A new fund is taking steps to offer everyday investors a chance to own a piece of major private companies like SpaceX and Anthropic. The fund, Powerlaw Corp., which holds stakes in several leading firms in artificial intelligence, defense, and space, has filed to sell its shares publicly in New York.
This move is designed to bridge a significant gap. Individual investors have typically been locked out of the high-growth phase of companies like OpenAI, which has seen its valuation soar from under $30 billion to potentially over $800 billion in just a few years. By the time such companies hold traditional public offerings, much of their explosive value growth has already been captured by venture capital firms and insiders.
“With the immense amount of capital available in private markets, the most successful companies are choosing to stay private longer,” explained John Spinale, a managing partner at a venture firm and an investor in the fund. “This deprives the public of the opportunity to invest in these high-growth firms.”
The fund’s strategy focuses on the “power-law” nature of venture investing, where a small number of investments generate the vast majority of returns. It has invested $355 million across 18 highly-valued private tech companies through secondary market transactions. These deals involve buying shares directly from existing backers, striking agreements with employees, or pooling resources with other investors.
Rather than a traditional IPO that raises new capital, the fund is pursuing a direct listing. This means it will sell existing shares held by current stockholders. Once regulatory approval is secured, investors will be able to purchase shares through a standard brokerage account, just like any other publicly traded stock.
Understanding the Risks
However, the opportunity comes with notable risks. The fund cautioned in its prospectus that closed-end investment companies like this one often trade at a discount to their net asset value. This means the share price might not fully reflect the portfolio’s performance. Additionally, the private companies in the portfolio disclose limited financial information to the public.
The fund reported a net asset value of approximately $475 million as of late last year. This structure also provides a benefit to the fund’s managers by offering a path to liquidity for investments that might otherwise remain locked up for years.
The push to open private market access to retail investors has been growing, but it carries inherent risks. The recent bankruptcy of another investment platform that offered stakes in unlisted companies highlighted the potential pitfalls. Powerlaw Corp. holds its investments through a combination of equity, convertible notes, and special purpose vehicles.
“We’re seeing a convergence where private assets are seeking public market access,” said an analyst at Bloomberg Intelligence. “There are various vehicles emerging to facilitate this, each with its own set of advantages and disadvantages for investors.”
