The Value Creators Podcast Episode #61. Democratizing Alternative Investments Through Innovation, Liquidity, and Design: A Conversation with Kim Flynn

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The term alternative investments refers to investment opportunities that the financial regulators want to preserve for financial elites and protect from the average “retail investor” like you and me. They’re investments like venture capital, private equity, and hedge funds. They’re too sophisticated for individuals who are not “accredited”. These potentially high-yielding investments must be fenced off from broad accessibility. Too risky for the plebes.

But, despite the regulators, financial markets are evolving to make alternative investments more accessible, liquid, and tailored to individual investors. How do you design products that combine institutional sophistication with retail access—without compromising on structure, performance, or trust? Through customer-centric design: knowing customers well and giving them access to products that meet their needs and give them new choices.

In this episode of the Value Creators Podcast, Hunter Hastings talks with Kim Flynn, President of XA Investments, a pioneer in private market innovation and product design. Kim shares how her firm is breaking down barriers in the investment landscape, from new fund structures to investor education and cutting-edge indexes.

Key insights include:

• Why the term “alternatives” is evolving into a broader concept of private markets.
  
• How products like interval funds and tender offer funds balance liquidity and long-term investing.
  
• The importance of demand-focused product design and timing innovation to market needs.
  
• How educational tools like the XAI Interval Fund Index create transparency and drive adoption.
  
• Why creativity, empathy, and structured iteration are critical in financial product innovation.
  

Whether you’re an investor looking to access private equity or a product builder seeking to serve new markets, this episode provides a playbook for innovation at the intersection of finance, entrepreneurship, and education.

Learn how venture-mode creativity is coming to financial markets—and how the next generation of investment products will empower everyone.

Resources:

➡️ Learn What They Didn’t Teach You In Business School: The Value Creators Online Business Course

Learn more about XMS Capital

Connect with Kim Flynn on LinkedIn

Connect with Hunter Hastings on LinkedIn

Subscribe to The Value Creators on Substack

Knowledge Capsule:

1. Alternative Investments Are Expanding and Being Redefined

• “Alternatives” once referred to hedge funds or private equity but now include private credit, real estate, infrastructure, and even crypto.
  
• Many industry players now prefer the term “private markets” to reflect a broader and more modern interpretation.
  
• As access increases, the need for clearer, investor-friendly labels grows.
  

2. Private Markets Are Changing the Capital Landscape

• A stock market listing, via IPO, was once seen as the pinnacle of achievement for private companies.
• But today, companies are staying private longer, reducing access to high-growth phases for public investors.
  
• Similarly, in lending markets, private credit is stepping in where traditional banks have pulled back from corporate lending.
  
• Private capital offers flexible, often more patient financing, altering the borrower-lender dynamic.
  

3. Liquidity Is a Growing Concern in Private Investing

• While private equity offers higher returns, it often locks up capital for 10+ years.
  
• Innovations like continuation funds and secondaries provide new, more flexible exit paths
  
• Even “patient capital” has limits when liquidity needs arise.
  

4. Public Markets Face Pressure from Unicorns and Grey Share Markets

• Many leading companies now remain private well into maturity, prompting the rise of unicorn indexes and grey markets for pre-IPO shares.
  
• Liquidity for employees and early investors in private companies is becoming a key opportunity.
  
• The S&P 500 is no longer the full picture of economic growth or opportunity.
  

5. The Democratization of Alternatives Is Underway

• Institutional-style products like private equity and venture capital are becoming accessible to retail investors.
  
• Structures like interval funds enable access while balancing liquidity needs and regulatory safeguards.
  
• This shift is transforming the average retirement portfolio beyond traditional stocks and bonds.
  

6. Interval Funds and Tender Offer Funds Are Innovating Liquidity Models

• Interval funds offer limited, scheduled liquidity (e.g., 5% quarterly), making private markets more flexible for investors.
  
• Tender offer funds provide flexibility to pause redemptions, offering sponsors greater control in volatile markets.
  
• These funds balance access with asset-specific constraints, like long hold periods in private equity.
  

7. Infrastructure and Custody Challenges Still Exist

• Custody issues, tax complications, and minimum investment thresholds are barriers for many retail investors. K1’s add a level of tax complexity not everyone wants!
  
• New fund structures and registered product formats aim to lower these barriers.
  
• Major alternative asset managers are investing heavily in education and infrastructure to improve access.
  

8. Demand-Focused Product Design Drives Innovation

• Products are created with market timing, investor demand, and differentiation in mind.
  
• Examples like Janus Henderson’s CLO ETF show that early movers gain a durable competitive edge.
  
• Product timing, market gaps, and liquidity needs all shape product strategy.
  

9. Education and Knowledge Flow Are Core Differentiators

• XA Investments emphasizes educating both investors and asset managers through resources, indexes, and consulting.
  
• The XAI Interval Fund Index is an example of education-led innovation, helping demystify a complex market.
  
• Knowledge is positioned as a strategic asset for investors that reduces barriers and increases adoption.
  

10. Product Development Requires Structured, Iterative Processes

• XA’s product development model is rooted in structured processes learned from successful institutions like Nuveen.
  
• Products begin with identified market needs and proceed through regulatory, operational, and strategic filters.
  
• XA also provides design consultancy – which, as an added competitive advantage, enables younger employees to iterate faster and gain deep expertise in fund design.
  

11. Strategic Differentiation Matters in a Crowded Market

• First-mover advantage is real in products like ETFs, but other success factors include education, structure, and access.
  
• Success in private markets depends on matching product structure to asset class, including knowing when not to launch.
  
• Innovation isn’t just about product type and features—it includes process, distribution, and user experience.
  

12. Innovation in Financial Products is Creative and Entrepreneurial

• Financial innovation involves design thinking, empathy, and continuous iteration—just like any other form of entrepreneurship.
  
• XA Investments combines institutional rigor with agile, entrepreneurial thinking to fill gaps in evolving markets.
  
• The future of finance is being built by those who understand both the investor and the ecosystem.