Unlocking Private Markets: How Monark Markets is Changing Access for Retail Investors

While recent regulatory and industry developments are changing the game for retail investors looking to access private markets.

A combo of regulatory reforms and market demand is driving greater access for retail investors.

The SEC and industry groups are pushing for easier access to private markets while maintaining protections and new fund structures and alternative products are opening doors.

And even 401k plans are embracing private access.

Joining me here this morning is Ben Haber, CEO of Monarch Markets.

Ben, great to have you here.

Thank you so much for joining me.

Ray, thank you so much for having me.

Well, based on what I know about Monarch, I understand that you're offering an alt as an API as service API.

So tell us how this is actually changing the access to private.

Absolutely.

So Monarch is an autism service API infrastructure.

We work primarily with traditional retail broker dealers and wealth management firms.

Monarch APIs are a fully embedded solution, so we integrate directly with an existing wealth management or brokerage platforms infrastructure.

They design sort of the UI, the UX for their clients, and then they use.

APIs to power access to private markets today there's not a tremendous amount of access to private markets for retail investors, and a lot of the more traditional brokerage firms don't have a private market solution.

And so we're really helping solve that problem by providing our solution as an API and providing it as an embedded way for these platforms to start to enable access for their customers.

Yeah, and I also understand that Monarch is focusing on pre-IPO companies, some familiar names such as OpenAI or also we have SpaceX or Anthropic.

So tell us about the actual opportunity here.

Absolutely.

So.

We spent the last 2 years or so really building the foundation for the company.

That was a technology process that was a regulatory process, you know, getting a broker dealer license, and then that was also a customer discovery process and so we talked to a of the traditional retail brokerage firms, and we asked them what interests you in private markets.

What do you think would be interesting to your clients?

By far and away, the resounding answer was access to the free IPO market.

And so to your point, those are companies like SpaceX, like OpenAI, like Stripe.

Um, very mature companies often with multi-billion dollar valuations, but still in the private markets and so not traditionally accessible to retail investors today.

And so our initial product as we've gone to market has been providing access to the pre-IPO space.

We think our solution makes that access a lot more seamless and stream.

Mind for retail investors to actually be able to participate and invest in some of these later stage pre-IPO names.

Yeah, and for retail investors out there who are watching right now and they're curious about your process over at Monarch when it comes to sourcing allocation as well as structure, tell us what goes on.

So we structure all of our investment products as special purpose vehicles, SPVs for short.

Um, we think that enables more streamlined access for investors.

In particular, it fractionalizes access and so it brings down the minimum investment size.

Typically in later stage private companies you're not going to be able to invest unless you're investing $10 million.50. dollars that's obviously not a very accessible minimum size for a lot of everyday investors.

And so by using the SPD structure we can actually bring that access, bring those minimums down and provide more accessible access to these private companies.

We do not operate a direct to consumer platform.

We only work with B2B partners, broker dealers, and wealth managers.

So if you're interested in accessing these markets, I would say, you know, call up your retail brokerage firm, call up your wealth management platform, and ask if they're already working with Monarch, and if not, if they want to integrate our API solution.

Yeah, and Ben, I'm sure you keep a close eye on the data.

So when it comes to investors, give us an understanding of the demand and what investors are actually looking for right now.

Yeah, it's a great question.

So definitely pre-IPO is where we see the most demand today, and so we see that as our sort of initial wedge product to start working with broker dealers and wealth managers.

I do think over time there will be more interest in some of the more registered products, so that would be, you know, some of the Blackstone funds, KKR funds, Apollo funds. that almost provide sort of ETF like exposure to private markets and sort of a diversified basket, and some of those registered products help bring down minimums for investors as well.

So I do see demand shifting in that direction over time, but today definitely a strong focus on you know, investors being able to access pre-IPO companies.

And of course with this increased focus on private markets, when it comes to regulatory changes, what are you expecting?

So I do think we're in an interesting regulatory environment.

It seems like the regulatory restrictions around access to private markets are only loosening going forward.

And so one of the biggest pieces of legislation that's been talked about in Congress and that I think could really help expand access is reducing some of the accredited investor limitations and Making it a little bit more fair for everyday investors to be able to access private markets as it stands today, the accreditation status or qualified purchaser status is based on your net worth, how much money you have in the bank.

I don't personally believe that the amount of money you have directly equates to your sophistication as an investor.

I know many investors that are very wealthy that are not very good.

Investors and then many investors you know that maybe only have a couple $1000 but are very educated on the markets and really know what they're doing.

And so making our legislation more fair, I think is the best way of providing increased access to private markets.

And very quickly we have less than 60 seconds here.

So when it comes to pre-IPO companies, what do you think investors need to be careful of?

So I think there's almost two different segments of the pre-IPO market, private markets for individual companies.

I see the pre-IPO, what we define as pre-IPO, is really the top sort of 25 to 50 names.

And so these are generally companies like SpaceX that are very mature businesses, you know, at times billions of dollars of annual revenue.

And so often getting into those companies is really just a game of access.

Some of the Earlier stage companies, you know, maybe your Series A, Series B companies that are also in that category of private, you know, you definitely want to look out for some of the more traditional risks that you would in an earlier stage company, you know, do they have cash to get to the next financing round, enough revenue to continue building their business?

OK, Ben.

Well, we will have to leave it there.

Thank you so much for joining me and thank you for sharing your insights.

Thank you so much for having me.