Private Markets and Private Funds

Perhaps the single most important development in finance of the last thirty years is the growth of private markets. But what are private markets, why have they grown, and what should regulation do about it? This class will explore these questions in order to understand the evolution of the financial system, including the capital raising and governance environment for private companies and the investment funds that increasingly finance them. Thirty years ago, public markets dominated finance. While there were millions of private companies, they raised far less money in the securities markets than public companies. Private investment funds—funds that are not listed on an exchange and in which the public cannot invest—managed a trivial amount of money in comparison to funds regulated by the SEC, such as mutual funds. In many ways, these trends have been reversed. More money is now raised in private markets than in public markets. Late-stage startups raise vast sums of money while staying private. Private investment funds—like private equity, private credit, venture capital, or hedge funds—now manage comparable sums to mutual funds. This class will aim to provide a synthetic picture of the landscape of private companies, private funds, and their dynamics. To do so, it will introduce students to the basic aspects of securities law, investment regulation, and institutions relevant to understanding private markets. We will study how private markets have evolved and the public policy questions they raise. This will be a journey through issues in statutory and administrative law, transactional structures, and economic considerations.