Monark Monthly, July Edition

The views and opinions expressed in this newsletter are solely my own and do not reflect any opinions or official position of Monark Markets. All content provided is for informational purposes only and should not be considered legal, financial, or professional advice; please consult with a qualified professional for specific advice related to your circumstances.

The temperature is rising in more ways than one this summer. July brought a wave of excitement to the intersection of retail investors and private markets, with new funding rounds, regulatory changes that will fundamentally reshape how retail investors access private markets, and an important perspective on the hype in Pre-IPO investing. The expansion of retail access to private capital markets is inevitable, and the race is on for which platforms, strategies and infrastructure will shape the future of private markets. We dive into it all, in the July edition of the Monark Monthly. 

Funding Rounds

iCapital, a market leader in the b2b distribution of alternative investments within the wirehouse channel, announced an $820M funding round this month, led by T. Rowe Price and SurgoCap Partners and valuing the company at over $7.5B. With over 700 employees and $945B of assets serviced on the iCapital platform, the company expects to use this fresh funding to make more technology and data related acquisitions. iCapital, despite its technology challenges fueling the need for more acquisitions (the firm has made 23 to date), has proven that incentive alignment with existing distribution channels is the best way to sell private market assets. In iCapital’s case, working closely to educate and provide easy access to private markets for wirehouse Advisors has proven that b2b distribution is the more scalable solution for private market assets.  

Yieldstreet, a direct-to-consumer alternative investing platform, announced a $77M capital raise in July, led by Tarsadia Investments. In addition to the funding announcement, Mitchell Caplan, the President of Tarsadia Investments, has taken the reins at Yieldstreet as the interim CEO. Mr. Caplan’s letter to investors and recent announcements from the company highlight a doubling down on direct to consumer distribution with a redesigned mobile app, expanding access to third party alternative asset managers like StepStone and Carlyle, and my favorite quote from recent product updates, “Over time, we expect to bring down management fees, remove the access fee, and introduce a one-time, upfront commitment fee — seeking to keep fees on investments largely the same.” In recognition of the competition from large retail brokerage firms like SoFi, Robinhood, Apex and others entering the private markets, 2/20 fees for retail access to private markets is quickly becoming obsolete. 

Regulatory Changes

We are in an era of regulatory change, with the pendulum swinging rapidly towards increasing retail investor access to private markets. A few important pieces of legislation described below will fundamentally expand retail investor access to private investment opportunities. 

One of the biggest hurdles slowing down retail access to private markets today is the definition of an accredited investor. Many private offerings are limited to accepting accredited investors or qualified purchasers, both hurdles are based on an investor's net-worth or income, not their education level or investment experience. H.R.3339 - Equal Opportunity for All Investors Act of 2025 would change that, allowing an individual investor to qualify as accredited through an examination established by the Securities and Exchange Commission. The examination must be administered by a registered national securities association and offered free of charge to the public. The House of Representatives passed this critical legislation in July, sending the bill to the Senate for debate. 

Another major hurdle in the Pre-IPO market specifically, has to do with the cap on the number of investors that can participate in Special Purpose Vehicles (SPVs). The Section 3(c)(1) exemption of the Investment Company Act defines a limit of 99 investors that can participate in a private fund or SPV, or less than 250 investors in “qualifying venture capital investments,” which today excludes secondaries or fund of funds. This arbitrary limit is one of the primary factors keeping minimum investment amounts higher, as more 3(c)(1) SPVs are used to facilitate access to private assets, including the top Pre-IPO companies. 

H.R.4429 - Developing and Empowering our Aspiring Leaders Act of 2025 would change the definition of a qualifying venture capital fund, (A) to include an equity security issued by a qualifying portfolio company, whether acquired directly from the company or in a secondary acquisition; and (B) to specify that an investment in another venture capital fund is a qualifying investment under such definition. H.R.4431 - Improving Capital Allocation for Newcomers Act of 2025 would change Section 3(c)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(1)) is amended— (1) in the matter preceding subparagraph (A), by striking “250 persons” and inserting “2,000 persons”; and (2) in subparagraph (C)(i), by striking “$10,000,000” and inserting “$150,000,000”. In other words, the two pieces of legislation above, both of which have bi-partisan sponsors/co-sponsors in the House, would increase the number of investors that SPVs can accept from 99 to 1999, enabling a massive influx of retail investors to the venture and secondary markets, and bringing down minimums dramatically.

President Trump is expected to sign an Executive Order that will help expand 401(k) access to private investments, a $12.4T TAM expansion for alternative asset managers targeting retail investors. While it is unclear if the Executive Order alone can reduce litigation concerns that major 401(k) providers have over higher fees and illiquidity risks, an EO would certainly be emblematic of a broader shift in regulatory policy. 

Within the next 12 months, it is likely we will see a complete refactoring of private capital markets, driven largely by the codification of these regulatory changes and increased distribution of private securities through traditional brokerage platforms and RIAs.

Important Perspectives on Pre-IPO Investing

I found an article this month from our friends at Nasdaq Private Markets particularly relevant for the times that we live in. “Public Markets, Public Hype,” provided an important perspective on the risks and considerations of investing in Pre-IPO companies for retail investors. 

With direct-to-consumer Pre-IPO investment firms like Linqto filing for bankruptcy amid an SEC investigation over lack of fee transparency and flaunting of regulations, retail investors should be very careful which platforms, service providers and marketplaces they choose to trust when investing in Pre-IPO companies. From the beginning, Monark’s b2b partnership model, powering established brokerage firms with access to private markets, has been driven by a mission to increase transparency and awareness of the risks, fees and challenges investing in Pre-IPO companies. We believe firmly that there is a right way and a wrong way to facilitate access to the Pre-IPO market, and the firms that put investors, regulatory compliance and transparency first will lead the market in the next wave of expanded access and growth.