Let’s talk about private equity for a minute. Full disclosure, i’m not an accredited investor. Still, through a myriad of circumstances I’ve been able to hold private assets with other parties as a Limited Partner. There are some times that being an LP or telling someone you’re an LP sounds good. Reality wise, it’s not all that nice most times. It’s an investment vehicle and that’s all it should be considered.
Someone was asking me about one of these related to a robotics venture and if they should invest. There is a lot of nuance to that question and for this person I discouraged it. Not because I think it was bad for me, but more because the experience of an LP is distinct in your inability to control outcomes. Even when I was working IN the actual business where I was also listed as an LP I didn’t have access to many of the levers that would deliver better outcomes to me as a shareholder.
General Partners have a much better viewpoint, but also have the privilege of personal liability against the asset. So i’m not saying their situation is any better. It’s simply different.
What do I do then?
Well for the person I was speaking with about the robot stuff, I told them the S&P 500 has a better feel. For them that was equally true because of their runway. For me, I have a longer timeline so i’m ok. But in general many (social media, news, advertising) will try to convince you that being an LP in something is SUPER great with a pot of gold at the end. It CAN be true, but it is NOT necessarily true. Also, private assets are harder to remove your position in where public assets are simple. As a litmus test to this, think about selling a stock on your fidelity account vs selling your house. See what I mean?
So i’m not giving advice on how you invest. We’re all adults here with our own versions of what we need and why we do things. That said, I do believe you should be aware of what you’re getting into and if you have the opportunity to own a private asset it’s worth careful consideration and wisdom from some trusted folks around you. That’s the point, don’t buy the line that there are riches at the end of this rainbow. There’s a safety net in a multitude of perspectives and experience
Who are your people that you trust to give you wisdom in these decisions?
