Investing.com -- Investors can now invest in popular private companies like OpenAI and SpaceX with as little as $5,000, thanks to changes by trading platforms EquityZen and Forge Global, the Wall Street Journal reported.
The firms plan to make an official announcement later on Tuesday, WSJ said.
The two marketplaces, which facilitate secondary share sales in private firms, are lowering their minimum investment requirements from tens of thousands of dollars. The move is part of a new partnership with Yahoo Finance, which will also publish data from both firms on roughly 100 pre-IPO companies.
This change marks a broader effort to open private markets to individual investors. Historically, access was limited to institutional players and ultra-wealthy individuals with the capital and connections to join fundraising rounds, which often require seven-figure minimums and decade-long commitments.
Now, the industry is eyeing the estimated $30 trillion held by U.S. households.
Private companies are often seen as high-reward opportunities due to their faster growth potential, though they come with trade-offs: limited liquidity, less transparency, and fewer financial reporting requirements.
Forge and EquityZen connect early employees or investors looking to cash out with accredited individuals willing to take on that risk. To make shares more accessible, the platforms offer single-company funds that allow smaller investments.
Still, trading private shares isn’t as seamless as trading public stocks. Deals can take several days to finalize, and stakes typically must be held for at least six months. Transaction (JO:NTUJ) fees range from 2% to 5%.
Most valuation data is also outdated, relying on past fundraising rounds. To address this, Forge has developed daily price estimates based on bid-ask activity across its platform.
“We’re at a tipping point right now,” Forge CEO Kelly Rodriques told the WSJ. “Increased participation leads to greater liquidity.”
While the $5,000 entry point expands access, investing in these private companies remains limited to "accredited" investors. That means an individual must earn at least $200,000 a year ($300,000 for couples) or have a net worth of over $1 million excluding a primary residence.
These standards haven’t changed since the 1980s, but now apply to about one in five U.S. households, up from under 2% in 1983, according to SEC data.
EquityZen CEO Atish Davda told WSJ he hopes the threshold can go even lower over time, but noted that investors should proceed with care. “Just because you can, doesn’t mean you should,” he said.
“If I only have $50 to invest, am I better off taking my $50 and going on FanDuel or something?”