Millennials and Generation Z, who have lived through significant financial upheavals, including the 2007-2008 Financial Crisis and recent bank failures, are notably wary of traditional financial institutions. Despite these challenges, a recent Bankrate survey highlights that a significant portion of these younger generations remains optimistic about their financial futures, with many turning to alternative investments to build their wealth.
Against this backdrop, Linqto, a San Jose-based firm, is stepping in to offer an innovative solution by providing access to private investments before they become publicly traded. This approach aims to democratize wealth generation opportunities that were traditionally exclusive and inaccessible to the average investor.
The World Economic Forum's Global Retail Investor Survey found that 70% of retail investors are under the age of 45, underscoring the growing interest of younger demographics in investing. Many Millennials and Gen Z individuals, having witnessed the meteoric rise of companies like Meta Platforms, Uber, and Airbnb, understand the potential for generational wealth through early, pre-IPO investments in private companies.
Linqto's mission is to make investing in private companies as straightforward and accessible as investing in the public stock market. The platform features high-growth, technology-driven companies that are likely to go public or be acquired within five years. Linqto primarily invests in mid-to-late-stage private companies in the technology sector, focusing on sub-verticals such as artificial intelligence, blockchain, digital assets, enterprise software, networking, IoT, hardware, and FinTech.
What sets Linqto apart from its peers is its rigorous due diligence process and its policy of investing alongside its users. By investing first, Linqto ensures that it has a vested interest in the success of the companies on its platform, thereby streamlining the investment process for its users. The company leverages its in-house research expertise to offer access to top private companies with industry-low minimums and no fees.
Linqto's fee structure is another key differentiator. It operates as a zero-fee investment management platform, purchasing shares in large quantities from founders, employees, and investors at negotiated prices. These shares are then made available to investors at a reasonable markup, eliminating the need for additional fees. Historically, investing in private companies required a minimum investment of $100,000, but Linqto has reduced this barrier to $2,500 for initial investments and $5,000 for subsequent investments.
This model is particularly advantageous compared to other private investment platforms like Forge Global Holdings, EquityZen, and HIIVE, as well as self-directed investment platforms such as Charles Schwab Corp. and Robinhood, which primarily focus on public equity investments.
As demand for private investments grows, Linqto's platform offers a new avenue for young investors to gain early, pre-IPO access to potentially industry-leading companies. This democratization of private market investments could significantly impact how the younger generation builds wealth, providing them with more opportunities to participate in high-growth investments that were previously out of reach.
