Ondo Finance is effectively trying to turn the venture capital asset class into a liquid, 24/7 tradable token. It is a bold attempt to bring the most illiquid corner of the market-private company shares-onto the blockchain. But beneath the hood, the engine has been swapped out. While Ondo built its reputation on tokenized public equities that are fully collateralized by actual securities held at a broker-dealer, its new Ondo Private Markets product operates on a fundamentally different, and significantly riskier, structural premise.
The core thesis here is that tokenization is finally reaching the venture layer. As Ian De Bode, Acting CEO and President of Ondo Finance, noted, “In the US, the majority of the investment options accessible for retail are public companies, yet 87% of companies with over $100m in revenue are private. That’s where many of the leaders defining the next era of our economy are emerging, and retail investors can’t access them today.”
It is a compelling pitch, but the execution requires a careful look at the fine print. These tokens are not equity. They do not grant you voting rights, dividends, or any seat at the table of the underlying company. Instead, they are tokenized notes that provide economic exposure linked to the per-share value of the referenced company’s common shares at a qualifying liquidity event, such as an IPO or acquisition. If you are looking for a piece of the next AI unicorn, you are not buying a piece of the company; you are buying a contract that promises to pay out if and when the company exits.
This brings us to the structural shift. Ondo’s existing tokenized public stocks, which command approximately 70% market share of tokenized equity issuers and have surpassed $1B in TVL, are fully backed by underlying US securities. These new private market notes, however, are unsecured contractual obligations of Ondo Global Markets (BVI) Limited, a bankruptcy-remote special-purpose vehicle. The issuer is the SPV, not the private company itself. Holders are essentially betting on the creditworthiness of that BVI entity and its ability to honor the payout, rather than holding a direct claim on the underlying asset. It is a leap from collateralized ownership to issuer credit risk.
The first asset out of the gate is a note referencing an unnamed AI company. For a product marketed as institutional-grade infrastructure, the lack of transparency regarding the underlying asset is a notable gap. It forces investors to rely on the issuer’s selection process rather than their own due diligence. This tension echoes findings from Chronicle Labs, which previously highlighted that a significant portion of top tokenized assets rely on trust rather than proof. When you move into private markets, where information is already asymmetric, this trust requirement becomes even more pronounced.
The competitive landscape for private secondary markets is already crowded. Platforms like Hiive and EquityZen have spent years building models for accredited investors to trade private shares. Hiive, which reached a $650M valuation in late 2025, offers an open order book with live bid/ask prices, while EquityZen, now a Morgan Stanley subsidiary, utilizes a deal-based model. Both platforms, however, carry Right of First Refusal (ROFR) execution risk, which can complicate or delay trades. Ondo’s play is to bypass these traditional friction points by making the notes freely transferable and composable onchain, allowing them to function as productive capital within the broader DeFi ecosystem.
Yet, the regulatory perimeter remains a hard wall. These tokens are offered under SEC Regulation S, meaning they are strictly for eligible non-US persons. US retail investors, who are the primary target of the “democratizing access” narrative, are explicitly prohibited from subscribing, acquiring, or redeeming these tokens. This creates a strange irony: the product is designed to solve a problem of access for retail, but the regulatory reality of the private market forces it to remain an offshore-only instrument.
Ultimately, Ondo is testing whether the efficiency of onchain settlement can outweigh the structural risks of unsecured notes. The broader RWA market, as tracked by rwa.xyz and now valued at nearly $39B, is clearly hungry for yield and exposure. But as the industry moves from the relatively safe harbor of tokenized Treasuries and public equities into the opaque world of private company notes, the definition of “institutional-grade” is being stretched. Investors are no longer just betting on the underlying company; they are betting on the legal and financial integrity of a BVI-based SPV. It is a shift from the certainty of collateral to the complexity of contract, and for the crypto-native audience, that is a distinction that matters.
