Day: August 12, 2025

Ed Elson, a 26-year-old research analyst and co-host of the Prof G Markets podcast, has heard plenty of stories about generations before him getting rich on stocks.

His own co-host, New York University business school professor and entrepreneur Scott Galloway, who’s 60, invested $800,000 in both Apple and Amazon back in 2009. Today, those investments total $40 million, a cornerstone of his $150 million net worth.

Elson wants the same opportunity to invest in the tech companies defining his generation. He sees those chances in OpenAI and SpaceX, standout innovators that have soared to valuations of $300 billion or more.

The problem? Both companies are private.

OpenAI and SpaceX top a growing class of companies making it big without the public markets. Rather than expose themselves to public market scrutiny and quarterly earnings pressures, these companies are raising round after round of fresh funds from venture capital firms. Over the last 10 years, global startup funding has more than tripled, with VC investments projected to hit $400 billion this year, according to data from PitchBook.

“The people who have access to the highest quality companies that are creating the most amount of value, i.e., OpenAI and SpaceX, are the people in VC who are already rich,” Elson said. “That’s a big problem for our generation.”

Seduced by fabulous success stories like Galloway’s, and empowered by the proliferation of digital trading platforms plus the investing advice on platforms like TikTok, Zoomers have become a generation of investors. The average Gen Z investor starts trading at 19 years old, compared to baby boomers’ typical kickoff at 35 years old.

It almost feels like a private members-only club. If you’re already rich, you can invest in this stuff. And if you’re not, sucks to suck. You’re locked out of the club.Vivian Tu, Your Rich BFF

But there’s also a gnawing sense that Gen Z missed out on the boom times. And they’re not entirely wrong.

The public markets now offer fewer stocks to choose from and higher price tags. Companies are waiting 14 years on average to go public, Jay Ritter, a professor of finance at the University of Florida’s Warrington School of Business, has found. More private companies are valued in the tens and even hundreds of billions, a feat usually reserved for public companies.

In 2025, an IPO is less a promise of what’s to come for a company and more a signal that you’ve already missed out on its biggest gains. That shift has more investors setting their sights on secondary markets, where stock purchases of private companies are limited to traders accredited by the US Securities and Exchange Commission. And whereas the public markets are open to anyone with a brokerage account, just 13% of Americans qualify for that accreditation.

“It almost feels like a private members-only club,” says Vivian Tu, the 31-year-old personal finance educator behind ‘Your Rich BFF.’ “If you’re already rich, you can invest in this stuff, and if you’re not, sucks to suck. You’re locked out of the club.”

Those rules aren’t sitting well with Gen Z investors.

Warren Buffett famously advised traders to invest in what they know. That’s what Galloway did back in 2009 when he bought shares in Apple. The iPhone was still relatively new, but it was clear the technology was a game changer. He could get in relatively early and profit from the stock’s exponential rise as Apple built on the momentum of its spectacular innovation.

These days, some of the most exciting tech companies innovate without needing to IPO. Elson points to OpenAI’s release of ChatGPT in 2022, which drew 1 million users in 5 days. “If we were living in the 1980s, there’s a very, very high likelihood that OpenAI would’ve been public at that point,” Elson says. Investors would have said: “Oh my God, this is an incredible tool. I want to buy some stock.”

But most investors were frozen out. In March, OpenAI was valued at $300 billion — a 900% spike in two years. The major beneficiaries included Microsoft, VC megafirm Sequoia Capital, and tech billionaire Peter Thiel.

The critique that the public markets don’t create enough value for mom and pop investors is virtually as old as public markets themselves. But the markets hit an inflection point in 2021 when a record 1,035 IPOs, raising a staggering $286 billion, were followed by an abrupt collapse. Investors, desperate for liquidity, began turning more to secondary markets to sell portions of their stakes. If companies can raise plenty of capital while keeping their investors happy, that has increasingly allowed them to put off their IPOs indefinitely.

“It’s pretty simple: Why go public if you have access to all the benefits while staying private?” says Deedy Das, a principal at Menlo Ventures. Das sums up the thinking of top-dollar startups this way: “I have all this administrative burden off my shoulders; I don’t have to have that predictable revenue; I can take riskier bets; I don’t have to explain to retail investors what my vision is. I can just run my business.“

With so much pent-up demand, it’s been extraordinarily expensive for retail investors to get in when a hot company finally goes public.

Take Figma, the design software maker, and its recent red-hot IPO.

