How Retirement Investors Can Invest in Private Companies

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Are you saving for retirement?

Are you thinking about allocating a small portion of your nest egg to a unique asset class? Then consider looking at Netcapital, which operates an investment portal that enables investors to set up an account online, browse information on private market companies offering securities on the platform, and invest.

The Netcapital portal offers both high net worth and non-accredited investors a chance to invest in companies that aren't on the stock market, Jason Frishman, the founder and CEO of Netcapital, said in an interview. Plus, Frishman said investors can diversify their "alternative investment portfolio" by investing lower dollar amounts in more companies.

"I think investors should know that it's a good use for some of your portfolio, but make sure that it's the capital that you're willing to risk," Frishman said. "That you go into this understanding that you're not buying a Fortune 500 company. There is a chance that any investment you make on that capital could go to zero. So, make sure you're comfortable with that risk and make sure you diversify."

To be fair, Frishman said most investors shouldn't allocate more than a small portion of their total portfolio to early-stage companies. But if you're comfortable with the risk, Frishman said there are enormous growth potential opportunities. "Private companies are really one of the few places that you should go," he said.

Listen to the full conversation with Frishman on TheStreet's podcast below.

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