Disrupting the Private Markets With Accessible Data

In a recent podcast episode, our very own Adam Hardej from Sandhill Markets sat down with Tyson Hendrickson, the founder of Notice.co, to discuss the recent shifts in the private market landscape. The conversation revolved around Tyson's ambitious mission to democratize access to private market data and the broader implications this has for investors, employees, and the private market ecosystem as a whole. The podcast delved into the challenges of creating a platform that provides this data, the impact of making previously gated information freely available, and the future of private markets in an increasingly data-driven world.

One of the most striking elements of the discussion was Tyson's unwavering commitment to transparency and education. Throughout the episode, he emphasized that the traditional barriers to accessing private market data—such as high costs and complex sign-up processes—have long excluded many potential participants. Notice.co's innovative approach seeks to dismantle these barriers, providing real-time market data, pricing, and other critical information to anyone who needs it, without the need for an account or a fee. This approach isn't just about providing data; it's about fundamentally changing the dynamics of private markets by making crucial information accessible to all.

Private Markets and a Fundamental Shift

The concept of democratizing data in the private markets is more than just a technological innovation—it represents a fundamental shift in how we think about access to financial information and the power dynamics that have traditionally governed these spaces. In the past, private market data was often seen as a luxury, accessible only to those who could afford expensive subscriptions or had the right industry connections. This created a significant imbalance, where a small elite controlled the flow of information and, by extension, the opportunities available within the market, but now the private markets have seen historical growth. S&P Global reported “Assets under management (AUM) in private markets totaled $11.7 trillion in 2022, up from $10 trillion in 2021 and $7.4 trillion in 2020.”(S&P Global)

By making data freely available, we can start to break down these barriers and create a more inclusive market environment. This is not just about equity in terms of access but also about enhancing the overall efficiency of the markets. When more participants have access to reliable information, they can make better decisions, leading to more liquidity and fewer inefficiencies. In turn, this could lead to a more stable and transparent market that benefits all participants, not just the privileged few.

Moreover, the democratization of data can foster greater innovation within the private markets. When more people have access to information, they are better equipped to identify trends, spot opportunities, and make connections that might otherwise have been overlooked. This can lead to the emergence of new ideas, products, and business models that might not have been possible in a more restricted information environment.

Some of these products even include recent podcast guests like Destiny and Hiive. We were lucky enough to have both of their founders on to discuss the innovation in the private markets. If you want to give it a listen, check it out here. 

Data Rules All

As private markets continue to evolve, the role of data is becoming increasingly crucial. Investors, both large and small, are beginning to recognize that access to timely, accurate data is not just a competitive advantage but a necessity. This shift is driving a broader transformation in the investment landscape, where traditional methods of due diligence and decision-making are being supplemented, if not replaced, by data-driven approaches. Ed Suh at Alpine Ventures is an expert in this data driven investing trend, so if you’d like to hear more about it, listen to our recent podcast episode with him.

In this new landscape, the ability to aggregate, analyze, and act on data in real-time can make the difference between success and failure. Investors need to be able to cut through the noise and identify the signals that truly matter, whether they are tracking the performance of a specific company or analyzing broader market trends. This requires not only access to data but also the tools and expertise to interpret it effectively. And in the modern world, figuring out what data to look at becomes a problem in itself. As Ray Zhou, CEO of Affinity, recently said in Forbes, “from job change signals, company growth signals and website traffic signals to communications and activity on X and GitHub, everyone and everything has some kind of digital footprint now. The opportunity lies in collecting every relevant data point from that footprint to develop a superhuman coverage of your investing thesis.” (Forbes)

The rise of data-driven investment strategies also has implications for how we think about risk. In a world where information is more readily available, the traditional models of risk assessment—based on historical performance and subjective judgment—are being challenged. Instead, we are moving toward a more dynamic model of risk management, where decisions are made based on real-time data and continuously updated projections. This allows investors to be more responsive to changing market conditions and to manage risk in a more proactive, rather than reactive, manner.

The Cons

While the democratization of data holds many promises, it also raises important ethical questions. As we make data more accessible, we must also consider the potential for misuse. In the wrong hands, data can be used to manipulate markets, exploit vulnerabilities, or infringe on individual privacy. This is why it's essential that we establish strong ethical frameworks and safeguards as we move toward a more data-driven market environment.

One of the key challenges will be ensuring that the data is accurate and that it is used responsibly. In a more open data environment, the temptation to cut corners or to rely on unverified sources can be strong. This is why it is crucial that we continue to emphasize the importance of data integrity and that we develop systems and processes for verifying and validating the information that is being shared.

Additionally, as more people gain access to data, there is a risk that the market could become more volatile. While greater access to information can lead to more informed decision-making, it can also lead to overreactions or herd behavior, where investors make decisions based on incomplete or misunderstood data. In fact, the World Economic Forum recently did a survey that found only “20% of Gen Z can answer financial literacy questions”. (WEF) This highlights the need for continued education and guidance to help market participants navigate this new landscape effectively. 

A Vision for the Future of Private Markets

As we look to the future, it's clear that the private market landscape will continue to be shaped by the availability and accessibility of data. However, the real challenge will be ensuring that this data is used in a way that promotes fairness, transparency, and stability within the market. This will require ongoing collaboration between industry participants, regulators, and technologists to create an environment where data can be a force for good.

We must also consider the broader societal implications of these changes. As more people gain access to financial information, we have the opportunity to create a more financially literate society, where individuals are better equipped to manage their investments and their financial futures. This could have far-reaching effects, not just within the markets, but across society as a whole. Barron’s recently reported that “On average, Gen Z—generally described as those born between 1997 and 2012—began saving and investing at 19 years old”. With more people investing at an earlier age, it only makes sense that most will eventually have some exposure to the private markets. 

The podcast conversation with Tyson from Notice.co highlights the beginning of a significant transformation in the private market space. However, the broader implications extend beyond any single company or platform. The democratization of data represents a fundamental shift in how we think about markets, information, and power. 

Ultimately, the future of private markets will be determined by how well we can balance the opportunities presented by data accessibility with the ethical and practical challenges it brings. If we can strike this balance, we will not only transform the private markets but also create a financial ecosystem that is more inclusive, innovative, and resilient.

At Sandhill, when we bring in private deals for our members we focus on data and transparency above all else. If investors want more information on a certain deal, we forward them to Notice.co or reach out to the deal manager directly. 

Want more podcasts from us? Find more Sandhill podcasts here!