When it debuted in July, Figma’s stock opened at $85 a share, more than double its $33-a-share IPO price. Since the overwhelming majority of IPO shares were allocated to institutional investors and not retail investors — which is typical for public listings — most retail investors paid a significant premium. At the end of the day, the frenzy had sent Figma’s valuation soaring to more than 60 times its revenue in the biggest first-day jump for a multibillion-dollar tech company in decades. By the first week of August, however, Figma had shed billions of dollars in market value as the stock came back down to earth, leaving many of those same retail investors holding the bag.

As of August 11, Figma’s stock was valued less than its opening day price, meaning any retail investor who backed the company on its first day of trading has since lost money. Institutions that bought in at the IPO price, on the other hand, are holding stock that’s still worth more than double what they paid for it.

Of course, there are still plenty of public companies creating massive wealth for shareholders. Palantir’s stock has surged over 1,800% since it began trading in 2020. Circle’s shares have jumped 140% above their opening price in the crypto company’s June IPO, though the stock has fluctuated wildly in that period. The public markets are still broadly considered the best place for companies to get returns to their employees and investors, since their liquid nature allows shareholders to cash out anytime.

But the biggest stock gains will always be reserved for the savvy investor who spots a big opportunity early. And increasingly, these opportunities are not in the public markets. Lots of investors — including Zoomers like Elson — want in on the action happening on secondary markets.

“Because of this dynamic where great companies have no incentive to go public, giving access to retail is heavily in our generation’s financial interest,” Elson said.

While this might present bigger opportunities, it also carries significant risks.

It’s galling to retail investors that there’s so much private company stock floating around — but they can’t get to it.

Getting your hands on private stocks generally means buying them from early investors that hold large chunks of equity or from early employees, who got stock as part of their compensation agreements. These so-called secondary sales generally must be approved by, if not facilitated by, the startup itself. And not a lot of companies, OpenAI included, are inclined to allow their employees or investors to sell shares on secondary platforms.

In an attempt to democratize access to private company equity, platforms like EquityZen, Forge Global and Hiive, which broker secondary investments into pre-IPO companies, are picking up steam. UBS projects the secondary market will hit a record-breaking $180 billion this year, up from $156 billion in secondary transactions in 2024.

EquityZen, which launched in 2013, says its user base has doubled in the past year; more than 770,000 individual investors and institutions are now registered on the marketplace. The company says it has brokered secondary sales for companies like Circle and Omada Health before their IPOs, as well as other startups that still haven’t gone public, like Impossible Foods. The company wouldn’t comment on whether it’s facilitated any deals with OpenAI or SpaceX.

These deals tend to be costlier than regular trading. Most secondary market platforms charge fees, often 5% of the sale, and require investors to put up anywhere from $5,000 to $100,000 or more to participate.

The bigger catch is that not just anyone can access these platforms. On most major secondary platforms, investors must meet the SEC’s stringent bar for accreditation: a net worth of over $1 million, excluding their primary residence, or a salary of at least $200,000 for the past two years and the expectation of earning that same income again.

The SEC says the rule was set up to protect retail investors, who tend to underperform the broader market with their stock picks. These investors are generally advised to back index funds over individual stocks to minimize the chance of catastrophic losses. The private markets are even more risky since, without disclosure requirements, private deals can obscure key details about a startup’s operations and pricing.

“One of the biggest opportunities and also a big tragedy is that private markets are where the bulk of the interesting appreciation and exposure is nowadays. We’re obviously working to solve that.”Robinhood CEO Vlad Tenev

But the requirement has been criticized by some as paternalistic, particularly amid surging activity on the private markets. After all, Americans can engage in plenty of high-risk activities with their money, from gambling to cryptocurrency investing to prediction market betting, with little to no regulation.

“In a world in which anyone can invest in any meme coin they want, how reasonable is it that you’re not allowed to invest in startups?” said Peter Walker, head of insights at Carta, a software platform that helps private companies manage their cap tables.

In June, the US House of Representatives passed the Equal Opportunity for All Investors Act, which would allow investors who passed a financial literacy test to qualify for accreditation, paving the way for them to make private market bets. The Senate isn’t yet scheduled to review the bill, however, and President Donald Trump has not said if he would support it.

In a burgeoning market with minimal oversight, the stakes are high. Linqto, once a prominent marketplace for pre-IPO shares, declared bankruptcy in July. The SEC is currently investigating claims that the platform sold securities to non-accredited investors and charged its users excessive margins. The company told BI it had also discovered “serious defects” in the business “that raise questions about what customers actually own.”

It’s unclear whether the thousands of investors who locked their cash away in Linqto will ever see that money again. Linqto said it’s working with an unsecured creditors committee in its bankruptcy proceedings to develop a plan to reorganize the company and “maximize value for customers.”

