Pre-IPO Tokenization

Why now

The average time from founding to initial public offering has stretched to roughly twelve years, up from four to five years in the 1990s, which means the most valuable phase of a company's growth now happens almost entirely while it remains private and accessible only to institutions and accredited investors.¹ With several of the most valuable private companies expected to eventually list at record valuations, demand for private-market access is acute, and tokenization is one venue that demand is flowing toward.

Three structures, and a missing short side

A research report on the category distinguishes three structurally different ways this exposure is currently packaged. Special-purpose-vehicle-backed tokens carry real backing, through a vehicle or direct equity, and are redeemable into cash or shares after an eventual listing, creating a notional price floor. Synthetic perpetual contracts are pegged to an oracle price with no backing and no claim on the underlying company at all, permissionless and largely unregulated. Closed-end funds offer indirect exposure through a fund wrapper, with fees and redemption limits attached. The throughline risk across all three is a missing short side: with no easy way to bet against these assets, pre-IPO exposure tends to trade at a persistent premium of twenty to forty percent, and sometimes one hundred to two hundred percent for the most sought-after names, above the last known private valuation, with no natural counterforce to correct it.¹ Real risks layered on top include the enforceability of transfer restrictions, since some of the most in-demand private companies have publicly condemned unauthorized tokenized exposure to their shares, and the possibility that a special-purpose vehicle cannot meet redemptions if net asset value cannot be realized on demand.

The demand side, and the consent problem

Vlad Tenev frames the same category from the perspective of a retail investor rather than the market-structure side, describing private markets as where the bulk of the interesting growth now sits, and calling exclusion from that growth the greatest remaining inequity in modern capital markets.² He identifies the real blocker as company consent rather than technology or regulation: his own company has already demonstrated the underlying technology by tokenizing shares of companies such as OpenAI and SpaceX as promotional giveaways in Europe, but the harder unlock for genuine twenty-four-hour trading is that companies themselves generally do not want their shares trading continuously, which he treats as a culture and control problem rather than a legal one, and therefore a stickier one to solve. His approach is to work directly with companies to earn that consent over time, drawing an explicit parallel to his company's earlier retail initial-public-offering access product, which took years of persuading skeptical issuers before becoming a standard part of how major listings are run, and betting that private-market access follows the same adoption arc over roughly five years.

Still an early category

The Binance founder CZ treats tokenized equities generally as a barely started category rather than a solved one, observing that only a handful of stocks are meaningfully tokenized today and that the ones that are remain largely centered on the United States.³ His framing extends the access argument from individual investors to the governments that issue the underlying securities, posing it as a question: which country would not want its own stock market accessible to the entire world. He also notes that crypto as a whole still represents under one percent of global wealth, meaning the binding constraint on this category is the supply of tokenized assets available rather than a shortage of demand for them.

Open questions

The absence of a natural short side is the central distortion, and it is not clear what, short of natural hedging demand actually arriving, corrects it, or how violently the premium unwinds once a company actually lists. Company consent is the harder version of the blocker Tenev describes, since regulatory clearance is at least binary while a shift in corporate culture toward accepting continuous trading changes slowly and unevenly across different companies and industries.