DarcMatter is an online investment platform that provides investors "institutional-level" access to private investment opportunities.
It is no secret that investors – particularly the high net worth and family offices – are increasingly using alternatives to diversify their portfolio and generate alpha with lower correlation to systematic market movements.
Indeed, according to a 2013 Natixis survey, 84 per cent of US financial advisors have spoken to clients about alternative investments, indicating a growing demand for access to related asset classes.
However, access to private securities has historically been limited due primarily to an 80-year-old ban on the marketing of such investments. This ban was lifted in July 2013, as required under the 2012 Jumpstart Our Business Startups Act, which was established to help start-ups and small business with regard to financing regulations.
Companies and investment funds are now allowed to advertise private securities to the general public via the Internet or other social media platforms – so long as the buyers are qualified institutions or “accredited” investors.
And as technology continues to bring transparency and increased access into the investment landscape, seeking to capitalize on the trend is New York-based DarcMatter, a transactional platform launched last year that provides “institutional-level” access to alternative investment funds for accredited investors.
Its goal is to “democratize the private markets” by providing opportunities for investors to participate in alternative assets that were previously not easily accessible without committing large amounts of capital or having direct connections to the issuer.
DarcMatter’s founder and chief executive, Sang Lee, believes that the biggest hurdle to providing comprehensive investment advice on alternatives has historically been information asymmetry and opacity in the marketplace.
(It is worth noting however that some alternative investment managers may actually prefer to avoid marketing so as to keep the spotlight away from themselves, their employees, investors and ultimately performance (source: Mitsubishi UFJ Fund Services).)