As for getting a piece of OpenAI or SpaceX, a few financial firms are creating workarounds. In one example, exchange-traded funds like the ERShares Private-Public Crossover ETF can buy stakes in top private companies, and retail traders can buy those ETFs on the public markets. In December, the fund announced that SpaceX had become its top holding. But without regular public disclosures of SpaceX’s finances, investors can only guess at the company’s real-time value.

In Europe, where SEC regulations don’t apply, the stock trading app Robinhood has sold blockchain “tokens” of OpenAI and SpaceX stock. The tokens attempt to mirror the price of stocks without actually giving retail traders any stake in the company. Last month, OpenAI posted a statement on X saying the company had not partnered with Robinhood and that the tokens “are not OpenAI equity.”

Robinhood CEO Vlad Tenev explained the app’s approach in an interview with Bloomberg last month. “One of the biggest opportunities and also a big tragedy is that private markets are where the bulk of the interesting appreciation and exposure is nowadays,” he said. “It’s a shame that it’s so difficult to get exposure in the US. We’re obviously working to solve that.”

Matt Kennedy, a senior strategist at the IPO-focused firm Renaissance Capital, says it’s perfectly understandable that the market’s slowdown may be frustrating to new investors. Back in 2021, new subscribers to the firm’s newsletter asked one question more than any other: How can I invest in pre-IPO companies?

“There’s this sense that, at the IPO, it’s already too late. They want to get in on the ground floor,” Kennedy said. But the firm advises investors to “be careful what you wish for.”

“Yes, you’re not going to get that $20-million-in-annual-sales, fast-growing tech company that could be a behemoth,” Kennedy said. “But you’re also not going to get those less established companies without a solid track record. There’s more margin of safety with a company that has $100 million or more in revenue.”

Can I burn the money for the sake of learning something rather than anticipating any specific return? For early investors like myself, I think that’s a really healthy way to go about it.Juliette Richert, The Artemis Fund

Barry Ritholtz, the founder of Ritholtz Wealth Management, echoed that sentiment. “A private company like OpenAI comes along, and suddenly people are salivating and getting FOMO and saying, I could pick the next one,” Ritholtz said. “History tells us, the odds are you cannot.”

Many young investors see those risks as worth taking — if not for the potential financial upside, then for the crash course in market literacy.

Juliette Richert, a senior associate at The Artemis Fund, has made three angel investments since joining the fund three years ago. Richert, who’s now 26, says she hasn’t seen any returns yet. Even if she never does, she thinks those bets were valuable opportunities for her early investment learnings.

“Can I burn the money for the sake of learning something rather than anticipating any specific return?” she said. “For early investors like myself, I think that’s a really healthy way to go about it.”

It’s the Gen Z way. Rather than follow well-trodden paths of previous generations, Gen Z investors are determined to pounce on opportunities where they find them and seize their financial destinies.

“There’s this desire for control and autonomy, the ‘American dynamism’ mindset: make your own way, versus depending on the system,” Richert said.

Throw in prediction markets, fractional real estate, and collectibles from sports cards to sneakers, and it’s clear that Gen Z isn’t just investing differently — they’re redefining what “investing” even means.

“Young people are smart,” Galloway said in conversation with Elson on a recent episode of their podcast. “They said, you know what, fuck this. I can’t buy a home. Stocks are crazy expensive. So what am I going to do? I’m going to create my own asset classes. And I’m going to create my own volatility.”

Rebecca Torrence is a correspondent at Business Insider covering startups and venture capital, with a focus on healthcare and late-stage equity capital markets.

Same drink, different year — and, hopefully, different result. That’s Mark Thomas Lynn’s approach to the relaunch of Afterdream, a cannabis drink, this year.

His company — the premium spirits and beverage company AMASS Brands Group — originally released its THC-infused formulation in 2021, but they pulled it off the market after about nine months due to legal hurdles around where and how they could sell the drink.

“Even though people were going crazy over the product, we were like, ‘Oh my God, this is just too byzantine,'” he says. “The regulations, basically, hadn’t caught up.” After re-releasing Afterdream in May of this year, AMASS is hoping its second rodeo will be more successful. The regulatory environment is still challenging, but it’s not a complete mess, and they think more consumers will give it a shot.

“Customers are much more curious about low-dose and social and non-alcoholic alternatives,” Lynn says. “If I have a delicious drink that doesn’t floor me, do I reach for that instead of a glass of wine?”

