Retail Investors Finding Ways into Private Companies Ahead of IPOs

Retail investors are gaining access to private companies like SpaceX and OpenAI through closed-end funds, but face risks such as high fees and liquidity limitations.

Mon Jun 01 2026

Retail Demand for Private Company Exposure Surges

As interest in IPOs grows and retail trading volumes increase, new avenues are emerging for everyday investors to access private companies like SpaceX and OpenAI. Bloomberg reporter Charlie Wells notes a significant rise in closed-end funds that allow non-accredited investors to gain exposure to these typically exclusive opportunities. This trend is fueled by companies staying private longer, pushing more of their growth potential into later-stage private rounds.

Trade-offs: High Fees and Limited Liquidity

However, this access comes with substantial trade-offs. Charlie Wells highlights that these funds often charge much higher fees compared to standard ETFs and impose six-month lock-up periods, preventing investors from immediately cashing out even if their holdings surge in value. Bloomberg Tech co-host Ed Ludlow adds that while early venture capitalists (VCs) and institutional investors in companies like SpaceX might see significant returns, retail investors entering at a later stage may find less upside due to the company's mature valuation.

VC Perspective and Market Dynamics

Venture capitalists argue that these funds democratize access to the private market, making it available to a broader audience. They acknowledge higher fees but assert they are still lower than traditional VC funds, and the risk is less than investing in a day-one startup. Ed Ludlow points out that for very mature companies like SpaceX and OpenAI, the focus for VCs is on maintaining their positions and raising more funds to support continued growth. He emphasizes that the competition among AI software providers to enterprise customers is intense, and mutual funds, sovereign wealth funds, and other private growth equity firms are increasingly muscling into later rounds, influencing the overall market dynamics.

*Source: YouTube: Bloomberg (2026-06-01)*

Tags: #retail-investing #IPO #SpaceX #OpenAI #tech