Alts for All: The Rise of Alternative Investments for Individual Investors

Investing isn’t what it used to be. Gone are the days when a simple mix of stocks and bonds could reliably carry an investor through market cycles. Today, alternative investments—think private equity, venture capital, private credit, and real assets—are becoming a must-have in portfolios looking for long-term growth and resilience. While these asset classes were once the playground of institutional investors, platforms like EquityZen are changing the game, giving individual accredited investors access to high-growth investments like pre-IPO companies to fuel portfolio growth.

The Growth of Alternative Investments

Alternative investments are booming. According to BlackRock, the global alternative investment market is expected to reach $30 trillion by 2030, up from $13 trillion today. Investors and financial advisors are increasingly looking beyond public markets.

Why? According to Hamilton Lane, 76% of clients surveyed see private markets as higher reward than stocks and bonds alone. They see private investments as a leading driver of both returns and diversification.¹ Institutional money managers seem to agree. Just this week BlackRock CEO Larry Fink suggested a new portfolio model: 50% stocks, 30% bonds, and 20% private assets. In fact, Blackrock’s model portfolios for individual investors now include alternative assets like private equity and private credit alongside stocks and bonds. The takeaway? Private market opportunities aren’t just for institutions anymore.

While institutions typically allocate 20% of their investments to alternatives, the average individual investor is only investing 3% into alts. A shift towards alternatives could represent a $30 trillion move, normalizing a new standard for investors large and small.

Macro Changes are Driving Adoption

Changes to the broader market landscape are creating new opportunities for private market investments. Savvy investors are capitalizing on these changes across asset classes. 

1. Private Equity & Venture Capital: With companies staying private longer, investors are eager to access high-growth businesses before they go public. While large investment firms like KKR, Blackstone, and Sequoia Capital dominate this space for institutional investors, access is broadening. Platforms like EquityZen allow accredited individuals to invest in late-stage private companies for as little as $5,000.
2. Private Credit: As traditional banks lend less, private credit funds are stepping in. Firms like Apollo and Blue Owl Capital are raising billions to provide direct lending solutions, creating high-yield investment opportunities.
3. Real Assets (Real Estate & Infrastructure): From REITs to infrastructure funds, tangible assets are proving to be strong inflation hedges and investors are taking note.
4. Hedge Funds & Alternative Strategies: Firms like Citadel and Bridgewater Associates continue to innovate with strategies that offer unique risk-adjusted returns, making them a compelling alternative to traditional stock market investing. Through new fund structures these strategies are now available to more investors than before.
5. Digital Assets & Blockchain: Crypto and blockchain-based investments are evolving rapidly, especially under a crypto-friendly administration. Despite market fluctuations, institutional investors are increasingly allocating capital to funds specializing in Bitcoin, Ethereum, and decentralized finance (DeFi).

Why Alternative Investments are More Important Than Ever 

Investors are turning to alternatives for several key reasons:

• Market Volatility: The stock market is unpredictable. Alternatives can provide stability with lower correlation to public markets. In a volatile market environment, private alternatives may be well positioned due to their long-term investment horizon. 
• Companies Staying Private Longer: Many of the most valuable companies—like SpaceX, Stripe, and Databricks—remain private for decades, meaning public market investors are missing out on their highest growth phases. More investors are tapping the late stage private markets to access leading innovative companies.
• Low-Yield Environment: Bonds aren’t delivering the returns they once did, leading investors to explore private credit and real estate.
• Tech-Driven Access: Investing in alternatives used to be an arduous process, requiring hundreds of pages of paper documentation. Platforms like EquityZen, iCapital, and CAIS are making it easier than ever for individuals and financial advisors to tap into private market investments through scalable technology.

Education is Key 

While the future is leaning towards alternatives. Investors would be wise to educate themselves before diving in. After all, investing in private markets isn’t the same as buying stocks on an exchange. It comes with unique considerations, risks, and a learning curve. This requires that investors educate themselves in order to make informed decisions. Here’s what investors should focus on:

• Understanding Valuations: Private assets like private companies don’t have daily stock prices. Learning the valuation mechanisms for a given asset class is key. Preqin and Pitchbook offer industry-leading research on private asset classes to help educate investors.
• Liquidity Considerations: Unlike stocks, private investments are often less liquid and require longer investment horizons. Knowing the holding period and exit strategies for a given investment is essential.
• Risk Management: Alternatives can be rewarding, but they come with risks like illiquidity and less publicly available information. Diversification within alternatives is just as important as diversification across asset classes.
• Regulatory Framework: Private market investments have specific legal and tax considerations that investors should be aware of. Investors can learn more about accredited investor requirements and private market regulations through the SEC and FINRA. 

What Lies Ahead

The private investment landscape is evolving fast, and the future looks promising. Some key trends to watch:

• Tokenization of Assets: Blockchain is making fractional ownership possible, increasing liquidity and accessibility in private markets.
• Retail Investor Access: Fintech innovation and regulatory changes are breaking down barriers, allowing more investors to participate. EquityZen is focused on providing access to alternatives to these investors with investment minimums as low as $5,000.
• Hybrid Investment Models: More firms are integrating private market strategies with traditional portfolios, offering a blend of public and private investments. This is highlighted in BlackRock’s new model portfolios.
• Growing Secondary Markets: As private market investments grow, so does the need for liquidity. Platforms like EquityZen are enhancing liquidity options for early investors and employees looking to sell private investments before an IPO.

Dive in with EquityZen

For investors looking to move beyond public markets, now is the time to explore the opportunities within alternatives. The landscape is changing—start investing in the future. For over a decade EquityZen has been at the forefront of the shift to private markets, helping accredited investors gain access to late-stage private companies. Our marketplace has facilitated billions of dollars of transactions across 450+ companies, offering liquidity solutions for employees and early investors while giving individuals a chance to invest pre-IPO.

Beyond just transactions, we are dedicated to investor education, ensuring that individuals understand the nuances of private market investing. Through webinars, our blog, help center, Private Market Map and more our marketplace equips investors with the knowledge needed to navigate alternative assets confidently. 

As Larry Fink stated in BlackRocks annual letter, “Markets don’t naturally evolve to serve everyone equally. They require relentless effort, conscious choices, and constant vigilance." While the private markets continue to grow and access becomes paramount, EquityZen will continue our relentless efforts to provide access and stewardship to all investors.

Not a recommendation or personal investment advice.  Not all pre-IPO companies will go public or be acquired, and not all IPOs or acquisitions are or will become successful investments. There are inherent risks in pre-IPO investments, including the risk of loss of the entire investment, illiquidity, and fluctuations in value and returns. Investors must be able to afford the loss of their entire investment.

Footnotes: 

1. Diversification does not assure a profit or protect against market loss.