Private Market Investing
Private markets reward judgment, not speed.
Unlike public markets—where prices update every second—private markets require evaluating imperfect information, incomplete data, and people who are naturally optimistic about their own businesses.
These are the core skills every successful private investor develops:
1. Judgment
The ability to make decisions with incomplete information
Private investing is fundamentally a judgment business.
You must assess:
quality of the founders
trustworthiness
alignment of incentives
realism of projections
execution capability
Great private investors consistently choose:
the right people
the right markets
the right timing
the right structure
Judgment is the highest-leverage skill in private markets.
2. Pattern Recognition
Understanding what success usually looks like
Across thousands of deals, patterns emerge:
strong founders have similar traits
great companies have similar growth signatures
weak companies repeat the same red flags
markets behave predictably at different stages
Pattern recognition lets investors see what others miss—quickly.
3. Founder and Leadership Assessment
Evaluating the human engine of the business
Private investors must answer:
Can this founder execute?
Will they attract great talent?
Do they handle adversity well?
Are they coachable?
Do they have a history of finishing hard things?
The people matter more than the plan.
A mediocre founder ruins a good idea.
A great founder fixes a weak one.
4. Due Diligence
Validating assumptions before committing capital
Diligence is not paperwork.
It is disciplined skepticism.
Key diligence areas:
The goal is simple:
Find the truth before writing the check.
5. Structure & Terms
How private investors protect themselves
Deal terms determine:
downside protection
governance rights
dilution
priority in liquidation
convertible mechanics
participation rights
Private markets are not “fair.”
People who understand terms win.
People who don’t get diluted or wiped out.
6. Risk Management
Protecting capital in a world without liquidity
Private investments can go to zero.
Good investors:
Most private investing errors come from taking too much risk too early.
7. Portfolio Construction
A strategy for generating asymmetry
Private returns follow power-law dynamics:
1–2 deals will drive the entire portfolio.
A disciplined portfolio involves:
This is how investors survive the losses and capture the winners.
