How to Invest in Private Equity as an Individual Investor (2026)

Private equity — buying ownership stakes in private companies — has returned roughly 13–16% annually over the past 20 years, outperforming public equities by 3–5 percentage points. The catch has always been access: traditional PE funds require $250,000 to $5 million minimums and restrict participation to institutional investors. But platforms like Moonfare, AngelList, and OurCrowd have cracked that gate open, letting accredited individuals invest in private equity starting at $10,000–$50,000. Here's how to invest in private equity without a family office.

What Private Equity Actually Means

Private equity refers to investment funds that buy stakes in private companies (or take public companies private), improve operations, and sell for a profit — typically over 5–10 years. PE firms use leverage (borrowed money) to amplify returns, and they charge fees that would make index fund investors wince: 2% annual management fees plus 20% of profits (the "2 and 20" model).

The returns have historically justified those fees. Cambridge Associates' PE index has outpaced the S&P 500 in most vintage years over the past two decades. Top-quartile funds have delivered 20%+ net annual returns.

Three main strategies dominate:

• Buyout funds acquire controlling stakes in mature companies, restructure operations, and sell. Think KKR buying a mid-market manufacturing company.
• Growth equity invests in rapidly growing companies that need capital to scale but don't want to give up control. These companies are past the startup stage but pre-IPO.
• Venture capital funds early-stage companies with high growth potential. VC is technically a subset of PE, though it's often discussed separately.

Why Individual Investors Want PE Exposure

The data makes a compelling case for how to invest in private equity:

Higher returns. PE has outperformed public equities by an average of 3–5 percentage points annually over 20 years. Even after the hefty fee structure, net returns to investors have been meaningfully higher than the S&P 500.

Diversification. Private equity returns are partially driven by operational improvements and financial engineering — factors independent of public market sentiment. This creates genuine diversification benefit, especially during sideways or declining stock markets.

Access to different companies. The number of U.S. public companies has dropped from about 8,000 in 1996 to roughly 4,000 in 2026. Meanwhile, private company count keeps growing. By investing only in public markets, you're missing the majority of the economy.

The J-curve. PE funds typically show negative returns in years 1–3 (as they deploy capital and pay fees on invested money), then accelerate in years 4–10 as portfolio companies mature and exit. Understanding this pattern prevents panic selling early.

For detailed return analysis, see private equity returns explained.

Private Equity Investment Platforms

Moonfare

Moonfare provides access to top-tier private equity funds that normally require $1 million+ commitments. The platform has secured allocations in funds from firms like KKR, Carlyle, EQT, and other marquee names.

Minimum: €50,000 (approximately $55,000) for most fund offerings. Some co-investment opportunities may have different minimums.

How it works: Moonfare creates feeder funds that invest into the underlying PE fund. You commit capital through Moonfare, and your money flows into the same fund that institutional investors access. Moonfare charges its own fee layer (typically 0.5–1% annually) on top of the underlying fund's fees.

Key advantage: Access to top-quartile funds that individual investors simply cannot reach on their own. Fund selection matters enormously in PE — the gap between top-quartile and bottom-quartile PE fund returns can exceed 15 percentage points annually.

Who it's for: Accredited investors with $50,000+ to commit for 7–12 years who want institutional-quality PE exposure.

AngelList

AngelList started as a startup investing platform but has evolved into a comprehensive private markets infrastructure. For PE and venture exposure, AngelList offers access to rolling funds, syndicates, and fund-of-funds products.

Minimum: Varies widely. Some rolling funds accept $1,000–$5,000 quarterly commitments. Syndicates typically require $1,000–$25,000 per deal.

How it works: AngelList's rolling funds collect capital on a quarterly basis and invest into a portfolio of private companies. Syndicates are single-deal vehicles where a lead investor sources a deal and invites others to co-invest. The platform also offers AngelList Access Fund, a diversified fund-of-funds.

Key advantage: Flexibility. Unlike traditional PE funds with 10-year lockups and large commitments, AngelList's rolling fund model lets you commit smaller amounts on a quarterly basis. You're still locked in for each quarterly commitment, but new commitments are optional.

Who it's for: Accredited investors who want to build PE/VC exposure gradually rather than making one large commitment.

OurCrowd

OurCrowd focuses on growth-stage companies and offers both direct company investments and PE-style fund products. Based in Israel with global deal flow, OurCrowd provides access to companies across technology, healthcare, and climate sectors.

Minimum: $10,000 for direct company investments. Fund minimums vary but typically start at $50,000.

How it works: OurCrowd's investment team selects companies and negotiates terms. Investors can choose specific companies or invest through diversified fund vehicles. The platform has had multiple exits via IPO and acquisition, including some notable successes.

Key advantage: Direct company selection gives you more control than a blind-pool fund. You review each company's financials, market position, and growth plan before deciding to invest.

Who it's for: Accredited investors who want to pick specific growth-stage companies while also having access to diversified fund options.

