The markets — and the U.S. economy more broadly — are undergoing a great reset. Household debt continues to climb to historic levels. Persistently high interest rates are restraining consumer and business spending. The
For the business community, economic uncertainty breeds apprehension. While companies were already taking much longer to make their initial public offerings even before the great reset, its impact on facilitating the creation of more publicly traded companies remains to be seen. For investors, the backlog of unicorns — late-stage privately traded companies with significant market caps — has generally meant a lack of access to the wealth-building potential of the private market. As policymakers consider remedies to address growing economic disparity across the country, safely facilitating increased access to equity in private companies should be seriously considered.
Today, most Americans aren't permitted to buy equity in SpaceX, OpenAI, Stripe or other nonpublic companies. The rationale for limiting access to purchasing equity in private companies has been understandably rooted in investor protection, but it is also true that these limitations hinder the potential democratization of opportunities for Americans seeking to grow their wealth. It's time to strike a balance between safeguarding investors and expanding access to the private market in a way that benefits as many investors as possible.
The private market has become an engine of economic growth and innovation. From early stage startups to late-stage unicorns, private companies drive entrepreneurship, job creation and technological advancement even before they IPO. Yet, the benefits of this growth often bypass average Americans due to regulatory barriers that restrict access. For instance, 76% of equity compensation granted to employees of private companies
Qualifying as an accredited investor — a key determinant of who can access the private market — has traditionally been based on arbitrary financial thresholds rather than an individual's knowledge or ability to assess financial risk. These thresholds, set decades ago, exclude many capable investors and perpetuate a system in which wealth begets wealth. Revisiting and modernizing these standards is an essential first step toward making private market participation more inclusive.
Sens. Elizabeth Warren, D-Mass., and Ron Wyden, D-Ore., will force the vote Wednesday on a bipartisan resolution aimed at terminating the national emergency declaration used by Donald Trump to impose sweeping tariffs.
But expanding the definition of an accredited investor alone will not suffice. Much like the outdated and arbitrary accredited investor thresholds, existing securities law establishes subjective and inconsistent caps that serve to limit private companies' ability to raise capital and grow, and, in turn, to provide more value to their investors. Modernizing and updating cap table, venture capital and other investor thresholds is critical in allowing investment opportunities in private markets. The current limits are too low and arbitrary, and they do not serve any specific investor protection or public policy consideration.
With greater access to the private market, policymakers should also explore remedies to facilitate improved liquidity, as only through greater liquidity on the sell side of secondary markets can the full wealth-building potential of improved access be unlocked.
Critics of private market access often cite the risks associated with these investments: illiquidity, volatility and limited transparency. These concerns are valid, but they should not serve as insurmountable barriers to entry that stifle Americans' ability to carefully consider and make their own financial decisions. Rather, they underscore the importance of regulatory frameworks that protect investors while enabling access.
A carefully calibrated approach that enables improved access to wealth-building investments with appropriate investor protection can achieve this balance. Whether it's an employee unlocking the value of their equity compensation or an individual investing in a groundbreaking startup, opportunity has always been at the core of the U.S. economy. It can drive financial empowerment and bridge wealth gaps, providing investors with options to navigate the great reset. As policymakers chart their priorities for the new Congress, they should revisit outdated regulations that arbitrarily limit participation in the private market. Expanding access in a thoughtful, balanced way will not only democratize wealth-building opportunities but also strengthen the broader economy.
The economic road ahead is always uncertain. This is a moment to embrace innovation and expand opportunities for more Americans. The potential of the private market is immense; now is the time to unlock it.
