(Bloomberg) -- The meme-stock crowd wants a piece of the rarefied world of private assets, and — for now — there’s big money to be made on Wall Street for anyone who can give it to them.

With a fresh 43% surge in its shares just this week, Destiny Tech100 Inc. (ticker DXYZ) is the nosiest salvo fired yet in the campaign to bring to the masses a class of investments that is usually off-limits to all but professional money managers and the rich. 

The young fund targets pre-public companies, with Elon Musk’s SpaceX and Sam Altman’s OpenAI making up almost two-fifths of holdings. Its listing proved so popular earlier this month that its value briefly soared to 20 times that of its underlying assets, earning it — in true meme-stock tradition — attention and ridicule in equal measure.

“It’s insane,” said Bloomberg Intelligence ETF analyst James Seyffart. “Even if you assume the value of the underlying has quadrupled in three months (it almost certainly hasn’t), this is still trading at a crazy valuation.”

While the frenzy recalls the day-trading boom of early 2021, there’s a key difference: Rather than betting on the likes of GameStop Corp., the Destiny strategy invests in businesses with no public listings at all.

It’s all putting a spotlight on newfangled funds and marketplaces that are riding investor appetite for private assets — and the rising risks for newbie investors plunging into them at soaring valuations. 

Other money managers such as ARK Investment Management and Liberty Street Advisors also have vehicles that provide access to private assets, but many place constraints on when and how much cash can be pulled out. By contrast, Destiny Tech100 trades like a stock, making it easy to buy and sell, though it only updates the fair value of its holdings on a quarterly basis. 

“If you are an investor and you think SpaceX is going to be worth a whole lot more money five, 10 years from now, this is one of the few vehicles you could actually express that conviction and get meaningful results,” said Jack Shannon, senior analyst of equity strategies at Morningstar. 

Making a case for private investing is relatively easy at first blush given its returns by some measures have outrun the public market. An index tracking venture capital based on private company valuations has gained 15% a year since 1999, almost twice as much as the S&P 500. 

The prospect of getting early access to the next Apple is also alluring after a decade of ultra-low interest rates allowed big and growing companies to fund themselves without initial offerings. Since the late 1990s, American stock markets have suffered a population implosion, with the number of listed firms falling nearly 50% to around 4,000 today. 

Yet while impeded access to growth-stage firms may be frustrating, owning their listed brethren has been a consolation. Anyone who bought the Invesco QQQ Trust a decade ago is up 19% annually since — hardly a sign of deprivation. Meanwhile, investing in private companies comes with added risks. Many startups and early stage businesses struggle to survive, particularly when conditions worsen, as happened in 2022’s bear market.

Destiny Tech100 started investing in 2021, the peak year of the pandemic tech boom, spending $77.4 million on its US investments. As of December, those stakes were valued at $50.8 million, amounting to a loss of 34%, according to its annual shareholder report. 

The fund’s extreme volatility underscores the dangers: After a blockbuster start, it plunged 71% over four sessions before jumping again this week. 

Pinpointing who’s behind the febrile sentiment in DXYZ is less straightforward, but the fund has captured the attention of popular trader chatrooms including Reddit Inc.’s WallStreetBets forum. The fund’s market value rose from less than $100 million to $1.1 billion in the space of eight sessions. 

The wild moves are part of a “discovery process” among investors trying to figure out what its yet-to-list technology companies are worth, Sohail Prasad, the chief executive officer of the fund’s parent company Destiny XYZ, told Bloomberg TV. “There will be more participants in the market and more stability over time.”

Destiny’s pitch to give little guys access to pre-IPO startups is enticing, but the firm isn’t the first to collect private stakes in the fund world. A smorgasbord of vehicles package a wide variety of unlisted securities, spanning everything from credit to shares in private markets funds and other partnerships. The last two years saw a mini-boom in such offerings, Morningstar says.

A closed-end vehicle called Private Shares Fund (PIIVX) bears a passing resemblance to Destiny, owning shares in SpaceX, Discord and Betterment, among other private firms. Started in 2014, it’s had nothing like the runup in its newly christened rival, rising 4.3% in 2024 after losing 9% last year. 

The product has seen “a significant increase” in inflows this year, driven by improved investor sentiment among other things, according to Christian Munafo, the fund’s manager and the chief investment officer of Liberty Street. There is a “view that market dislocations over the past couple years have negatively impacted valuations, making it potentially an attractive entry point now as the market environment improves,” he said.

The ARK Venture Fund (ARKVX) is another Destiny predecessor. While owning private stakes in firms including Epic Games and SpaceX, the fund has lost 6% of its value this year, trimming returns since its 2022 inception to 31%. 

ARK didn’t reply to an email seeking comment. 

Read more: Cathie Wood Muscles Into ChatGPT Boom With New OpenAI Stake 

A big reason for these funds’ differing performance is in their structure — they’re interval funds, whose rules dictate that their prices better reflect the underlying assets. Investors can buy into Private Shares or ARK Venture at any time, but can only sell on a quarterly basis — and there’s no guarantee they will be able to exit at those times. 

The Destiny fund, on the other hand, trades on exchanges in real time, allowing it to rally to a premium when demand is high or sink to a discount when it’s low. 

Private-stakes transactions are off to a better start this year. At Hiive, a marketplace that allows investors to buy and sell holdings in privately held firms, the number of daily accepted bids has averaged 16 in the past 30 days, up from three a year ago, according to founder and CEO Sim Desai. 

With the minimum trade size set at $25,000, the price tag is another hurdle on top of existing Securities and Exchange Commission requirements for an accredited investor in private equity: a net worth of $1 million or an annual income of $200,000 for the past two years. 

“There’s clearly a lot of retail interest in the stock of unicorns, and there’s not been many available avenues for them to access that right now,” said Desai. “There’s unquestionably an opportunity to bring these private investments to a retail audience, and we’re looking at those possibilities.” 

At Forge Global Holdings Inc., another private-stakes marketplace, trading is on the rise too. The firm’s indication of interest among customers surged 45% in the first quarter from the previous three months, ending with the heaviest tilt toward buys in more than two years.

Forge Global this month partnered with asset manager Accuidity LLC to launch a fund based on an index that tracks the performance of private companies, catering to qualified investors with a net worth of at least $5 million. Such products can be broadened to the masses, according to Howe Ng, Forge Global’s head of analytics and investment solutions.  

“The market has matured to a tipping point that it is time to provide some kind of a broad diversified access,” he said. 

--With assistance from Katie Greifeld.

(Updates trading in second paragraph. An earlier version was corrected to fix the inception year for PIIVX.)

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