Ondo Finance launched Ondo Private Markets on Oct. 6, offering investors exposure to private companies through tokenized notes. Its first product is tied to an unnamed pre-IPO AI company, and the token is expected to begin trading on the secondary market this week, according to the company’s announcement.
First product tracks an undisclosed pre-IPO AI company
Ondo has previously focused on tokenized equities and U.S. Treasury products. With Ondo Private Markets, it is moving into private-company exposure. The first token references a pre-IPO AI company, though the press release did not identify the firm.
Ondo said the instrument is a tokenized note. The notes are debt obligations of the issuer, not shares of the company they reference. Holders do not receive ownership rights or shareholder rights, and they have no right to hold or obtain the underlying asset.
Access limited to qualified investors in permitted jurisdictions
The product is available only to qualified investors in what Ondo described as permitted jurisdictions. The tokens have not been registered under the U.S. Securities Act of 1933, so U.S. persons may not subscribe for, acquire, or redeem them. The same restriction applies to anyone placing orders from within the United States.
The disclaimer at the start of the release also states that the offering is for non-U.S. persons only. That stands in contrast to comments in the release about the limited investment options available to U.S. retail investors, because U.S. investors are not eligible for this product under the stated terms.
Redemption linked to value realized in a liquidity event
Ondo said the payout on each note is linked to the per-share value of the referenced company’s common stock at the time of a qualifying liquidity event. A liquidity event refers to a point at which shareholders can monetize their holdings, such as an initial public offering. The release did not specify which events count as qualifying liquidity events.
The company’s disclaimer also says acquiring the tokens involves risk and that holders could lose money, including the full amount paid to buy in.
Ondo says the tokens can move onchain and be used in DeFi
According to Ondo, the tokens will be freely transferable and can be combined with other onchain protocols. Holders will be able to move them into DeFi, or decentralized finance, and use them as productive capital.
Ondo also said the tokens will trade on a permissionless, around-the-clock secondary market. Qualified investors, it said, will be able to enter, exit, or adjust positions without waiting for an IPO to realize value.
Company targets the long exit cycle in private markets
Ondo said that 87% of U.S. companies with more than $100 million in annual revenue are not publicly listed, which it framed as nearly nine out of every 10 such companies remaining outside public equity markets. The release did not provide a source for that figure.
Ondo argued that access to leading startup investments is still concentrated among institutions and venture capital firms, and that even investors who do get in may need to wait years before they can exit.
Ian De Bode, Ondo’s acting CEO and president, said in the release: 「In the U.S., most of the investment options available to retail investors are public companies, but 87% of companies with more than $100 million in revenue are private. Many of the companies defining the next economic era are emerging from this group, yet retail investors cannot invest in them today. Ondo Private Markets is built to change that. It uses permissionless onchain infrastructure to offer 24/7 trading and bring tokenized exposure to the world’s leading companies.」
Built on the same infrastructure as Ondo’s existing platforms
Ondo said Private Markets uses the same infrastructure that supports its tokenized equities and U.S. Treasuries platforms. Those two existing platforms account for about $3.7 billion in total value locked and more than 1 million holders combined, according to the release.
Those figures apply to Ondo’s existing equities and Treasury products, not to Private Markets itself. The new product has not started trading yet and does not have standalone scale metrics at this stage.
More sectors are planned after the AI-linked launch
Ondo said it plans to add exposure to companies in robotics, cybersecurity, biotech, and infrastructure after the initial AI-linked product.
Full token terms, subscription agreements, and risk disclosures will be provided to qualified clients before subscription. If those issuance documents differ from the summary in the press release, Ondo said the issuance materials will control.