Original title: Can Tokenized Pre-IPO Stocks Break Barriers in the Private Equity Market?
Original source: Tiger Research
Original translation: AididiaoJP, Foresight News
Summary
Despite the high returns offered by the private equity market, it remains primarily targeted at institutional investors and high-net-worth individuals, making it difficult for ordinary investors to participate.
Tokenization can address the limitations of the traditional financial system in terms of liquidity, accessibility, and convenience, but it still faces significant legal and technical barriers.
Projects like Ventuals, Jarsy, and PreStocks are exploring different approaches to tokenized private equity. Although these attempts are still in the early stages, they have already shown potential to reduce structural barriers in the market.
Private equity is highly attractive, but ordinary investors cannot participate.
How can ordinary people invest in SpaceX or OpenAI? As private companies, they are out of reach for most investors. The opportunities for ordinary investors are almost zero, as investment opportunities typically only arise after a company goes public.
The core issue lies in the exclusion of ordinary investors from the high returns generated by the private market. Over the past 25 years, the value created by the private market has been about three times that of the public market.
This structural barrier arises from two core factors. First, the financing process of private companies is highly sensitive, and transactions are typically only open to well-known institutional investors, regardless of the investor's qualifications. Secondly, the growth of the private capital market provides companies with more financing options, allowing many companies to raise billions of dollars without going public.
OpenAI is a typical example of these two dynamics. In October 2024, it raised $6.6 billion from major investors such as Thrive Capital, Microsoft, Nvidia, and SoftBank. By March 2025, it raised another $40 billion in a funding round led by SoftBank, with participation from Microsoft, Coatue, and Altimeter, becoming the largest private financing in history.
This phenomenon reveals a reality: only a few institutional investors can participate in the private market, while a mature private capital infrastructure provides these companies with financing options outside of going public.
As a result, today's investment environment is becoming increasingly closed, exacerbating the inequality in the distribution of high-growth opportunities.
Equal access, can tokenization solve structural barriers?
Can tokenization truly address the structural inequality in the private equity market?
On the surface, this model is quite attractive: real-world assets are converted into digital tokens, enabling fractional ownership and supporting round-the-clock trading in global markets. However, essentially, tokenization merely repackages existing assets like Pre-IPO equity into a new form. Solutions to improve accessibility already exist in traditional finance.
Source: ustockplus
For example, platforms like Dunamu's Ustockplus in South Korea, Forge, and EquityZen in the U.S. allow ordinary investors to trade private stocks within the existing regulatory framework.
So, what is unique about tokenization?
The key lies in market structure. Traditional platforms use a peer-to-peer (P2P) matching model, where buyers must wait for sellers to post orders. If there is no counterparty, the transaction cannot be completed. This model suffers from low liquidity, limited price discovery, and unpredictable execution times.
Tokenization is expected to address these structural limitations. If tokenized assets are listed on centralized exchanges (CEX) or decentralized exchanges (DEX), liquidity pools or market makers can provide ongoing counterparties, thereby enhancing execution efficiency and pricing accuracy. In addition to reducing friction, this approach can also redefine market architecture.
In addition, tokenization can achieve functions that the traditional financial system cannot support. Smart contracts can automatically distribute dividends, execute conditional trades, or enable programmable governance rights. These functionalities pave the way for the emergence of new financial instruments that are designed to be both flexible and transparent.
Projects attempting to tokenize Pre-IPO equity
Ventuals
Source: Ventuals
Ventuals builds a perpetual contract structure. Its core advantage lies in the ability to conduct derivative trading without holding the underlying asset. This allows the platform to quickly launch a large number of Pre-IPO stocks while circumventing conventional regulatory requirements such as identity verification or accredited investor certification.
Perpetual contracts are achieved through Hyperliquid's HIP-3 standard. However, this standard is currently only operating on the testnet, and Ventuals is still in the pre-release phase.
Its pricing model is also unconventional; the token price is not based on stock price or actual market transactions but is calculated by dividing the company's total valuation by 1 billion. For example, if OpenAI's valuation is $35 billion, then the price of one vOAI token would be $350.
This low-threshold model also brings structural challenges, the most prominent of which is the reliance on oracle issues. The valuation data of private companies is itself opaque and updated infrequently. Derivatives based on such incomplete information may exacerbate market information asymmetry.
