Ondo Moves Into Pre-IPO Markets With Tokenized Notes Linked…

Ondo Finance is expanding from tokenized public securities and Treasurys into private markets, launching a platform that gives eligible non-U.S. investors economic exposure to individual private companies through transferable blockchain-based notes. Ondo Private Markets will initially offer a tokenized note referencing an unnamed pre-IPO artificial intelligence company, with secondary-market trading expected to begin this week. Ondo plans to add exposure to companies across robotics, cybersecurity, biotech, infrastructure, defense, energy and space. The structure is important: investors are not buying shares in the referenced private company. Each token represents an obligation of the note issuer, with its eventual payout linked to the per-share value realized on the referenced company's common stock at a qualifying liquidity event. Holders receive no ownership, voting or other shareholder rights in the underlying business. How Do Ondo's Private-Market Tokens Work? The notes are designed to turn exposure that would normally remain locked inside private-market structures into an asset that can move between eligible investors onchain. Ondo says holders can keep the tokens in self-custody wallets and trade them around the clock on secondary markets rather than waiting for the underlying company to complete an IPO or another liquidity event. The distinction between economic exposure and ownership creates a different risk profile from directly holding private-company shares. An investor's claim is against the issuer of the note, while the payout mechanism references the value eventually realized on the target company's shares. That makes the legal structure, issuer creditworthiness, valuation methodology and definition of a qualifying liquidity event particularly important. Secondary-market prices could also diverge from the latest implied valuation of the private company because there is no continuously traded underlying stock providing an observable reference price. The approach resembles a wider industry effort to make private-market exposure more tradable. FinanceFeeds previously reported that Citigroup was developing blockchain-based access to private-company shares, initially for foreign investors, as financial institutions look for ways to bring an historically illiquid asset class onto digital infrastructure. Investor Takeaway The token should not be analyzed as if it were conventional private-company equity. Investors gain economic exposure through a note issued by another entity, adding issuer and structural risk alongside the valuation risk of the referenced company. Does 24/7 Trading Solve Private Markets' Liquidity Problem? Ondo is targeting one of the main constraints of private investing: investors can often enter a company years before an IPO but have limited opportunities to exit. The company argues that transferable tokens can create a secondary market where eligible holders adjust positions without waiting for the reference company itself to go public. Blockchain transferability, however, does not guarantee deep liquidity.