AMASS isn’t the only company hoping cannabis beverages will catch on. The booze alternatives have been about to be the next big thing for a while now. The dream among those in the industry has been that they’ll soon be flying off the shelves, if not replacing alcohol sales, then at least complementing them. The market is indeed growing. Brightfield Group, a market research firm that follows the cannabis industry, conservatively estimates that hemp-derived THC beverages will reach $571 million in sales this year and $756 million by 2029. But even that ambitious 33% growth rate would leave the category comparatively tiny. The US beer market was worth $117 billion in sales last year. Modelo alone is expected to do $5 billion this year.

“Initially, there was a lot of hype behind drinks but not necessarily a lot of consumer adoption,” says Zehner, a research analyst at Brightfield Group.

Drinkmakers and industry analysts have long been confident that cannabis beverages will soon be in refrigerators across America. But whether THC drinks are actually going to take off at a massive scale remains TBD. Legal frameworks are still murky or downright unfriendly, even in some unexpected places. Perhaps more importantly, it’s still not entirely clear who these libations are for — alcohol drinkers may be hesitant to swap, marijuana lovers may want something stronger, and some people may have had a bad cannabis experience elsewhere that turned them off. And the taste can be a little funky, too, though it’s getting better. Cannabis drinks were supposed to be a rocket, but instead, thus far, they’ve largely failed to launch.

To briefly set the stage here, bear with me while I get a bit in the weeds about, well, weed. If a cannabis plant has more than 0.3% of the psychoactive compound tetrahydrocannabinol — more commonly known as THC — it’s marijuana. If it has 0.3% of THC or less, it’s hemp. In the 2018 Farm Bill, a comprehensive piece of legislation renewed every five years, Congress created a loophole legalizing hemp at the federal level, perhaps accidentally. Most of what I’ll be talking about in this story are hemp-derived THC drinks that seek to take advantage of this congressional go-ahead, though cannabis drinks with the “regular” stuff exist, too.

Initially, there was a lot of hype behind drinks but not necessarily a lot of consumer adoption.

There’s a lot of legalese back-and-forth over the effect of the 2018 Farm Bill, but Elisabeth Stahura, the cofounder and COO of BDSA, a market research firm that focuses on the cannabis industry, says it can be interpreted as anywhere from a “gray area” backdoor to sell hemp products to a definitive blessing for federal legalization. The real can of worms comes at the state level, where rules vary widely in terms of where beverages can be sold, what dosages they can contain, and whether they can be sold at all.

“There have been different approaches to how tightly they are regulated, whether they’re regulated, whether it’s just kind of a free-for-all,” Stahura says.

The risk is probably worth the reward.

Minnesota has been particularly friendly to THC-infused drinks, allowing them to be sold at retailers, restaurants, bars, and liquor stores. Zehner says Texas and Florida have been “hotbeds” for the products, too, though there’s been some legal wrangling. Other states have not been so kind to them. Despite legalizing recreational marijuana, California has moved to ban intoxicating hemp products, and Colorado has severely limited them. Leaders in those states say they want to protect their constituents from unregulated products. Also, an obstacle: The states’ licensed marijuana industries don’t want to face competition from the hemp companies.

If a state has a legal cannabis market, “it probably has limited the sales of hemp-derived THC significantly, if not outright banned it,” Zehner says. “Usually, because of some sort of protectionism around their existing cannabis market and not wanting to have those necessarily be undermined.”

The regulatory guidelines remain precarious, with threats to legalization at both the federal and state levels. In July, Kentucky Republican Senators Mitch McConnell and Rand Paul clashed over whether to close the farm bill’s hemp loophole. In June, Texas Gov. Greg Abbott vetoed a bill that would ban THC in the state.

“The regs could still go the wrong way here, and this could be very challenging,” Lynn says. “But the risk is probably worth the reward.”

Blake Patterson, the chief revenue officer of Keef Brands, which makes THC and cannabis beverages, tells me that he spent much of the day before we spoke trying to decide what to do about new rules in Florida around drink serving sizes on packaging. “We say two servings of five milligrams. It needs to change to just one serving of 10 milligrams,” he says. “They keep moving the goalposts.”

As much as the legal hurdles may be irksome to the cannabis beverage industry, there are cultural barriers, too. Widespread adoption isn’t really happening, at least not yet.

Scott Selix and his wife founded Climbing Kites, a cannabis beverage company, out of their Iowa brewery in 2023. They wanted to create something that caters to America’s “can-in-hand culture” but also serves people who aren’t drinking alcohol as much. He’s been blown away by the uptake but also acknowledges there’s a long way to go. “There is an absurd amount of white space here, and I think it’s going to take a long time to get where this industry eventually grows to,” he says. One problem: many people don’t know these products are even available.

