Wall Street wants to let investors in on private markets. Should they take the invitation?

A lot of people are about to get rich from OpenAI's expected IPO. You probably won't be one of them.

By the time Sam Altman's juggernaut finally trades in public markets, it's expected to already rank among the most valuable companies on the planet. A staggering amount of wealth will have already been created. Most of it will belong to early investors and insiders who participated behind the closed doors of private markets.

Retail investors will eventually get their shot. They'll be able to buy the stock, maybe even turn a tidy profit, once the company goes public. But they'll be showing up late to the party. As usual the real money, the kind that changes lives, will have already been made.

This isn't a one-off. It's a pattern that's becoming more common as companies stay private longer. Last year's post-IPO pops from names like CoreWeave and Figma showered early backers with riches. For everyday investors, it was a familiar gut punch. Both stocks now trade significantly below last year's highs.

Reddit and other online forums are littered with retailer investors complaining about being "exit liquidity" for venture capitalists and executives who cashed out early positions for huge gains. Individual investors who bought near the top are now left holding the bag.

The retail crowd knows they're missing out. That fuels resentment. Locked out of private markets, everyday investors often watch the biggest wealth-creation moments happen without them. If broad participation is supposed to be a pillar of capitalism, why has so much of the action moved behind a velvet rope?

For better or worse, many of those barriers to entry are coming down. Financial institutions are rolling out new products in private equity and credit markets aimed at everyday investors.

"The train has indeed left the station," said Stanford finance professor Amit Seru. "The industry sees a once-in-a-generation chance to tap a vast pool of new capital."

In the latest installment of Business Insider's "Future of Capitalism" series, we explore the push to "democratize" private markets and what it means for retail investors. Retail access is expanding to investments that would've been unheard of years ago. They're finally getting a seat at the private-markets table.

The question now is whether that seat will ultimately be worth the risk.

The walls are coming down

For years, private markets swelled in size without much fanfare. That's changing.

"What we're finding is a lot of people are more curious about what they don't know about private markets," said Monish Verma, the CEO of Vardhan Wealth Management. "They've been hearing more about it. They understand it's more than just equities and bonds."

Investment managers are looking to meet the moment.

Private equity assets under management swelled to an estimated $6.7 trillion in 2025, up 72% over the last five years, according to data from the analytics firm Preqin. The firm predicts this number will swell to nearly $12 trillion by the end of the decade.

Assets under management in private credit investments rose to $2.2 trillion last year, an 86% increase over the same time frame. Preqin predicts this will surge to $4.5 trillion by decade's end.

US policymakers have been warming to the idea that private markets should be opened up to more investors. In August, the SEC reversed a rule that had previously limited access to certain closed-end funds. That nudged the door to private markets a little wider for investors who are "non-accredited," or those with a lower net worth than the markets are typically opened to.

"Financial innovation sometimes means getting out of the way of capital formation and allowing all investors to gain the benefits of our robust markets," Paul Atkins, the chair of the regulatory agency, said in prepared remarks last May.

Private-market funds have been rolling out investment vehicles that aren't just for the ultra-rich. In the last year or so, the likes of KKR, State Street, and Apollo have launched a series of new funds and ETF products that offer the public access to public and private credit. SoFi, meanwhile, has debuted a handful of private markets funds specifically aimed at retail investors, with minimum investment requirements as low as $500.

"I certainly think it's not a fad," Robert Callagy, associate managing director at Moody's Investors Service, told Business Insider about the slowly expanding access to private investments.

Is the juice worth the squeeze?

Investing in public assets is inherently risky. In the event a company goes under, stock investors get paid last, if at all, with whatever is left over after a company reimburses its creditors.

But private markets are a different animal entirely, and come with their own unique set of risks. Some key differences might catch investors off guard, Callagy and Seru said.

For one, retail investors are used to being able to access their money easily. Private assets are less liquid and can be tougher to sell if you want to offload. SoFi's Cashmere Fund, which offers access to growth-stage companies backed by VCs, explicitly notes that it's aimed at long-term investors who don't need quick access to cash.

Retail traders usually expect their money to be put to work right away, in vehicles like ETFs and mutual funds, Callagy said. This is often not the case for private-market funds, which tend to hold significant cash positions as managers scan the market for opportunities. The amount of private-equity money on the sidelines has been near record levels in recent quarters.

There also tends to be an information gap. Private companies aren't required to publicly disclose their earnings, debt, or other financial information. It's more difficult for an investor to know exactly what they're buying.

Callagy says that the pressure to put cash to work could lead to more lax underwriting standards by money managers dealing with limited information.

What retail investors think

While access to private markets has expanded, retail investors, some of the supposed beneficiaries who spoke with Business Insider, don't seem convinced. The prevailing mood is distrust. Many see a version of capitalism where institutions still win, even as markets are branded more "democratic."

Bilaal Dhalech, a 29-year-old day trader and an electrical engineer based in Toronto, is interested in accessing private companies because he feels like institutions currently have a leg up on him.

"They're getting in early, riding the value creation, and then exiting after the IPO," he told Business Insider, noting the post-offering stock skids that have befallen many recent market debutants.

"Having access earlier would level the playing field and absolutely change outcomes," Dhalech added.

Minwoo Lim, a full-time trader who lives in Dubai, is more outright skeptical. In an interview, he said he believes institutional investors will continue to have an edge over the retail crowd, no matter how accessible private markets become. In his view, alternative asset managers will simply create a new structure that once again limits the most enticing private opportunities to institutions.

"If a private deal is available to retail, it's usually because the good part is already gone," Lim said. "Institutions already took the real upside."

David Villalobos, a trader based in Colorado, is more ambivalent. He said he's not interested in branching out into private markets, and that most retail traders have a tough time navigating public markets as they are.

"From my perspective, this push resembles prior bubbles we've seen in financial history," he said. "Retail participants are likely to be attracted more by the narrative than the substance."

Guardrails are needed

If Wall Street feels that skepticism, it isn't showing in its pursuit of expanding the reach of private markets.

The private equity industry has already successfully lobbied to allow private credit instruments into retirement funds, and big asset managers tout the benefits of diversification.

"You really need to be adding that private market exposure as a source of income, as well as a source of lower volatility," said Gargi Pal Chaudhuri, BlackRock's chief investment and portfolio strategist for its Americas division.

She conceded that it's not for everyone, though.

"There's a liquidity premium that you will pay for that, but you're supposed to make that decision based on the portfolio that you have and the liquidity biases that you have."

Governing bodies have been clear that guardrails are needed. In a report from last fall, the SEC suggested a series of checks and balances designed to protect retail investors, ranging from investment limits to more robust disclosure requirements.

Seru said he also believes in safeguards, like limits on the amount of illiquid private market assets allowed in ETFs. He also thinks there needs to be more transparency about who will provide liquidity in the market if there's a stress event.

Eventually, Seru says, the line between private and public markets will start to blur, to the point where the historical advantages of private markets are eroded.

"At some point, the quest for scale becomes self-defeating," he said.

Even with rules in place, Seru only recommends private market funds to investors who can handle putting money into relatively illiquid funds for a long period of time.

"Done poorly, democratization simply transforms a high-performing asset class into a systemic risk machine," he added.