Not-so-private markets

BMO is linking up with Toronto tech financier Georgian to bring down the wall between investors and privately held technology companies. 

Driving the news: A new BMO fund will allow accredited investors (think of it as a blanket term for “very rich”) to invest in Georgian’s portfolio of more-established, North American technology companies, per The Globe and Mail

  • The development matters because previously, these investments were only available to the “unbelievably rich.”   

Why would this slow inch toward more democratized investing matter to you? 

At the highest level, there are two types of investments: Private and public. Private investing is arguably where the cool stuff happens: The “unbelievably rich” investors or firms bet on companies they think have high growth potential, and if it plays out, the upside is so high that it’s rarely replicated in public markets unless you bought Monster Energy stocks in 2003. 

  • Part of the reason these types of investments aren’t widely available to everyday investors is that they come with relatively higher risks

But now, “asset managers such as Mackenzie Investments, Brookfield through its Brookfield Oaktree Wealth Solutions group, New York-based Blue Owl Capital with a recently opened Toronto office, and online investment manager Wealthsimple all offer access to private funds that cater to a less tony tier of qualified Canadian retail investors,” writes Sean Silcoff.

Zoom out: As interest in stocks (refresher: the public market) wanes after a particularly rough year and raising money in private markets becomes more difficult amid tightening economic conditions, the conditions are set for asset managers to start offering up more non-traditional investments options to a broader investor pool.