If Steve Pellatier has his way, everyone will be able to invest in pre-IPO companies. Or at least everyone who meets the requirements laid down by regulators. Pellatier is the CEO of Offroad Capital, which is trying to open the private equity market to individuals and smaller institutions, although Pellatier prefers the term private securities, as he doesn’t want to limit opportunities purely to equities. He does not skimp on ambition and wants Offroad Capital to be “the predominant global private securities marketplace by using the internet to bring together investors, issuers and intermediaries”.
Offroad was the First to complete any such deal online on 31st July last year, two years after Pellatier left a senior position at Intuit. Until last month, he concentrated on the US market. “There is over $1 trillion in private assets in the US which is available for investing in private securities,” he says. So he struck up deals with US companies to help further his cause. One is with investment bank Robertson Stephens, which is expanding the range of deals available to his investors. Another, with Mayfield Fund, aims to improving contact with the venture capital community. The third is with broker Charles Schwab. Offroad oVers Schwab’s clients access to its platform and in turn gets a captive audience of investors with $1 million or more at their disposal.
Established private equity investors raise questions about the suitability of their market for private individuals, citing the difficulty of conducting due diligence on unlisted Firms and the illiquidity of private securities. They say individuals should take exposure only through diversified funds.
Even so, last month Pellatier announced two more alliances. First, with the Partners Group, a Swiss Firm which manages private and public equity for institutional and private clients.
The second is with Korean management consultant Samjong Consulting which specializes in asset management.
Private equity has been a very private club for years. The rewards for breaking in will be huge but if the battle in public securities is anything to go by, getting that far will not be easy.
