Private market investing, often referred to as venture capital or private equity, operates differently than the public stock market. While public stocks are accessible to any retail investor via brokerage accounts, private markets involve buying shares in companies that have not yet held an Initial Public Offering (IPO). This allows investors to enter at a valuation that may be significantly lower than what the company might command once it reaches the public markets.

However, this strategy carries distinct risks and requirements. Unlike public stocks, which offer high liquidity—meaning they can be sold instantly—private investments are often 'locked up' for years. Investors may have no way to exit their position until the company is acquired or goes public. Furthermore, these investments are typically restricted to 'accredited investors' who meet specific net worth or income thresholds, as regulators view these assets as higher risk and less transparent than public equities.

While the potential for high returns exists, the failure rate for early-stage companies is substantial. Many startups never reach the stage of an IPO, which can result in a total loss of the initial investment. The barrier to entry remains high, not just in terms of capital, but in the access required to participate in private funding rounds, which are often closed to the general public.