Can tokenized pre-IPO stocks break down barriers in the private equity market?
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Can tokenized pre-IPO stocks break down barriers in the private equity market?
Through case studies of Ventuals, Jarsy, and PreStocks, explore how tokenization lowers investment barriers in the Pre-IPO equity market.
Navigating Web3 tides with focused insightsWritten by: Tiger Research
Translated by: AididiaoJP, Foresight News
Summary
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Although private equity markets offer high returns, they remain largely accessible only to institutional investors and high-net-worth individuals, leaving ordinary investors excluded.
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Tokenization can address limitations in liquidity, accessibility, and convenience within traditional financial systems, but still faces significant legal and technical barriers.
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Projects like Ventuals, Jarsy, and PreStocks are exploring different approaches to tokenized private equity. While these efforts are still in early stages, they have already shown potential in reducing structural market barriers.
Private equity is highly attractive, but inaccessible to ordinary investors
How can the average person invest in SpaceX or OpenAI? As private companies, they are out of reach for most investors. Ordinary investors have virtually no opportunity to participate, as investment access typically only emerges after a company goes public.
The core issue lies in the exclusion of retail investors from the substantial returns generated in private markets. Over the past 25 years, private markets have created approximately three times more value than public markets.
This structural barrier stems from two key factors. First, fundraising by private companies is highly sensitive, and transactions are usually offered only to well-known institutional investors regardless of other investors’ qualifications. Second, the growth of private capital markets has given companies more funding options—many now can raise billions without going public.
OpenAI exemplifies both dynamics. In October 2024, it raised $6.6 billion from major investors including Thrive Capital, Microsoft, Nvidia, and SoftBank. By March 2025, it secured another $40 billion in a funding round led by SoftBank and joined by Microsoft, Coatue, and Altimeter—making it the largest private financing round in history.
This phenomenon reveals a reality: only a select group of institutional investors can access private markets, while mature private capital infrastructure provides these companies with alternatives to going public.
As a result, today’s investment landscape is becoming increasingly closed off, exacerbating inequality in access to high-growth opportunities.
Equal access: Can tokenization overcome structural barriers?
Can tokenization truly resolve structural inequalities in private equity markets?
On the surface, the model is appealing: real-world assets are converted into digital tokens, enabling fractional ownership and enabling 24/7 trading on global markets. But fundamentally, tokenization merely repackages existing assets such as pre-IPO shares into a new form. Traditional finance already offers solutions to improve access.
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 shares within existing regulatory frameworks.
So what makes tokenization unique?
The key lies in market structure. Traditional platforms use peer-to-peer (P2P) matching models, where buyers must wait for sellers to list offers. Without a counterparty, trades cannot be executed. This model suffers from low liquidity, limited price discovery, and unpredictable execution times.
Tokenization holds promise in addressing these structural constraints. If tokenized assets are listed on centralized exchanges (CEX) or decentralized exchanges (DEX), liquidity pools or market makers can provide continuous counterparties, improving execution efficiency and pricing accuracy. Beyond reducing friction, this approach could redefine market architecture.
Moreover, tokenization enables functionalities unsupported by traditional financial systems. Smart contracts can automate dividend distributions, execute conditional trades, or enable programmable governance rights. These features open the door to new financial instruments designed with flexibility and transparency built-in.
Projects attempting to tokenize pre-IPO equity
Ventuals
Source: Ventuals
Ventuals employs a perpetual contract structure. Its main advantage is enabling derivative trading without holding the underlying asset. This allows the platform to rapidly list numerous pre-IPO stocks while bypassing standard regulatory requirements such as KYC or accredited investor verification.
The perpetual contracts are implemented using Hyperliquid’s HIP-3 standard. However, this standard currently runs only on testnet, and Ventuals remains in pre-release stage.
Its pricing model is also unconventional—the token price is not based on stock prices or actual market trades, but calculated by dividing the company’s total valuation by one billion. For example, if OpenAI is valued at $35 billion, then 1 vOAI token is priced at $35.
This low-barrier model introduces structural challenges, the most prominent being oracle dependency. Valuation data for private companies is inherently opaque and infrequently updated. Derivatives based on such incomplete information may worsen information asymmetry in the market.