Jarsy
Source: Jarsy
Jarsy adopts a 1:1 asset-backed tokenization model. Its core mechanism involves directly acquiring Pre-IPO stocks and issuing one token for each share held. For example, if Jarsy holds 1,000 shares of SpaceX stock, it will mint 1,000 JSPAX tokens. Although investors do not directly hold the underlying stocks, they enjoy all related economic rights, including dividends and stock price appreciation.
Source: Jarsy
This model relies on Jarsy as the asset management entity. The platform first tests investor demand through the presale of tokens, then uses the raised funds to purchase actual stocks. If the purchase is successful, the presale tokens will convert into official tokens; otherwise, the funds will be refunded. All assets are held by a special purpose vehicle (SPV) and provide real-time verification through reserve proof pages.
The platform has significantly lowered the investment threshold, with a minimum investment amount of only $10. For investors outside the United States, there are no qualification requirements, thus expanding global accessibility. All transaction records and asset holdings are stored on-chain, ensuring auditability and transparency.
However, this model has structural limitations. The most pressing issue is liquidity, which stems from the platform's limited asset holding size for each company. For instance, Jarsy currently holds approximately $350,000, $490,000, and $670,000 worth of stocks from X.AI, Circle, and SpaceX, respectively. In such a low liquidity market, even a small sell order from a large holder can trigger significant price fluctuations. Because private equity is itself opaque and illiquid, price discovery is particularly challenging, further amplifying volatility.
Moreover, while the asset-backed model provides stability, it limits scalability. Each new token issuance requires the actual purchase of stock, a process that involves negotiations, regulatory coordination, and potential procurement delays, thus hindering the platform's ability to respond to rapidly changing market trends.
Nevertheless, Jarsy is still in its early stages, having been online for just over a year. As the user base and assets under management (AUM) grow, liquidity issues may gradually ease. With the expansion of the platform, a broader coverage and deeper pool of tokenized equity may naturally form a more stable and efficient market.
PreStocks
Source: PreStock
PreStocks adopts a model similar to Jarsy, purchasing shares of private companies and issuing endorsed tokens at a 1:1 ratio. The platform currently supports trading of 22 types of Pre-IPO stocks and has opened its products to the public.
PreStocks is built on the Solana blockchain and facilitates trading through integration with Jupiter and Meteora. It offers round-the-clock trading and instant settlement without charging management fees. There is no minimum investment requirement, and anyone with a Solana-compatible wallet can participate, further lowering the access threshold.
However, the platform also has some limitations, as users from the U.S. and other major jurisdictions cannot access it. Although all tokens are reportedly fully collateralized by the underlying stocks, PreStocks has yet to disclose detailed holdings verification documents. The team stated that they will regularly release external audit reports and can provide paid individual verification services upon request.
Compared to Jarsy, PreStocks has tighter integration with decentralized exchanges (DEX), which may support broader secondary use cases like token lending. Within the Solana ecosystem, tokenized public stocks (like xStock) are already in active use, and PreStocks may benefit from ecosystem-level synergies.
Obstacles not yet solved by Pre-IPO stock tokenization
The tokenized stock market is in its preliminary formation. Although platforms like Ventuals, Jarsy, and PreStocks show early development momentum, significant structural challenges still exist.
First, regulatory uncertainty is the fundamental barrier. Most jurisdictions still lack a clear legal framework for tokenized securities. As a result, many platforms operate in the regulatory gray area, taking advantage of jurisdictional arbitrage without direct compliance.
Secondly, the resistance from private companies remains a key barrier. In June 2025, Robinhood announced a new service for EU clients that provides exposure to tokenized investments in companies like OpenAI and SpaceX. OpenAI immediately publicly opposed it, stating: 'These tokens do not represent equity in OpenAI, and we have no partnership with Robinhood.' This response highlights private companies' reluctance to relinquish control over equity structures and investor management, a core function they tightly guard.
Thirdly, the complexity of technology and operations cannot be ignored. Maintaining a reliable link between real-world assets and tokens, addressing cross-border compliance issues, dealing with tax implications, and executing shareholder rights are all non-trivial challenges. These issues may severely limit user experience and scalability.
Despite these limitations, market participants are actively seeking solutions. For example, Robinhood plans to expand its token product to thousands of assets by the end of the year, despite facing numerous challenges in the public market. Platforms like Ventuals, Jarsy, and PreStocks are also continually pushing forward with differentiated tokenized equity access methods.
In short, tokenization offers a promising path to improve accessibility in the private equity market, but this field is still in its infancy. Current limitations are real, but the history of the crypto space shows that technological breakthroughs and rapid market adaptation can, and often do, redefine possibilities.
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