The article discusses the challenges retail investors face in accessing private capital and explores the potential of tokenization as a solution to these issues.
The Allure of Private Equity and Its Inaccessibility
Investors are often interested in opportunities to invest in companies like SpaceX or OpenAI, but access to such investments is limited. As private companies rarely offer their shares to retail investors, significant barriers are created. Over the past 25 years, private markets have been able to generate roughly three times the value of public markets.
Tokenization as a Means to Address Structural Barriers
Tokenization allows for the conversion of real-world assets into digital tokens, enabling fractional ownership and 24/7 trading in global markets. However, tokenization primarily repackages existing assets, resembling traditional financial solutions. Unlike traditional platforms, tokenization can improve liquidity and settlement processes.
Projects Attempting to Tokenize Pre-IPO Equity
Among the projects working on tokenizing private capital are Ventuals, Jarsy, and PreStocks. Ventuals offers a perpetual futures model, Jarsy uses a 1:1 asset-backed tokenization, and PreStocks enables trading of shares in private companies. Each of these projects faces unique challenges, such as liquidity and the availability of information on key assets.
While tokenization offers potential paths to improve access to private capital, significant structural issues and uncertainties remain. Various projects demonstrate early stages of success, but regulatory concerns and resistance from private companies require further examination.
