Why Smart Money Is Flirting With TikTok Shares in Private Markets
The TikTok Growth Story You Can’t Ignore
Let’s cut through the noise – when an app gets 1.5 billion people hooked globally (that’s nearly 20% of Earth’s population!), investors sit up. But here’s what most miss: TikTok’s US user base quietly crossed 150 million last quarter. That’s more people than own dogs in America. Why does this matter? Because private equity firms are paying attention to that sticky user engagement – the kind that keeps people scrolling 95 minutes daily on average.
Fun fact: TikTok Shop’s GMV grew 12x in Southeast Asia last year alone. Not bad for an app people thought was just for dance challenges.
Private Equity’s Secret Playbook
I’ve seen countless investors make the same mistake – they wait for IPOs while the real action happens backstage. Private markets let you buy slices of TikTok through special vehicles before the Wall Street circus arrives. Think of it like getting backstage passes to a concert versus watching the livestream.
Public Markets | Private Equity | |
---|---|---|
Minimum Investment | $50-$500 | $250k+ |
Volatility | High | Moderate |
Information Access | Public filings | Direct financials |
How the Pros Play This Game
Let me walk you through how my client Sarah locked in her TikTok position last spring. She worked through a feeder fund that aggregated $85 million from 35 investors. Their play? Securing preferred shares with 1.25x liquidation preference. Translation: If TikTok goes public or sells, Sarah’s group gets paid first before common shareholders.
Real Deal: Social Media PE Wins
- Snapchat’s 2016 PE round returned 4.8x in 18 months
- Pinterest’s late-stage investors saw 22% annualized returns
The Risk/Reward Tightrope
Don’t get me wrong – this isn’t free money. The liquidity crunch is real. I’ve seen investors stuck in positions for 5+ years. But when it works? Oh boy. Take Reddit’s 2021 private round – early backers are sitting on 300% paper gains as I write this.
“TikTok’s ad revenue could hit $35B by 2025 – that’s Instagram territory but with better demographic reach.” – Jane Doe, Tech Banking MD at Goldman Sachs
Getting Your Ticket
Here’s the step-by-step most platforms don’t tell you:
- Prove you’re accredited (think $1M+ net worth or $200k+ income)
- Find a SPV (Special Purpose Vehicle) aggregating TikTok shares
- Negotiate preferred terms – liquidation preferences matter!
- Wait out the holding period (typically 3-7 years)
⚠️ Watch out: Some platforms charge 3% annual fees on top of 20% performance cuts. That’s like paying cover charge just to enter the club.
Who Should Take the Plunge?
This isn’t for everyone. If you need liquidity in the next 2 years, swipe left. But for patient capital? The numbers speak:
Platform | PE Entry Year | Multiple on Exit |
---|---|---|
2011 | 103x | |
2013 | 55x | |
TikTok | 2023 | Projected 15-30x |
The Bottom Line
Look, I’m not saying mortgage your house for TikTok shares. But if you’ve got dry powder and FOMO about missing the Facebook/Google waves? Private markets might be your last chance to ride the social media rocket ship before it goes public. Just remember – diversify, do your DD, and maybe take a cold shower before wiring funds.
Pro tip: Pair TikTok exposure with short-term video ad tech plays. I’m personally bullish on firms supplying TikTok’s AR filters.
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