We all dream about discovering the “next Facebook” or “next Google.” Imagine you invested $10,000 in Amazon when it first went public in 1997. How much is your investment going to be worth today? Over $13,620,000! That’s right, millions of dollars in return. Now, imagine you had invested in big tech companies like Apple, Google, Facebook before they were publicly traded. We’re probably talking of billions of dollars return on investment.
Pre-IPO investing involves buying into a company directly before its shares become available to the general public on the stock exchange. On the other hand, IPO investing is about buying shares when the stock first goes public. For tech startup companies, pre-IPO shares are one of the ways startup companies raise funds and offset the risk in case the IPO does not turn out to be as successful as hoped.
Unlike in the past, today companies are staying private longer than ever before and achieving incredible growth, growth that would traditionally benefit all in a public market.
For many years, government regulators and federal securities laws typically limit the purchase of private shares in private unicorns – a growing $2.5 trillion asset class – to individual investors with a net worth of more than $1 million or annual income above $200,000. As such, only institutions, insiders, and country’s wealthiest investors had the access to the best private market deals and and everyday investors are left out. Additionally, over the last two years, pre-IPO investors have experienced tremendous returns. The everyday investor, however, has no option but to wait until after the IPO.
The early growth once available to everyday investors in transformative tech companies like Amazon and Google, which went public at earlier stages in their growth, is today beyond reach. “When it comes to the private markets, the opportunity to invest is only legally available for institutional and accredited investors — the wealthiest 1% of the global population,” said Sohail Prasad, Founder and CEO of D/XYZ. “This is the opposite of equal opportunity and we want to change that.”
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Now, one venture capital firm wants to change that and level the playing field and give public access to pre-IPO private technology companies. The founders of Forge Global Inc., an online marketplace for buying and selling shares of private firms, announced yesterday the launch of D/XYZ (pronounced Destiny), a new company that gives public access to in technology startups before they go public. The idea behind D/XYZ is to enable any investor — not just the top 1 percent — to invest in promising and high-growth startups.
The goal of D/XYZ is to expand upon the founders’ vision of opening access to the private market for all. The founders said D/XYZ will create a family of exchange-traded products that once publicly listed, will enable anyone with a brokerage account — regardless of net worth — to invest in portfolios of private technology companies.
In conjunction with the launch, the company also announced it has closed a $100M fundraise to enable the launch of its first product, the Destiny Tech100. The Destiny Tech100 will be a portfolio of the top 100 venture-backed private technology companies — providing everyday investors access to these private market leaders for the first time. Early backers of the Destiny Tech100 include the founders of Dropbox and Coinbase; current and former Partners at Sequoia Capital, Greylock Partners, and Y Combinator; and cultural icons such as Nas, Keisuke Honda, and Heather Hasson.
“I am aligned with D/XYZ’s belief that access to the innovation economy is important for more than just financial reasons,” said Heather Hasson, Co-Founder and Co-CEO of FIGS. “As a society, we must make innovation accessible to all because providing a stake in the future is the first step in inspiring the next generation to take ownership of it.”
Just as SPY is an exchange listed portfolio of 500 of the largest publicly traded companies (S&P 500), and QQQ is an exchange traded fund of 100 of the largest non-financial companies listed on Nasdaq (Nasdaq 100), the Destiny Tech100 is intended to provide sophisticated, diversified, and liquid exposure to 100 of the top venture-backed technology companies, breaking down barriers that limit private market access.
Before founding D/XYZ, at twenty years old, Sohail Prasad and Samvit Ramadurgam founded Forge in 2014 to create an accessible, liquid, and transparent private market. Forge now transacts billions of dollars in pre-IPO stock annually and is projected to have over $120M of revenue in 2021. Forge recently announced that it will be going public in a $2B merger with special-purpose acquisition company Motive Capital Corp, becoming the first dedicated trading platform for private shares to become a public company.