According to private markets firm Hamilton Lane, there were roughly 140,000 private companies globally generating annual revenue of at least $100 million in 2023, compared to roughly 19,000 public companies. Historically, private markets have outperformed public markets over the long-term and the next few years is expected to be no different – particularly as the artificial intelligence infrastructure build-out continues and investors look to put their money into the next OpenAI.
Private companies make for attractive investment as they can offer outsized returns. Back in 2010, before its IPO (Initial Public Offering) in 2012, Facebook owner Meta’s valuation was reported at $33.7 billion. At the time of writing in late 2025, the company is worth approximately $1.67 trillion.
But, as ever, buyer beware. “We all hear about the winners, but nobody really talks about the losers. Out of 100 investments, only one to three companies will show a meaningful return,” warns Omar Rajjoub, vice president of the private client group at New Jersey-based wealth management firm HudsonPoint Capital.
Investing in private companies can be risky, especially if they’re at an early stage, says Rajjoub. According to Experian, around 50 per cent of new businesses in the UK fail within the first three years, largely due to running out of cash or simply a lack of market demand for their product or service.
If companies are successful, any money invested is likely to be tied up for several years. This is because, unlike with public companies, selling shares in private companies is significantly restricted. Investors will typically only be allowed to sell during funding rounds or during a takeover.
“There is no doubt, private equity is a challenging asset class to invest in. It’s definitely not liquid. Even if family offices are happy with the lack of liquidity, it comes with other complexities,” says Khaled Said, managing partner at London-based private investment office Capital Generation Partners.
Identifying companies to buy into requires a lot of research and analysis, while managing individual investments can be an administrative headache, Said adds. According to Penguin Analytics, a global wealth survey of 13,500 families with capital between $3 million and $100 million, roughly 20 per cent of families still track their assets using paperwork stored in a filing cabinet, while 18 per cent rely on spreadsheets.
“Direct investments in private businesses are desirable, but only for families who can handle the increased burden of due diligence, monitoring, and paperwork that these transactions involve,” says Srbuhi Avetisyan, research and analytics lead at Owner.One, a wealth technology company offering a digital repository for clients to store asset data.
Knowing your investment funds
The liquidity challenge led to a dip in the number of family offices with exposure to private equity in their portfolios in 2025 — 21 per cent, down from 26 per cent in 2023, according to data from Goldman Sachs.
The bank’s poll of 245 worldwide family offices, the results of which were published in September, did, however, find that 39 per cent plan to increase their exposure to private equity over the next 12 months. With IPO and M&A (mergers and acquisitions) activity expected to pick up in 2026, this should lead to better private equity performance, as well as more exit opportunities for investors.
For ultra-wealthy investors looking to gain exposure to private companies, but without the hassle of investing directly, there are a number of different fund types that they can take advantage of.
“Private equity funds are much simpler than direct investments. You get access to an externally-managed pool of companies with the benefit of an experienced private equity management team at the helm, taking care of the day-to-day administration,” says Said.
The standard option is primary funds, but these have high minimum capital commitments, often in the millions of pounds. And, while they offer access to private companies at an early stage, they generally have a lifespan of up to 10 years. This is because the funds will initially decline in value before a dramatic upswing as companies mature and grow in valuation — known as the ‘J-curve’.
An alternative is secondary funds that buy into private companies when they’re at a slightly more mature stage and often at discount on their valuation. Secondary funds take assets off the hands of other funds or institutional investors that need to sell up and are happy to do so at a reduced price. The benefit of buying secondary funds, explains Avetisyan, is that they avoid the initial negative performance of primary funds, flattening the ‘J-curve’. The minimum investment required can be from as little as £25,000, but the lifespan is still several years.
If ultra-wealthy investors don’t want their money locked up for a long period of time, they could consider semi-liquid (or evergreen) funds. These offer a more flexible way to gain exposure to private markets as they allow investors to sell shares on a regular basis, usually quarterly. Minimum investment can be from £10,000.
Investors who prefer to just dip their toe into private markets can also buy shares in venture capital trusts (VCTs) listed on stock exchanges. Well-known UK names that have been held by VCTs include online resale platform Depop, bought by Etsy in 2021, and snack brand Graze, bought by Unilever in 2019 and sold on to Jamie Laing’s Candy Kittens last month.
The fund type that is right for each investor depends on their investment horizon and how comfortable they are with a lack of liquidity. If in doubt, it is advisable to spread your money across different fund types. As Rajjoub stresses: “The bottom line is that private markets are another space where diversification is key.”
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