The Hidden Risk Behind “Easy-to-Buy” Private Investments
What Most New Investors Never Learn Until It’s Too Late
If you’ve ever been tempted by a glossy online ad offering “early access” to the next big breakthrough — a revolutionary EV startup, a futuristic lithium extraction technology, a prefab housing company, or a solar-powered vehicle — you are not alone.
Private companies today can raise money directly from everyday investors using a legal pathway called Regulation A (Reg A+).
It sounds empowering. Democratizing. Even revolutionary.
The pitch is always irresistible:
Invest for as little as $500
Shares priced at only $10 or $11
Get in before the IPO
Be part of transforming the future
This feels like venture capital, finally open to everyone.
But beneath this promising exterior lies a reality that most new investors never discover until they’re stuck — sometimes for years.
Here’s the truth:
These private shares are extremely easy to buy… and often incredibly hard to sell.
In many cases, investors may not be able to sell them at all.
This article is designed to give you a clear, honest look at what’s really behind these offerings — and why cautious, informed decision-making is so important.
Why These Investments Look So Attractive
Reg A allows companies to raise up to $75 million from the public without being publicly traded. This creates a perfect environment for exciting, futuristic startups to market directly to retail investors.
The result?
Beautiful videos. Slick websites. Bold promises.
A feeling of being invited inside something rare.
But your ability to buy shares has nothing to do with your ability to exit those shares later.
And that’s where most investors get hurt.
The Illusion of Access: “Ground-Floor Opportunity” Isn’t What It Seems
Let’s examine what actually happened to everyday investors in some of the most heavily marketed private offerings of the past decade.
Knightscope (Security Robots)
Raised tens of millions from retail investors at $10/share.
Eventually IPO’d on Nasdaq — a rare win.
But today?
Shares trade around half the offering price.
Even the “good outcome” resulted in significant losses for early investors.
Atlis / Nxu (EV Trucks & Batteries)
Reg A priced at $27.50/share.
Stock spiked briefly after listing… then collapsed.
Dilution, reverse splits, and a delisting notice followed.
Investors now sit on losses of 90% or more.
Elio Motors (3-Wheel Car)
One of the first big Reg A successes — until it wasn’t.
The company never reached mass production.
Shares now trade for fractions of a penny.
Nearly total losses for investors.
Boxabl (Prefab Housing)
Raised over $200M from tens of thousands of small investors.
A SPAC deal values the company at $3.5 billion — despite limited revenue and unresolved operational questions.
Will the stock hold up once it hits public markets?
History says: be careful. Extremely careful.
Aptera Motors (Solar EV)
Raised over $120M from retail investors.
Years later:
No commercial production
Heavy losses
A “going concern” warning
No public market for shares
Investors cannot sell — and may not be able to for years.
So What Do These Cases Tell Us?
Across hundreds of Reg A deals, the same four patterns repeat:
1. Marketing is far more sophisticated than the business
Promotional materials often look like Hollywood trailers, but:
Many companies have no revenue
Product delivery is years behind schedule
Profitability is far away (if ever)
You’re buying the future, not the present.
2. Share prices often have no relationship to intrinsic value
$10 or $11 per share feels reasonable.
But many companies set these prices themselves — without public market validation.
Book value per share is often under $1.
You are paying a premium for a dream.
3. Liquidity is not guaranteed — not even close
If there’s:
No IPO
No listing
No buyback
No acquisition
No active secondary market
…you may simply hold those shares indefinitely.
And if the company does IPO, the stock may plunge when exposed to real-world scrutiny.
4. Secondary markets quietly reveal the truth
Platforms like Forge and Hiive sometimes trade these private shares.
And a striking pattern emerges:
Companies selling shares at $10–$11 often see secondary valuations closer to $5–6.
That’s a 40–50% haircut before the investor can even think about breaking even.
Why Companies Love Reg A — and Why You Must Be Cautious
Reg A is great for founders:
They raise capital on their terms
They avoid tough negotiations with venture firms
They get massive marketing reach
They keep control
They can set optimistic valuations
But for the investor?
The picture is very different:
High risk
High dilution
Limited disclosures
No guaranteed exit
Potential multi-year lockups
Potential complete loss of capital
This is not a substitute for index funds, ETFs, or even individual public stocks.
This is venture capital risk — without venture capital protections.
A Simple Rule to Protect Yourself
If you’re ever tempted by a futuristic private investment, ask yourself:
“If this money is locked up for 10 years — and worth 80% less — will I still be okay?”
If the answer is no, walk away.
If the answer is yes, treat it as speculation — not a retirement strategy.
There’s nothing wrong with taking a moonshot.
Just make sure it’s a small one.
Final Thought: Real Opportunity Doesn’t Come From Hype
Private deals marketed with emotional storytelling and slick branding are designed to feel exclusive. But access is not the opportunity.
The real opportunity comes from:
Patience
Diversification
Understanding risk
Avoiding emotional decisions
Protecting your principal
If a company is truly destined to become the next Tesla, NVIDIA, or Apple,
you will have plenty of opportunities to invest once it’s public, regulated, and liquid.
Until then, don’t mistake excitement for opportunity.
And never confuse marketing with value.
