Private investing is investing in privately held companies, similar to investing in companies that offer securities as a listing on one of the publicly traded indexes such as the NYSE, TSX, or NASDAQ — except that the companies you are investing in are not publicly traded. As a result, private investing has historically been accessible only to institutional investors, venture capitalists, and high-net-worth individuals.
What Makes Private Investing Different?
When you invest in a publicly traded company, you buy shares on an open exchange where prices are set by the market in real time. Anyone with a brokerage account can participate. Private investing works differently: you are purchasing equity directly in a company that has not gone through the process of listing on a public exchange.
Because there is no open market for these shares, private investments are generally illiquid — meaning you cannot sell your position easily or quickly. In exchange for accepting that illiquidity, private investors have historically been compensated with the opportunity to participate in the company's growth at an earlier stage, often at a lower valuation than what the company might eventually command as a public entity.
Why Private Investing Matters
The vast majority of companies in the world are private. They range from early-stage startups to well-established mid-market businesses generating tens of millions of dollars in revenue. Many of the most significant wealth-creation events in history have occurred in the private markets — before a company ever listed on a public exchange.
For decades, the returns generated in private markets were largely unavailable to ordinary investors. That has been changing. Regulatory frameworks in Canada, including National Instrument 45-106, have created pathways for a broader range of qualified investors to access private market opportunities through the exempt market.
The Risk and Return Profile
Private investing carries a distinct risk and return profile compared to public market investing:
- Higher potential returns. Because you are investing earlier in a company's lifecycle, the potential for significant appreciation is greater.
- Higher risk. Early-stage and growth-stage private companies carry meaningful risk, including the risk of total loss of capital.
- Illiquidity. Private investments typically require a multi-year holding period. You should not invest capital you may need in the short term.
- Less transparency. Private companies are not subject to the same ongoing disclosure requirements as public companies.
Understanding and accepting these trade-offs is the starting point for any private investor.
Who Can Invest in Private Companies?
In Canada, access to private investments is governed primarily through the exempt market. Investors who qualify under specific exemptions — such as being an Accredited Investor or investing under a minimum amount exemption — can purchase securities in private companies without the company needing to file a full prospectus.
Equifaira operates as a registered Exempt Market Dealer in British Columbia, facilitating connections between qualified investors and carefully selected private companies.
The Role of Due Diligence
Unlike public markets, where companies are required to make extensive ongoing disclosures, private market investing places a greater burden of due diligence on the investor and their advisor. This is one of the reasons working with a registered exempt market dealer matters — it ensures that securities offerings have been reviewed and that investors are matched with opportunities appropriate to their risk tolerance and financial situation.
At Equifaira, due diligence is built into every step of our process. We conduct thorough reviews of each company before presenting any opportunity to investors, and we work closely with investors to ensure they understand what they are investing in.