public. Venture capitalists seem intent on extracting the maximum value out of their portfolio companies before bringing them to an IPO, preventing the vast majority of investors from participating in this rapid growth phase.

Consider some examples:

• Uber’s early backers provided $3 million in seed capital; in May of this year the company raised $8 billion in an IPO.

• Facebook received $5 million in seed capital and eight years later went public through an IPO that raised $104 billion.

• Dropbox early backers put up $29 million in seed capital; seven years later the company raised $10 billion in Series C funding.

The list goes on and on—private companies becoming multibillion-dollar enterprises before an IPO, where all of those billions of value is concentrated in the most connected, wealthiest individuals and venture capitalists.

Given the growing wealth gap in the country, financial advisors ought to have a means to participate on behalf of their clients in this growth opportunity. Fortunately, thanks to a provision of the 2012 JOBS Act, which went into effect in 2016, now they do.

Prior to the Act, investing in private market companies was restricted to the most well connected investors because companies could not “generally solicit” their sale of securities. Without an ability to tell the world you are raising capital, how are you and your client to get access to the deal?

Recognizing that small companies create most of the net new jobs in the country, Congress included a provision in the Act, Regulation CF, to open up private market investment opportunities to all investors. Providing more capital for startups, they hoped, could both create more jobs and provide more investors with the opportunity for early stage growth investing.

The primary mechanism for investors, and advisors who act on their behalf, to participate in private market investing are online investment portals, which are regulated by the Securities and Exchange Commission and are members of FINRA.

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