New Marketplace Completes Securitize’s End-to-End Platform to Ease the Investing and Trading of Alternative Assets, with a Goal to Increase Overall Liquidity of the Private Markets
Securitize, Inc. has announced the launch of a fundamentally better way for investors to access the private capital markets. Largely inaccessible behind highly fragmented websites and antiquated paper processes, alternative assets in the private markets have remained stubbornly illiquid and closed off to most investors. Open today, Securitize Markets provides investors access to invest in and trade a broad range of alternative assets, including private company equity, real estate and funds, within a single regulated digital marketplace.
All investments on Securitize Markets are tokenized as Digital Asset Securities (also commonly referred to as “security tokens”), which bring a host of benefits over traditional paper securities, including virtually instantaneous settlement minimizing counterparty risk, greater efficiency with fewer intermediaries, and the opportunity for fractional ownership.
At least nine offerings are anticipated to be available for secondary trading when, or soon after, the platform launches.
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The new marketplace completes Securitize’s end-to-end solution enabling established private businesses to raise capital, manage shareholders, and provide the potential for liquidity through secondary trading.
The demand for such a marketplace is clear: the private capital markets are growing at more than twice the pace of the traditional public markets, with $11 trillion invested in alternative assets at the end of 2020–a figure expected to nearly double by 2025. Yet private market trading activity is just 1/300th that of the traditional public markets, a result of a lack of modernization and infrastructure, a highly fragmented landscape, and myriad niche secondary market websites with high trading fees.
A primary reason the private markets are expanding: growing companies are staying private longer than before. Gone are the days of Microsoft, Amazon and Oracle, whose early IPOs were seen as opportunities for individual investors to share in unicorn-driven wealth. Today, most of a company’s value is generated long before an IPO, with IPOs increasingly recognized as exit opportunities for founders and early investors. In fact, by the time individual investors are able to participate, approximately 80% of IPOs actually lose value.
“The focus on IPOs is misplaced. Today, wealth is generated by investing in early-stage companies, not mature ones. But most investors have been frozen out of these opportunities, until now. Securitize Markets is intended to give many more investors access to alternative investment opportunities, with an aim at increasing the liquidity of the private markets overall,” said Carlos Domingo, CEO of parent, Securitize, Inc. “Securitize Markets is the final critical component in creating the world’s largest, fully digital, end-to-end, regulatory compliant solution for raising and trading private capital. I am very proud of our team, which developed this vital platform in just eight months.”
“Executive teams at midsize and large start-ups spend an immense amount of time seeking capital from VC firms and banks, reducing their ability to focus on running and scaling their business,” said Scott Harrigan, CEO of Securitize Markets, which is a wholly-owned subsidiary of Securitize, Inc. and operates the alternative trading system. “Securitize allows businesses to fundraise directly from those already most invested in their success: their customers, fans and partners. And with Securitize Markets, their investors no longer have to be on a VIP list, or wait for a long-off IPO to trade, but can do so easily online.”
While the private markets have grown dramatically in recent years, the benefits have largely been enjoyed by a handful of founders, the wealthy, and institutions, with individual investors locked out.
The goal of Securitize Markets is to enable investors, whether individual or institutional, to participate in private capital market opportunities through a fully digital environment, without offline intermediaries, with the expectation that as the marketplace grows alternative assets will become more liquid than they have been in the past.
Securitize Markets was built following Securitize’s November 2020 acquisition of Distributed Technology Markets, with principal development complete by May 2021, and testing and regulatory approvals complete by August 2021.
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