Jarsy
Source: Jarsy
Jarsy uses a 1:1 asset-backed tokenization model. Its core mechanism involves directly acquiring pre-IPO shares and issuing one token per share held. For instance, if Jarsy holds 1,000 shares of SpaceX stock, it mints 1,000 JSPAX tokens. Although investors do not directly own the underlying shares, they enjoy all associated economic rights, including dividends and price appreciation.
Source: Jarsy
This model relies on Jarsy’s role as an asset management entity. The platform first tests investor demand through token presales, then uses the raised funds to purchase actual shares. If purchases succeed, presale tokens convert into official tokens; otherwise, funds are refunded. All assets are held via special purpose vehicles (SPVs), with real-time verification provided through proof-of-reserves pages.
The platform significantly lowers investment thresholds, with minimum investments as low as $10. For non-U.S. investors, there are no qualification requirements, greatly expanding global accessibility. All transaction records and asset holdings are stored on-chain, ensuring auditability and transparency.
However, this model faces structural limitations. The most pressing issue is liquidity, stemming from the platform’s limited asset holdings per company. For example, Jarsy’s current holdings in X.AI, Circle, and SpaceX are worth approximately $350,000, $490,000, and $670,000 respectively. In such low-liquidity markets, even small sell orders from large holders can trigger significant price swings. Given that private equity is inherently opaque and illiquid, price discovery is especially difficult, further amplifying volatility.
Additionally, while the asset-backed model offers stability, it limits scalability. Each new token issuance requires purchasing actual shares—a process involving negotiations, regulatory coordination, and potential procurement delays—hindering the platform’s ability to respond quickly to shifting market trends.
Nonetheless, Jarsy is still in its early phase, having launched just over a year ago. As its user base and assets under management (AUM) grow, liquidity issues may gradually ease. With expansion, broader coverage and deeper pools of tokenized equity could naturally form more stable and efficient markets.
PreStocks
Source: PreStock
PreStocks adopts a model similar to Jarsy—purchasing private company shares and issuing 1:1 backed tokens. The platform currently supports trading of 22 pre-IPO stocks and has opened its product to the public.
PreStocks is built on the Solana blockchain and enables trading through integrations with Jupiter and Meteora. It offers 24/7 trading and instant settlement with no management fees. There is no minimum investment requirement—anyone with a Solana-compatible wallet can participate, further lowering entry barriers.
However, the platform has certain restrictions: users from the U.S. and other major jurisdictions cannot access it. Although all tokens are claimed to be fully collateralized by underlying shares, PreStocks has not yet published detailed asset verification documents. The team states it will release external audit reports regularly and offer paid individual verification services upon request.
Compared to Jarsy, PreStocks has tighter integration with decentralized exchanges (DEX), potentially supporting broader secondary use cases such as token lending. Within the Solana ecosystem, tokenized public stocks (such as xStock) are already actively used, and PreStocks may benefit from ecosystem-level synergies.
Unresolved obstacles in pre-IPO stock tokenization
A tokenized stock market is beginning to take shape. While platforms like Ventuals, Jarsy, and PreStocks show early momentum, significant structural challenges remain.
First, regulatory uncertainty is the most fundamental barrier. Most jurisdictions still lack clear legal frameworks for tokenized securities. As a result, many platforms operate in regulatory gray areas, leveraging jurisdictional arbitrage without direct compliance.
Second, resistance from private companies remains a key obstacle. In June 2025, Robinhood announced a new service for EU customers offering tokenized exposure to companies like OpenAI and SpaceX. OpenAI immediately objected publicly, stating: “These tokens do not represent equity in OpenAI, and we have no partnership with Robinhood.” This response highlights how private companies are unwilling to relinquish control over their capital structures and investor management—core functions they guard closely.
Third, technological and operational complexity cannot be ignored. Maintaining reliable links between real-world assets and tokens, handling cross-border compliance, managing tax implications, and executing shareholder rights are all non-trivial challenges. These issues could severely limit user experience and scalability.
Despite these constraints, market participants continue actively seeking solutions. For example, Robinhood has indicated plans to expand its tokenized offerings to thousands of assets by year-end, despite facing hurdles in public markets. Platforms like Ventuals, Jarsy, and PreStocks also continue advancing through differentiated approaches to tokenized equity access.
In short, tokenization offers a promising path toward improving access to private equity markets, but the field remains in its infancy. Current limitations are real, but history in crypto shows that technological breakthroughs and rapid market adaptation can—and often do—redefine what’s possible.
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