Exploring Private Market Investing with Cole Pearson

Show Notes

They’re not listed on stock exchanges, yet private market investing opportunities are becoming increasingly popular.

So, just what are private markets? Why would you want to consider making them a part of your portfolio? And how would you go about it? Cole Pearson is here today to break it all down for us.

What Is Private Market Investing?

Private market investing involves putting capital into companies that are privately held rather than those listed on public stock exchanges. Unlike investing in publicly traded firms, private market investments focus on businesses that are in earlier stages of development.

You might think of the local hardware store or a manufacturing plant in your area—these are privately held businesses. Private market investing tends to focus on rapidly growing for-profit businesses that can serve as powerful economic engines while also having the potential for positive impact.

Investors often hear terms like private equity, venture capital, and private credit when discussing private markets. These investments provide opportunities to support growing businesses while diversifying a portfolio beyond publicly traded stocks.

Public vs. Private Markets: Which Is Safer?

One common concern is that private markets may be riskier than public investments. Public markets are typically considered safer because of regulatory oversight and greater liquidity. However, all investments involve risk—whether public or private.

Private markets offer unique advantages that can complement a traditional portfolio. While they may be less accessible and require a longer-term outlook, they also provide exposure to businesses at earlier stages of growth, offering potential for higher returns.

Historically, private markets have been dominated by institutional investors and ultra-high-net-worth individuals. Institutions tend to allocate five times more to private markets than the average retail investor.

This is largely due to the potential for higher returns, market inefficiencies, and diversification benefits. In the U.S., there are approximately 4,000 publicly traded companies with over $10 million in revenue—but in the private markets, there are 182,000 companies above that threshold. That means there’s a much larger opportunity set available for investment.

The Advantages of Private Market Investing

Private market investments offer several key benefits:

Many public companies started as private, venture-backed firms. Today, these once-private companies make up nearly 77% of market capitalization and contribute 92% of research and development spending. Private investing allows access to these high-growth firms before they go public.

Private investments are less correlated to the stock market, helping investors diversify their portfolios. Their value isn’t directly impacted by daily market fluctuations, reducing exposure to broader economic downturns.

Unlike public market investing, where shares are traded between investors, private market investments directly fund businesses. This allows investors to have a greater say in how companies operate and ensure that their investments align with biblical values.

One of the most compelling reasons to consider private market investing is the opportunity for faith-based impact. Rapidly growing, for-profit businesses are one of the most powerful engines God has given us to create positive change in the marketplace.

Through private investing, believers can support businesses that align with their values—whether that’s ethical business practices, advancing healthcare, or improving infrastructure. Imagine if the leadership of today’s major corporations were faith-driven. By investing in private markets, Christian investors can directly support businesses that promote Kingdom values.

Making Private Markets Accessible to Everyday Investors

One of the biggest barriers to private investing has been accessibility. Traditionally, high minimum investments and complex paperwork restricted this opportunity to institutional investors. However, interval funds—a relatively new financial vehicle—are changing that.

Interval funds function similarly to mutual funds but invest in private equity. They allow for periodic liquidity, making it easier for everyday investors to access private markets with a lower minimum investment.

How to Get Started with Private Market Investing

If you’re working with a financial advisor but have never discussed aligning your investments with your values, start the conversation by asking:

• Do we know what’s inside our current portfolio?
• Can we evaluate our investments to ensure they align with our faith?
• Are there opportunities to diversify with private market investments?

These simple questions can help guide your financial decisions toward a more faith-based approach.

Private market investing presents an exciting opportunity for those looking to diversify their portfolios, support high-growth companies, and make a Kingdom impact. With new financial vehicles like interval funds, this once-exclusive market is now accessible to more investors than ever.

On Today’s Program, Rob Answers Listener Questions:

• I'm 64 and my wife is 61. We're buying a $230,000 home, but the mortgage company hasn't discussed a down payment or interest rate with us. We have around $300,000 saved up between us. The home is $230,000 plus closing costs, with an interest rate of around 6.75%. I'm not sure what to do here and could use some guidance. What would you recommend?
• My son has $7,000 that he thought he put into a high-yield savings account, but the bank he used got merged into another bank. Now he's finding the interest rate is only around 0.1%. He wants to pull the money out and put it somewhere else to earn a better interest rate. Where would you recommend he put this $7,000 to earn a good interest rate?

Resources Mentioned:

• Faithful Steward: FaithFi’s New Quarterly Magazine
• OneAscent
• Christian Community Credit Union (CCCU)
• Bankrate.com 
• Wisdom Over Wealth: 12 Lessons from Ecclesiastes on Money (Pre-Order)
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App