Of every objection I hear from prospective investors, this one comes up the most: “What if life happens and I need that money back early?”
Let me give you a more useful answer than most articles will.
The first answer is uncomfortable: if “needing it back early” is a recurring thought in your head, you probably aren’t ready for alternative investments yet. I’ll get to why in a moment.
The second answer is more practical: there are real options, they’re just not the same options the public-market world has trained you to expect. And one of them — tokenization — is about to fundamentally change this conversation in a way most investors haven’t seen coming.
Let’s walk through what actually exists, and how realistic each one is for the typical accredited investor (let’s say someone with a $25K–$100K position, not a $50M institutional check).
This is the option most articles miss. When the SMART Flex Fund pulls together capital for a deal — say, $1,000,000 — that usually represents 8 to 12 investors. If you need to exit and the deal is performing on or above pro forma, it’s typically not difficult to find someone among those existing investors to step into your position.
Better yet, there’s often someone in the broader fund who passed on the deal originally — maybe their liquidity wasn’t where it needed to be at the time, maybe the timing was wrong — and now, two years later, sees a spot opening up and wants in. The structure of a fund-of-funds like ours allows this kind of in-network secondary to happen pretty seamlessly when the situation comes up.
This is the option I’d point a real investor to first.
You may have heard of platforms like EquityZen, Forge, or the Nasdaq Private Market. Yes, they exist. No, they aren’t really designed for the typical accredited investor trying to unload a $50K LP position in a syndicated real estate deal.
Those platforms are built for institutional-sized positions in well-known late-stage private companies. If you’re holding a $50,000 stake in a self-storage syndication in Knoxville, you’re not going to find a buyer there. Don’t go in expecting it.
And speaking of those secondary platforms — I’ve noticed something worth flagging.
I recently noticed that EquityZen partnered with Morgan Stanley to give “eligible investors” the opportunity to invest in select private companies.
There’s a pattern forming. Wall Street wants in on alternatives. And trust me — when the big firms get hold of this asset class, their goal will be to strip out that 500-basis-point premium and make alternatives tame, just like the rest of the market.
I love alternatives the way they are: illiquid and raw. Alternatives are awesome because they’re an imperfect market. Those who know where to look and how to find them can find great deals with mitigated risk. The day Wall Street brings this asset class to the broader retail investor — sanitized, pasteurized, and packaged for daily liquidity — is the day the alpha disappears.
I’d challenge you to get in now, while alternatives are still rough around the edges. When Morgan Stanley, JP Morgan, and the rest of Wall Street arrive in force, you’ll know the game is up.
Here’s something most investors don’t know. One of the largest investments the SMART Flex Fund has made is into a technology platform built on the tokenization of real estate and the valuation and trading of hard, illiquid assets.
I think this is going to happen. I don’t know if the specific platform we backed will be the eventual winner, but I sure hope it is.
The implication for investors: it likely won’t be many more years before the “illiquid” alternative asset can be tokenized and posted for sale, with a transaction settled in hours rather than years. This wouldn’t sanitize the asset class the way Wall Street will — it would just give existing private investors better optionality at exit time.
It’s worth knowing this is coming. It also doesn’t mean you should wait for it. The deals available today are too good to sit on the sidelines waiting for a future liquidity feature.
I haven’t actually had this happen — partly because we work hard upfront to make sure investors are right-sized for the deals they enter. But if you called me tomorrow, here’s the script:
The Three Questions I’d Ask
1. Why do you need the money? The answer changes everything. A genuine emergency is different from a shiny-object opportunity elsewhere.
2. Are you willing to take a discount on the value of your position? Liquidity costs something. The faster you need out, the deeper the discount.
3. What’s your timeline? 30 days vs. 6 months vs. “whenever someone wants to take it” are completely different problems with completely different outcomes.
Realistic outcomes:
I’m telling you this not to scare you off but to be straight with you about the real range. Most fund managers won’t put this in writing.
Here’s something the marketing materials never explain. When you build a portfolio of alternative deals over time, you create something I call Natural Liquidity.
Each deal you enter starts at a different point in its lifecycle. As the years roll forward, those deals reach maturity at different times. A deal you entered in year one may exit in year four — right around the time the deal you entered in year three is finally distributing its first refinance proceeds. Capital starts coming back to you in a continuous, rolling pattern.
You don’t get this from any individual deal. You get it from the discipline of continuously deploying into different deals over time. Three years in, you have natural liquidity events landing every few quarters. Five years in, you have a self-funding flywheel.
This is why I push so hard on getting started early and pacing your deployment over years rather than waiting for one giant capital event.
Here’s the part I have to be honest about, even if it costs me a few prospective investors.
If “what if I need to get out early?” is a thought that keeps coming back, you probably shouldn’t be in alternatives yet.
Long-term thinking is the prerequisite skill in this asset class. You have to be able to look forward and reasonably anticipate your capital needs. Unforeseen events will happen — that’s what your liquidity foundation is for. (For me, that foundation is nine high cash value whole life policies built over fifteen years, plus one to two years of expenses in liquid form. Not the deals themselves.)
If you’re stress-testing every potential investment with “but what if I need it back” — that’s not investor due diligence. That’s a signal that your foundation isn’t where it needs to be yet. Fix that first. Then come back to alternatives with the right mindset.
The investors who do best in this asset class are the ones who set up their financial life so they don’t ever need to ask the early-exit question in the first place.
If your foundation is solid, your liquidity outside of alternatives is real, and you’re starting to look at private deals seriously — let’s have a conversation. Specifically about the deals we have on the desk right now and whether the timing, structure, and liquidity profile match where you actually are in life.
A direct conversation about your situation, your liquidity foundation, and whether the deals currently on our desk are a fit. No pressure, no pitch — if you’re not ready, I’ll tell you so.
Disclaimer: This article reflects the personal experience and opinions of Kent Leach and Hickory Creek Capital Partners. It is not tax, legal, or investment advice. Always consult a qualified CPA, attorney, and financial advisor before pursuing any private investment, secondary-market transaction, or estate-planning strategy. Tokenization technologies referenced are emerging and unproven; specific platform investments mentioned are illustrative only. Past performance — including the historical outperformance figures referenced — does not guarantee future results. Private fund investments are limited to accredited investors and involve substantial risk, including total loss of principal.