Atish Davda is EquityZen‘s CEO, former quant at AQR Capital and a Penn alum who loves FinTech, Python, traveling and tennis.
For years, the vast potential of private market investments has largely been out of reach for the everyday investor. Not only are these opportunities potentially lucrative (while not without risk), they are also the engines of innovation. Access to private markets, where companies mature and grow before ever hitting public exchanges, has typically been reserved for large institutions and the ultra-wealthy. But recent developments signal a potentially game-changing shift: Private market investments may soon become more widely available within 401(k) retirement plans.
This shift marks a significant moment for individual accredited investors, particularly those exploring pre-IPO investment opportunities.
The Policy Shift: Opening The Gates To Private Markets In 401(k)s
On August 7, 2025, the Trump administration signed an executive order aimed at expanding access to private market investments within U.S. retirement plans, including 401(k)s. This order directs the Department of Labor, the Secretary of the Treasury and the Securities and Exchange Commission to reexamine guidance, clarify how employers and plan administrators can prudently incorporate these assets and facilitate access to alternatives in participant-directed defined-contribution retirement savings plans. These directives could broaden access to more options for up to 90 million Americans who participate in these plans.
This isn’t an entirely new conversation. However, the renewed order underscores a persistent belief within the private fund industry that individuals deserve access to the same growth avenues as institutional investors. SEC Chairman Paul Atkins has also publicly emphasized the need for broader democratization of private market investments.
Why This Matters: Tapping Into The Private Market Advantage
As the co-founder of EquityZen, a fintech company, I have long championed the democratization of private markets. The move toward private markets access via 401(k)s directly aligns with my personal mission to connect accredited investors with high-growth, pre-IPO companies. Here’s why this development is so compelling.
A Natural Fit For Long-Term Horizons
Retirement accounts like 401(k)s are inherently long-term investment vehicles, designed for capital appreciation over decades. This aligns with the nature of private market investments, which typically have longer holding periods (often five to 10 years or more) and are less liquid than publicly traded stocks. This “patient capital” approach allows private companies the time to innovate, execute long-term strategies and grow without the constant pressure of quarterly public market reporting.
Investors who invest in illiquid assets with longer time horizons expect to be rewarded with a liquidity premium, which can drive meaningful returns over the long term, in exchange for the heightened risk from illiquidity. The strategic alignment between the long-term nature of retirement savings and the growth cycles of private companies makes a compelling case for their inclusion.
Tax Advantages For Asymmetric Upside
Unlike public companies, the expectation of private market investments is that they typically have an exit (e.g., IPO). Timing of exits is unpredictable, so if a private market investment matures and exits via a merger or acquisition, the result may be an unexpected tax bill. Retirement accounts that defer taxes provide tax-advantaged status compared with investing in private companies from a typical brokerage account.
Accessing Untapped Value Creation
Companies are staying private longer than ever before. In fact, the number of publicly traded companies has reached a 50-year low. Private equity funds now manage over $8.2 trillion, double the amount they did in 2018, providing ample funding for more companies while they are private. With no urgency to go public, a significant portion of many companies’ growth and innovation occurs before they ever go public. For investors looking for access to value creation in industries like artificial intelligence and fintech, the private market is increasingly essential.
Diversification Beyond Traditional Assets
As BlackRock’s Larry Fink noted, the future standard portfolio may look more like “50/30/20—stocks, bonds and private assets,” rather than the previous norm of a 60/40 split. Our research at EquityZen echoes this, showing that financial advisors increasingly leverage alternative investments for diversification (78%), downside risk mitigation (57%) and enhanced return opportunities (45%). Private market exposure offers a vital avenue to achieve better risk-adjusted returns while complementing traditional portfolios.
Investing In The Heart Of Innovation
The private markets are home to the companies defining our future. From artificial intelligence to cybersecurity, these innovators are flourishing outside public scrutiny. Globally, there are currently over 1,200 unicorn companies (private companies valued at over $1 billion) collectively valued at an astonishing $4.4 trillion. AI startups alone received $50 billion in global venture capital in Q2 2025. Many of these companies are early in their life cycles and likely years away from becoming publicly traded. As a result, many investors are flocking to the private markets to access this innovation.
What This Means For Accredited Investors
Through this directive and broader macroeconomic shifts, the private market is becoming accessible to more investors than ever. While the details of this executive order and the downstream impacts are still in the works, investors don’t need to wait. Through self-directed IRAs (SDIRAs), retirement investors can already access private market opportunities. These products enable investors to capture the growth potential of pre-IPO investments today.
As the lines between public and private markets continue to blur, staying informed and strategically positioned will be key. This potential expansion into 401(k)s marks another pivotal step toward a more inclusive investment landscape, empowering more individuals to participate in the growth of the world’s most innovative private companies.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?