Private Markets have Special Risks investors need to know

Global Intel Hub — Knoxville, TN — Private Markets create generational wealth, but they are also subject to risks that investors need to be aware about. From our partner Venture Capital Cross, we have compiled a short list of these risks that need to be considered. In the most basic risk mitigation strategy, only invest a small part of your portfolio or money you can afford to lose.

Private Markets are subject to the decisions of individuals who may base the factors of those decisions which are self-serving. Here are a few rare but possible situations that may happen:

Execution risk – funds can be returned, a deal can be unwound.
Dilution – Companies can dilute shares, reducing value. In some cases, there can be severe dilution. (Jet Token – Jet AI)
Down round – Companies can raise money at a lower valuation. (Alto Pharmacy)
Regulatory Risk – A government may shut down a platform, causing the business to suffer irreparably. (Tik Tok)
Key Man Risk – A founder who acts as the sole developer, CEO, and other functions could be incapacitated, and if he does not have a backup, the business may not have a way forward. (Mr. Beast Feastables Series A)

While these risks are rare, there are no protections or risk mitigation strategies available to investors. Private markets investors assume special risks associated with private securities investments.

See this video explanation: