A recent social media post by Ryan Sean Adams, founder of Bankless, has ignited discussion around the accessibility of American capital markets, asserting that "our best companies are closed to the public" and that "only wealthy have access." Adams directly attributed this trend to regulation, stating, "You can blame the billionaires all you want, but the truth is regulation made this so."
This sentiment reflects a growing concern that companies are opting to remain private for extended periods, significantly impacting retail investors' ability to participate in early-stage growth. Historically, companies would go public after approximately seven years; however, current trends show this timeline has stretched to around 11 years. This extended private phase means that by the time many high-growth companies do enter public markets, much of their explosive growth has already occurred, limiting the upside for individual investors.
Experts point to several factors contributing to companies staying private longer. The availability of substantial private capital, coupled with the increasing complexity and cost of public market regulations, including legal, accounting, and tax compliance, makes remaining private an attractive option. Furthermore, the growth of secondary markets allows private shareholders and employees to achieve liquidity without the need for a full initial public offering (IPO).
While Adams' tweet places the blame squarely on regulation, the issue is multifaceted. Some argue that the push to "democratize" private markets by easing restrictions for retail investors could expose them to illiquid, opaque, and risky assets. Organizations like Better Markets have criticized the SEC for advancing policies that could lead ordinary investors into private markets, suggesting this benefits Wall Street rather than Main Street. They highlight that private market assets often lack the transparency and liquidity of public offerings, and historical returns for private equity have sometimes lagged behind public indices like the S&P 500.
The debate underscores a fundamental tension in capital markets: balancing investor protection with access to high-growth opportunities. As companies continue to leverage private funding and delay IPOs, the discussion around the role of regulation in shaping market accessibility for all investors is likely to intensify.
