Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / How Bull Markets Are Making Private Markets Platforms a Must-Watch
Transcript
- Lucas: So Goldman Sachs just launched a private markets platform specifically targeting wealthy individuals who want access to deals like the next SpaceX or Stripe. This was announced yesterday, July 21st, and it's a pretty significant move for a Wall Street giant that traditionally reserved those opportunities for institutional clients. Luna: Right, because for years, if you weren't a pension fund or a sovereign wealth fund, you just couldn't get into these pre ipo companies. Goldman's basically opening the club to a much wider group. Lucas: Exactly. And the timing is no accident. The bull market in public equities has pushed valuations so high that more and more accredited investors are looking for uncorrelated returns. Private markets globally are estimated at around thirteen trillion dollars now, and that number keeps growing. Luna: Thirteen trillion — and that's assets under management, not just deal flow. That's up from about nine trillion five years ago. The compound annual growth rate is something like eight percent. Lucas: And what's interesting here is that Goldman isn't just acting as a middleman. They're creating a platform that includes direct investments, co-investments, and even a secondary market for existing stakes. The take rate is reportedly around one and a half percent annually on assets placed through the platform. Luna: That's competitive with some private equity fund fees, but the key difference is liquidity — or at least more liquidity than traditional PE. You can sell your stake on the secondary market within the platform. Lucas: Now, the timing also coincides with some very specific headline drama. Elon Musk just warned that short sellers in SpaceX 'won't survive' as bets against the company have hit thirty-two percent of the float. That's a huge short interest for a private company. Luna: Wait — short selling SpaceX? How does that even work for a private company? I thought short selling required publicly traded shares. Lucas: It does, but there are now swaps and contracts for difference on private company valuations. Essentially, you can bet against SpaceX via derivatives that track its valuation in secondary markets. It's a sign of how mature the private markets ecosystem has become. Luna: So the same forces that are making private platforms mainstream are also enabling short selling. It's a double-edged sword. Lucas: Exactly. And Goldman's platform is explicitly trying to mitigate some of those risks by curating the deals. They're vetting companies, providing due diligence, and offering a managed exposure. But it's still inherently riskier than buying an S&P 500 index fund. Luna: Speaking of the S&P 500, it's at 7,509 today. Down a bit over the past five days — about 0.8 percent. The Nasdaq is off more, down 1.6 percent. So maybe some rotation out of tech and into these private market stories? Lucas: Could be. The Russell 2000 is actually up 0.4 percent over the same period. Small caps finally catching a bid. But the broader point is that the bull market is now almost thirty months old, and investors are getting creative about finding returns. Luna: And the Fed isn't helping much. Effective fed funds rate is at 3.63 percent, flat. No cuts on the horizon, but no hikes either. So cash is still yielding a decent return — around 3.6 percent in money market funds — but that's not going to get you wealth compounding. Lucas: Which is exactly why platforms like this resonate. If you're an accredited investor with a million dollars or more to deploy, the opportunity cost of sitting in cash is huge. Private markets offer the potential for outsized returns, but also illiquidity and higher fees. Luna: Goldman's platform requires a minimum investment of a hundred thousand dollars. That's lower than most private equity funds, which often require a million or more. So it's a step toward democratization, but still only for the top few percent of households. Lucas: Right. The SEC's accredited investor definition still applies — you need a net worth over a million dollars excluding your primary residence, or an income above two hundred thousand for the last two years. That's about ten percent of U.S. households. Luna: But there are efforts to expand that definition. The SEC has been floating changes under the current administration to allow 'knowledgeable employees' or people with certain professional certifications to qualify. Nothing finalized yet. Lucas: And that would be a game changer for platforms like Goldman's. More eligible investors means more demand, which means more deal flow. The platform is starting with about fifty companies, including SpaceX, Stripe, and a few biotech firms. Luna: Stripe alone was last valued at sixty-five billion dollars in a secondary transaction earlier this year. SpaceX is reportedly valued at around two hundred and ten billion. These are massive companies. Lucas: Huge. And the irony is that some of them might not need to go public for years, if ever. SpaceX CEO Elon Musk has said he's in no rush. Stripe's founders have hinted at staying private as long as possible. So these platforms become the only way to get exposure. Luna: I want to ask about the risks though. We talked about the short interest in SpaceX — thirty-two percent of the float. That's a massive bet against the company. If the platform includes SpaceX, are investors being told about that short interest? Lucas: Goldman says they provide full disclosure on each company's capital structure, including any derivatives exposure. But of course, the short interest data on private companies is less transparent than on public ones. There's no SEC filing requirement for private company shorts. Luna: So you're trusting Goldman's due diligence. Which brings us to the fee question: one and a half percent annually on assets placed. Plus maybe carried interest on gains? How does that compare to a typical venture capital fund? Lucas: Typical VC is two and twenty — two percent management fee and twenty percent carried interest. Goldman's one and a half percent management fee with no carried interest for the basic platform. They do have a separate 'premium' tier with co-investment opportunities that carries a ten percent carried interest. Luna: That's actually pretty competitive. No wonder there's buzz. JPMorgan and Morgan Stanley are reportedly working on similar offerings. The race is on. Lucas: And that race is a direct product of the bull market. When public equities are expensive and yielding single-digit returns, private markets become the hunting ground for alpha. It's the same logic that drove the ETF arms race we talked about in episode 109. Luna: Speaking of that — if today's conversation helped you think about your own portfolio or just understand what's happening in markets, we want to keep these shows ad-free and accessible. The way that works is listener support. You can find us at buy me a coffee dot com slash fexingo. No pressure, just a low-key way to keep the episodes coming. Lucas: Absolutely. And if you're an accredited investor, maybe this is the year you explore a platform like Goldman's. But for everyone else, understanding this trend is valuable because it shapes how companies approach financing and how the broader market evolves. Luna: So what's the one thing you want listeners to take away from this episode? Lucas: That the line between public and private investing is blurring fast. The bull market is forcing innovation in how wealth is managed. If you're paying attention, you can see the future of capital formation — and it's happening on platforms like this.