Understanding the Fee Structure

Private equity fees compound in ways that aren't immediately obvious. Here's a realistic breakdown for a $50,000 investment through a platform:

| Fee Layer | Annual Cost | Over 10 Years | |---|---|---| | Underlying PE fund management (2%) | $1,000 | $10,000 | | Platform/feeder fund fee (0.75%) | $375 | $3,750 | | Carried interest (20% of profits) | Varies | Significant |

On a $50,000 investment that doubles over 10 years (total profit of $50,000), you'd pay roughly $10,000 in carried interest plus $13,750 in management fees — $23,750 in total fees on $50,000 of profit. That's a 47.5% fee load on the gross profit, bringing your net gain to roughly $26,250.

Despite these fees, top-quartile PE funds still outperform public markets net of all costs. The key phrase is "top-quartile." Mediocre PE funds can underperform the S&P 500 after fees, which makes fund selection the most critical decision in PE investing.

How to Evaluate a PE Opportunity

Track record. For fund investments, the GP's (General Partner's) historical returns across prior funds are the single best predictor of future performance. Ask for DPI (distributions to paid-in capital) — actual cash returned — not just IRR, which can be manipulated.

Vintage year diversification. Don't invest your entire PE allocation in a single year. Economic conditions at the time of investment heavily influence returns. Spread commitments across 3–5 vintage years to diversify this timing risk.

Strategy alignment. Buyout funds have different risk/return profiles than growth equity or VC. Buyout funds offer more consistent returns with lower variance; VC funds have higher variance with more outlier returns. Choose strategies that match your risk tolerance.

Liquidity needs. PE capital is locked for 7–12 years with no reliable exit before that. Some platforms offer secondary markets, but selling PE positions early typically means accepting a 10–30% discount. Only invest money you truly don't need for a decade.

For information on whether you qualify for most PE opportunities, see accredited vs non-accredited investments.

Risks Specific to Private Equity

Illiquidity is non-negotiable. Your money is locked for the life of the fund — typically 10 years with possible extensions. No amount of planning fully prepares you for not having access to invested capital for a decade.

Leverage amplifies losses. PE firms borrow heavily to fund acquisitions. When deals go well, leverage multiplies returns. When deals fail, leverage multiplies losses. In a severe downturn, leveraged portfolio companies can go bankrupt, wiping out equity investors entirely.

Valuation subjectivity plagues private markets. PE firms value their own portfolio companies based on internal models, not market prices. This can smooth out reported volatility (making PE look less risky than it is) and delay recognition of losses.

Fee drag is relentless. Even in years when the fund generates zero returns, you're paying 2%+ in management fees. Over a decade, fees consume a meaningful portion of your capital regardless of performance.

Building a Private Equity Allocation

A 10–20% allocation to private equity suits investors with long time horizons and high risk tolerance. Build this gradually over 3–5 years across different fund vintage years.

Start with Moonfare or AngelList to access diversified fund vehicles. As your comfort and capital grow, add direct company investments through OurCrowd. The combination of fund exposure and direct deals creates a well-rounded PE allocation.

Pair PE investments with liquid alternatives (REITs, public market stocks) in the rest of your portfolio to ensure you can meet short-term cash needs while your PE capital is locked up.

Frequently Asked Questions

Can regular investors invest in private equity?

Yes, but with restrictions. Most PE platforms require accredited investor status ($200,000+ income or $1 million+ net worth). Minimums have dropped significantly — from millions to $10,000–$50,000 on platforms like OurCrowd and Moonfare. Non-accredited investors have very limited PE options, though some interval funds and BDCs offer indirect exposure.

What returns should I expect from private equity?

Top-quartile PE funds have historically returned 16–22% net annually. Median funds return roughly 10–14%. Bottom-quartile funds can underperform public markets entirely. Realistic expectations for platform-accessible PE: 10–15% net annual returns over a 10-year period, assuming decent fund selection.

How long is my money locked up in private equity?

Typical PE fund life is 10–12 years. Capital calls (when the fund actually takes your money) are spread over years 1–5, and distributions flow back in years 4–10+. Your full investment isn't locked from day one, but committed capital can be called at any time. Plan for no liquidity for a decade.

What is the difference between private equity and venture capital?

Private equity typically buys controlling stakes in profitable, mature companies and uses leverage. Venture capital buys minority stakes in early-stage, pre-profit companies without leverage. PE returns are more consistent; VC returns follow a power law with more total losses but higher potential outliers.

How is private equity taxed?

PE fund distributions typically include a mix of long-term capital gains (taxed at 0–20%), short-term capital gains (ordinary income rates), and return of capital (tax-deferred). Carried interest is taxed as capital gains for the fund manager. Investors receive K-1 tax forms annually. PE investments in IRAs can trigger UBTI tax if the fund uses significant leverage.

Should I invest in PE funds or direct deals?

Start with funds for diversification — a single fund holds 10–30 companies, spreading risk. Add direct deals (through OurCrowd or AngelList syndicates) once you have $100,000+ in PE and understand how to evaluate individual companies. Direct deals offer higher return potential but concentrated risk.

ModernAlts is an independent research platform. Nothing in this article constitutes investment, legal, or tax advice. Alternative investments involve risk including possible loss of principal.