In a recent Capital Ideas interview, Rialto Markets CEO Shari Noonan shared insights on the transformation of private market investing, highlighting how retail investor participation and blockchain technology are reshaping capital formation. Speaking with hosts Nick Morgan, co-founder of the Investor Choice Advocates Network (ICAN), and Fintech thought leader Dara Albright, Noonan detailed the significant shifts occurring in private market dynamics.
The conversation comes at a pivotal moment as companies increasingly delay public offerings and fewer businesses maintain public listings. According to Noonan, this trend has created a substantially larger landscape of private companies across all stages of development, particularly impacting innovative early-stage ventures seeking capital.
“The last 10 years has been a fascinating experiment,” Noonan noted, referring to the JOBS Act’s impact on private capital formation. The legislation enabled private companies to raise capital from the general public, leading to what Noonan describes as a fundamental shift in how businesses approach fundraising.
“What we’ve seen is a lot of companies, as well as certain sectors or verticals, really leaning into this idea of community and raising from their community, activating their community,” Noonan explained. She emphasized that these are “true retail investors” – what she calls “retail with a little R” – rather than just accredited investors or qualified institutional buyers (QIBs).
This democratization of investment opportunities allows unaccredited investors to participate in companies they believe will make a meaningful impact. The trend represents a return to foundational American principles, as host Dara Albright observed, reminiscent of when any citizen could invest in the innovation and ingenuity of their fellow Americans.
Tokenization and Real-World Assets
The conversation turned to emerging trends in venture capital, particularly the tokenization of real-world assets (RWA). Noonan revealed that Rialto Markets spent approximately two years working with FINRA and the SEC to facilitate digital securities trading, recognizing blockchain technology’s potential in private markets where legacy infrastructure is less entrenched.
“What I love about the ability to tokenize something is not only can you begin to scale it, go to a much lower capability and create new products… but you can also start separating out the governance from economic or some sort of other right,” Noonan explained. This unbundling of rights and benefits creates new opportunities for product innovation and risk management.
Noonan highlighted a current project in private credit where funds seek to transfer economic exposure while maintaining governance rights. This structure appeals to investors who benefit from the expertise of established private credit firms while gaining desired economic exposure. The technology is also enabling innovation in real estate and alternative investments like music royalties, which offer portfolio diversification through non-correlation with equity markets.
Regulatory Challenges
Despite these innovations, regulatory hurdles remain a significant challenge for private market participants. Noonan pointed out that regulatory bodies are still adapting to the scale and complexity of private markets, having historically focused primarily on public market oversight.
“Private markets and private markets at scale is something that the regulators are just now trying to put their arms around,” Noonan observed. She shared an example of a current project facing a four-year regulatory approval process, despite essentially replicating existing trading practices on new technological infrastructure.
This regulatory inertia, particularly concerning JOBS Act implementation, represents a broader challenge in adapting oversight frameworks to market evolution. As Nick Morgan noted, ICAN’s mission includes addressing these regulatory barriers to enhance capital market accessibility.
Looking Forward
As the interview concluded, the participants acknowledged the rapid pace of innovation in financial markets. With private companies staying private longer and new technologies enabling novel investment structures, the landscape of private market investing continues to evolve.
Rialto Markets’ experience in navigating both traditional regulatory frameworks and emerging digital asset opportunities positions the firm at the intersection of these trends. Their work in facilitating digital securities trading while maintaining regulatory compliance demonstrates the potential for innovation within existing regulatory frameworks.
The discussion highlighted several key developments shaping private markets:
- The growing importance of community-based capital formation
- Technological innovation enables new investment structures
- The need for more nimble regulatory frameworks
- Increased retail investor participation in private markets
- The emergence of tokenized real-world assets
As we enter 2025, these trends suggest a continuing evolution in how private companies access capital and how investors participate in private markets. The combination of regulatory modernization, technological innovation, and changing market dynamics points toward a more accessible and efficient private capital marketplace.
The conversation underscored that while challenges remain, particularly in regulatory adaptation, the private markets sector continues to innovate and expand opportunities for both companies and investors. As Noonan’s insights suggest, the integration of blockchain technology and the democratization of investment opportunities may fundamentally reshape private market investing in the years ahead.
Nick Morgan is President and Founder of ICAN, the Investor Choice Advocates Network, a nonprofit public interest litigation organization dedicated to serving as a legal advocate and voice for everyday investors and entrepreneurs. He was previously a partner in the Investigations and White Collar Defense Group at Paul Hastings law firm. Morgan previously served as Senior Trial Counsel in the SEC’s Division of Enforcement. Capital Ideas is a series created by Morgan and Dara Albright.