Testing the secondary market
Fishing for bigger companies that aren't public yet? Then consider secondary markets.
Secondary markets are private company exchanges that let you buy shares before they go public. These shares may be sold by the company founder or another investor. Online platforms such as SharesPost or EquityZen match investors with companies. Some offerings have been hot tickets, such as Facebook, Spotify and Twitter.
At SharesPost, some investments have included high-profile offerings like LinkedIn. However, the competition for shares is intense. You can buy and sell private company shares on the SharesPost platform, which is a member of the Nasdaq Private Market.
Also, to be an investor on SharesPost, you must have earned more than $200,000 annually for the past two consecutive years or have a net worth of at least $1 million. You'll need to prove that you meet these criteria, which are set by the Securities and Exchange Commission.
That's not all. Shares bought and sold on secondary markets typically have limited volume and lack transparency. And investment minimums are high. At SharesPost, they average $100,000.
For a less risky alternative investment, buy shares in a publicly traded company that invests in private companies, says the Center for Venture Research's Sohl. One example is the Blackstone Group, one of the world's largest private equity investors.