A pretty standard move in finance is that you have a product for sophisticated institutional investors, and it becomes popular, so you look for ways to offer it to retail investors. “Retail investors” can mean literally everyone on Robinhood, or it can mean some higher category of accredited or qualified or otherwise high-net-worth clients, but the point is that you are marketing the product to hundreds or thousands or millions of individuals rather than dozens of endowments and pensions.
Often you will have to make some changes to the institutional product in order to offer it to retail. One common change is: Institutional products can be unfunded, while retail products more often have to be prefunded. What that means is that if you have a product like “in Situation X, I pay you $100, and in Situation Y, you pay me $100,” that’s a pretty easy trade to do with a big institution. You do some due diligence on their finances, you sign a contract, and you generally get comfortable that if Situation Y happens, they will pay you the money. And if they don’t you can probably sue them and get the money.
