Most investors are familiar with public markets. You open a brokerage account, buy shares in companies listed on the TSX or NYSE, and watch your portfolio fluctuate with the market. But the public market represents only a fraction of the total investment universe. The private market — companies that have not listed on a public exchange — is where much of the world's economic activity and wealth creation actually takes place.
Understanding the key differences between public and private investing is essential for anyone looking to build a truly diversified portfolio.
What Are Public Markets?
Public markets are exchanges where shares of companies are bought and sold by the general public. Companies listed on public exchanges — such as the Toronto Stock Exchange (TSX), New York Stock Exchange (NYSE), or NASDAQ — are subject to rigorous regulatory requirements. They must file audited financial statements, disclose material events, and adhere to continuous disclosure obligations.
The benefit for investors is transparency and liquidity. You can buy or sell shares at any time during trading hours, and the price you pay is set by the market in real time.
What Are Private Markets?
Private markets consist of companies that have not gone through the process of listing on a public exchange. This includes everything from early-stage startups to established businesses generating significant revenue. These companies raise capital privately — from founders, friends and family, angel investors, venture capital firms, private equity funds, and through the exempt market.
In Canada, the exempt market provides a regulated pathway for qualified investors to access private company securities. Equifaira operates as a registered Exempt Market Dealer, facilitating these investments under the rules established by National Instrument 45-106.
Key Differences Between Public and Private Investing
Liquidity
Public market investments are highly liquid. You can convert your shares to cash quickly and easily. Private market investments are illiquid by comparison. There is no open exchange where you can sell your shares, and most private investments require a holding period of several years. In exchange for accepting that illiquidity, private investors have historically earned a premium — a higher potential return than what public markets offer.
Transparency
Public companies are required by law to disclose a great deal of information about their financial condition, operations, and material events. Private companies have no such obligation. They report primarily to their investors and are not subject to the same level of public scrutiny. This places a greater responsibility on investors and their advisors to conduct thorough due diligence before committing capital.
Growth Potential
When a company lists on a public exchange, it has typically already passed through the highest-growth phase of its lifecycle. Early investors — those who participated in private financing rounds — have often already realized significant gains by the time the public gets involved. Investing in private companies gives investors the opportunity to participate in that earlier, higher-growth phase.
Access
Historically, private market investing was the exclusive domain of institutional investors, venture capital firms, and ultra-high-net-worth individuals. Regulatory changes, including Canada's exempt market framework, have gradually opened access to a broader group of qualified investors. However, private investing is still not universally accessible — investors must meet specific eligibility criteria.
Valuation
Public company valuations are determined by the market, updated in real time, and highly visible. Private company valuations are more subjective, based on factors like comparable transactions, earnings multiples, and negotiated terms. This can work in an investor's favour — private companies can be acquired at valuations that the market has not yet recognized — but it also introduces a degree of uncertainty that does not exist in public markets.
The Case for Combining Both
A well-constructed investment portfolio does not have to choose between public and private markets — it can include both. Public market investments provide liquidity and diversification across sectors. Private market investments provide the potential for higher returns and exposure to the early-growth phase of promising companies.
Equifaira's approach is to help qualified investors access carefully selected private companies, complementing their existing public market holdings and contributing to a more diversified, resilient portfolio.