Tokenized Startups: Bringing Liquidity to Positions That Aren't Usually Liquid

Tokenized Startups: Bringing Liquidity to Positions That Aren't Usually Liquid

Tokenized startups are a way to bring liquidity to a kind of asset that almost never has any: a piece of a private, venture-backed company. The pitch is simple. Take a company that only venture capitalists can buy into. Wrap a piece of it in a token. Let anyone in the world trade that token from day one. The point is to break open access to the fastest growing companies on earth, the ones that today only show up on retail screens after most of the growth has already happened.

This is the goal that the term "Internet Capital Markets," or ICM, is meant to capture. A market for private company exposure that runs on public rails, twenty four hours a day, with the same openness that public stocks had thirty years ago. The work to build it is happening right now, in public, across a handful of teams.

This piece is a tour of where things stand. What tokenized startups are, why the demand is showing up now, what is actually new about the current wave, and the design questions that are still wide open.

Why now: the IPO stopped doing its old job

For most of the last century, the IPO was where everyday investors first met a growth company. Netscape was eighteen months old when it went public in 1995. Amazon went public at a $438M valuation in 1997 with about $16M in trailing revenue. A retail investor with a brokerage account could buy in on day one and ride the compounding.

That door is mostly shut now. The median US technology company today takes about fourteen years to go public, roughly triple the figure from the late 1990s. The companies on every "fastest growing" list - SpaceX, Anthropic, Stripe, OpenAI - are staying private for years or decades. By the time the bell rings, the growth is already gone. We wrote a longer data piece on this called The 14-Year IPO, if you want the numbers.

The result is a market with a real thirst for venture-performing assets and very few legal ways to drink. That thirst is now showing up in the data.

The market already responded: SPVs grew 500% in two years

The most visible patch on the broken IPO has been the special purpose vehicle, or SPV. An SPV is a single-deal fund that lets a group of investors pool capital to buy into one private company. Want exposure to a specific late-stage round? Find an SPV that owns it.

The volume of SPV activity has grown roughly 500% over the past two years. That is not a niche product anymore. It is a wholesale workaround for the closed primary market. SPVs have real downsides though. They are illiquid. The legal cost per vehicle is meaningful. The investor base is still capped to accredited investors. The clearing is still slow and bilateral.

Tokenized startups are the next move along the same vector. Same demand, better rails.

The idea is not new. The primitives are.

A market for "tokens that represent a piece of a private company" has been tried in several forms. None of them are perfect analogs, but each one rhymes with what is being built now.

• ICOs (2017-2018). Tokens sold to the public, often before the company existed. Most were unregistered securities offerings under US law. The model collapsed under enforcement and bad actors, but it proved the demand.
• DAO funds. Pooled, on-chain investment clubs that bought into private deals collectively. Cool idea, lots of governance overhead.
• Tokenized SPVs. SPVs whose limited partner interest is itself represented by a token. Older versions existed but never reached real volume.
• Token-equity standoffs. Aave, Axelar, and others where a token's relationship to the underlying business equity has been debated for years.
• Ownership coins. Friend.tech and adjacent experiments where the token tracks a person or product, not an entity.
• Pre-IPO perps. Perpetual futures contracts that track a private company's expected IPO price.

None of those is the same as a tokenized startup in the 2026 sense. What is new this time is the building blocks. The primitives have caught up.

A short list of what is being shipped today:

• Closed-end funds on tokenized rails. Products like the Robinhood / USVC effort use a closed-end fund structure to give retail investors regulated, on-chain exposure to a basket of private companies.
• Tokenized SPVs done well. PreStocks and similar teams are building SPV stacks where the legal structure, the cap table, and the token all live in a clean, programmatic flow.
• Pre-IPO perps with real liquidity. Ventuals and others are building order books for perpetual contracts tracking specific private companies. Pure price exposure, no spot backing required.

It is the wild west of experimentation. Most of these will not be the final shape. A few of them probably will be.

The open design questions

Anyone shipping in this space is making a bet on each of the following. The honest answer is that nobody has a definitive answer yet.

Early stage or late stage?

A tokenized seed-stage startup and a tokenized SpaceX are very different products. Late stage has obvious customer pull. The companies are known, the price discovery is roughly understood, and the demand is enormous. Early stage is where the asymmetric upside lives, but it is also where founders are most protective of their cap table and where price signals are noisy.

Are founders receptive or adversarial? Some will welcome a liquid market for their equity because it pulls forward employee liquidity and adds to demand. Others will see it as a cap table they cannot control. Both reactions are rational. The shape of any successful product will need to give founders something they want, not just take.

Pure price exposure or spot backing?

A pre-IPO perp gives you price exposure to a private company without any underlying share ever changing hands. It is fast to launch and capital efficient. It also does not give the buyer any real ownership.

A spot-backed token, like a tokenized SPV interest, is heavier to build but represents an actual claim on the underlying equity. The two products serve different buyers. A trader wants the perp. A long-term investor wants the spot.

Most platforms will probably end up building both, sitting next to each other.

What legal entity wraps it?

Three real options, each with tradeoffs.

The right answer depends on what you are tokenizing and who you want to sell it to. A basket of YC startups for a global audience looks different from a single SpaceX SPV for US accredited investors.

A specific bet worth watching: tokenized accelerator batches

It would not be surprising if the major accelerators - YC, HF0, SPC and others - are quietly running internal experiments on tokenization. The product is obvious. Take a batch like YC W26. Wrap a small pro-rata position from every company in the batch into a single token or closed-end fund. Sell that token to a global audience.

A buyer who knows nothing about any individual W26 startup could still want exposure to "YC W26" as an index. The accelerator brand does the credit work. The token does the access. The basket diversifies the risk that any single company in the batch fails.

This is the kind of product that did not have legal or technical rails until the last twelve months. It does now.

The shape of the next eighteen months

A few honest predictions.

1. The first real volume will come from late-stage perps. Pure price exposure on SpaceX, Anthropic, Stripe, and OpenAI is the easiest product to ship and the easiest demand to fill. Expect order books with real depth before the end of the year.
2. Spot-backed products will lag but matter more. Tokenized SPVs and closed-end fund tokens take longer to set up, but they are the products that actually move private company ownership onto public rails. These are the ones that change the market structure, not just the trading layer.
3. Accelerator and emerging-manager baskets will be the surprise. A tokenized basket of an accelerator batch, or of an emerging fund manager's portfolio, gives retail a way to buy diversified venture exposure for the first time.
4. Most early products will fail in interesting ways. The legal structures will be wrong. The price feeds will be gamed. Founders will push back. That is normal. The wave that learns from those failures is the one that scales.

What it means for retail

For most of the last twenty years, the answer to "how does a normal person get exposure to the next Stripe" has been "you don't." Tokenized startups are the most credible attempt yet to change that answer.

The technology is no longer the bottleneck. The remaining work is legal, structural, and political. Founders, regulators, accelerators, and the SPV and fund stacks all need to converge on a small set of designs that actually work. That convergence is what the next eighteen months will be about.

If you want to see how this shapes up, the Legion blog covers this beat regularly. Three pieces worth reading next:

• The 14-Year IPO for the data on why this market exists at all.
• What Is an SPV? for the legal vehicle that most tokenized startup products will be built on top of.
• Private Markets Liquidity for the secondary market context.

More research on tokenized startups is incoming. Stay tuned.