“If you ask people and you go out and say, ‘Hey, does beer exist?’ They say yes. And you say, ‘Does wine exist?’ They say yes. It’s like 99% consumer awareness,” he says. “If you ask people, ‘Hey, when was the last time you had a THC beverage?’ Consumer awareness is really low.”

The constituency for cannabis beverages isn’t always obvious. Big cannabis connoisseurs don’t tend to opt for relatively low-dose drinks, which generally run from 2 mg to 10 mg per can. (Two mg probably won’t do much, 10 mg might, depending on your tolerance.) Oftentimes, they want something stronger — it’s sort of a beer vs. liquor situation, but one in which few people want the beer-level option. Dispensaries haven’t really had an easy time selling them, either. Stahura tells me cannabis drinks are 1-1.5% of total sales in dispensary channels.

“Beverages are difficult to carry for a dispensary where the rest of their inventory is something that’s smaller, easier to move, doesn’t require refrigeration,” she says.

Consumers who prefer alcohol or who don’t like marijuana are tough to win over. As much as alcohol is dangerous, it’s also ingrained in American culture. Even Gen Z teetotalers are picking up the bottle now. The effects of THC aren’t as familiar to many people as, say, a glass of wine.

Aaron Nosbisch, the founder of Brēz, which makes THC-infused drinks and other beverages, says they’ve had to work to get cannabis-skeptic consumers to get past their negative run-ins with other cannabis products.

“If you ask 10 people if they’ve tried an edible and they say yeah, and then you ask them again, ‘Have you had a bad edible experience?’ Like eight out of 10 will say yes,” he says. “We call Brēz the antidote to the bad edible experience.”

I think the idea that we market this as it fits in where alcohol does all of the time for everybody is not necessarily the route.

He and other modern THC beverage makers have tweaked the science behind the formulations so that they better mimic alcohol. They’re using smaller particles now, which means the psychoactive effects hit people faster and also fade away faster. “If you want to disrupt an industry, what you have to do first is meet the industry where it’s at, and then you have to find a better solution.”

Still, these drinks may make some people nervous, and — like alcohol or coffee — are not for everyone or suitable for every occasion.

“There is a lot of consumer education that we’re working on of, like, ‘Hey, is this right for you when you’re going to sleep? Is this right for you when you’re at a bar? Is this right for you when you’re at a pool party? For some people, is this right for you when you wake up in the morning and need to work from your home office?” Selix says. “I think the idea that we market this as it fits in where alcohol does all of the time for everybody is not necessarily the route.”

There is hope that the lighter hemp-derived THC drinks will finally reach what those in the cannabis industry call the “reclusive soccer-mom” constituency, who, thus far, have been quite nonexistent, Keef’s Patterson says. They’re the people who, because of the remaining stigma around cannabis, have been too afraid to go into dispensaries. But if they see the drinks in a liquor store or convenience store, they may be more open to giving them a try — and, perhaps, delving into other, higher-dose cannabis products, too.

“If we can start to seed these people with these beverages, it is going to get them at some point in time into our dispensaries,” Patterson says. They’ll get “canna-curious,” he says, and start looking for what’s next.

The appeal of cannabis beverages is definitely there. They promise the buzz without the hangover. Consumers view them as healthier. They’re getting better in terms of taste. Bigger companies, including Total Wine and DoorDash, are selling and distributing them more.

And where these beverages are widely and easily available, there are signs they’re doing well. Minnesota liquor stores have seen their profits boosted partially by THC sales. Nosbisch, from Brēz, tells me they did $1.25 million in sales the year they launched, in 2023, and got to nearly $29 million in 2024. The alcohol industry is getting anxious about the threat of cannabis beverages, and some alcohol companies are even testing the waters with their own products.

“The hemp space has shown that this category, the beverage category, can be successful if it’s properly marketed,” Patterson says.

All that being said, widespread adoption remains an uphill climb for the cannabis drinks industry. The regulatory landscape is better, but it’s still a nightmare. Everyone’s sort of holding their breath, hoping they’ve interpreted the laws right and states won’t change their minds too quickly, at least not in the wrong direction.

Consumers seem to be a little bit holding their breath, too. Sure, maybe you’ll stick a four-pack or two in the cooler at your BBQ, next to the beer and wine, to see if anybody bites. But if they’re all left over at the end of the night, you won’t be surprised, either — even if people were passing a joint around all night.

Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.