What if you could invest in a private company’s future value without actually owning its shares?
For years, investing in private companies has been difficult for most investors. Unlike publicly listed stocks, private shares are not freely available on exchanges. Access can depend on eligibility, transfer restrictions, available sellers and the price both parties agree on.
Now, a different approach is emerging. Instead of buying shares directly, investors can purchase financial contracts whose payouts are linked to the future value of a private company.
This is the idea behind a new product from Ondo Finance, which announced private-company notes this week, starting with an unnamed pre-IPO AI company.
The notes are digital tokens that can trade on blockchain networks. Their eventual payouts are linked to the value of the referenced company’s common shares.
At first glance, this may sound like another way to invest in a company before it goes public. But there is an important distinction: exposure to a company’s value is not the same as ownership of the company.
Understanding that difference is essential before looking at what these products could mean for investors and private markets.
How does it work?
When an investor buys shares in a company, they acquire an ownership interest. Depending on the type of shares, that ownership may come with voting rights, dividend entitlements and other shareholder rights.
A private-company note works differently.
The investor buys a contract issued by a separate entity. The contract determines how much the investor may receive when a specified event occurs, based on the value of the referenced company’s shares and the terms of the instrument.
Under the structure described in the source, Ondo’s private-market notes are unsecured contractual obligations of Ondo Global Markets (BVI) Limited.
That means the investor’s claim is against the note issuer, not the private company itself.
The holder does not receive shares, voting rights or dividends from the referenced company.
In simple terms, you are investing in a contract linked to a company’s value, not buying a piece of the company itself.
The distinction matters because the company and the issuer are separate entities with separate obligations.
What triggers a payout?
The payout does not necessarily happen when the company raises its next funding round or completes a private share sale.
According to Ondo’s FAQ, the qualifying events for these notes include:
- Public listing: The company goes public and completes six months of trading.
- Acquisition: Another party acquires majority control of the company.
- Bankruptcy or insolvency: A qualifying financial failure occurs.
- Asset liquidation: Substantially all of the company’s assets are liquidated.
- Ten-year deadline: Ten years pass without an earlier qualifying event.
Ordinary funding rounds, employee share tenders and secondary share sales do not qualify as payout events under the terms described in the source.
The exact payout calculation and settlement process depend on the offering documents.
This creates an important consideration for investors: a company can continue growing, raise more money and attract new investors without triggering a payment under the note.
The timing of the eventual payout is therefore just as important as the company’s valuation.
An investor who expects a quick return may have a very different experience from someone prepared to wait years for a qualifying event.
Why would investors consider this route?
Private companies can attract considerable attention long before they enter the public markets.
Artificial intelligence companies are a clear example. Investors may want exposure to a business well before its shares become available on a public exchange.
However, buying private shares directly can involve restrictions on who can invest, who can sell and how ownership can be transferred.
A contract linked to a company’s value offers a different way to approach that challenge.
There are several reasons investors may find the structure interesting.
1. A different route to private-market exposure
Investors can gain contractual exposure to a company’s future share value without acquiring its shares directly.
2. Potentially more opportunities to trade
The notes may be sold before a qualifying payout event if a buyer is available. This could give holders another way to exit their positions.
However, the ability to trade does not guarantee that a buyer will be available when an investor wants to sell.
3. Access through digital infrastructure
Tokenisation allows the notes to be represented and traded as digital tokens on blockchain networks. This changes how the contracts can be transferred, but it does not change the underlying rights automatically.
4. Exposure to companies before an IPO
For investors interested in private businesses, these products offer another structure to consider. Access is still subject to eligibility requirements, permitted jurisdictions and the terms of the offering.
The product described in the source is available only to eligible non-US investors in permitted jurisdictions.
It is not a universally accessible investment option.
Tokenisation does not mean ownership
This is perhaps the most important point in the entire discussion.
A financial product can be represented by a blockchain token without giving the holder ownership of the company it references.
The token tells you something about how the instrument is represented or transferred. The legal contract tells you what you actually own.
That distinction has become increasingly important as financial products linked to private companies enter the market.
In July 2025, when Robinhood distributed tokens linked to OpenAI in Europe, OpenAI publicly clarified that the tokens were not OpenAI equity and that it had not partnered with or endorsed the offering.
In May 2026, OpenAI also warned about unauthorised transactions involving its equity, with concerns that certain arrangements could violate securities laws or affect the validity of the underlying equity.
These examples highlight why investors need to look beyond a product’s name or the company featured in its marketing.
A token linked to a well-known private company does not automatically mean that the company has issued, approved or guaranteed the product.
Before investing, the key question is not just which company the token references. It is who issued the instrument and what legal claim the investor holds.
The price may tell you more than you think
Imagine a private AI company whose valuation is rising because investors expect strong future growth.
A note linked to that company’s share value might also become more attractive. But its market price will not necessarily move in line with the company’s valuation.
Several factors can influence what buyers are willing to pay.
- Company performance: Expectations about revenue, growth, competition and future profitability can influence the perceived value of the underlying business.
- Timing of a liquidity event: If an IPO or acquisition appears further away, investors may be less willing to pay the same price today.
- Issuer credit risk: The investor depends on the note issuer to meet its contractual payment obligations.
- Market liquidity: The price may be affected by the number of buyers and sellers available to trade the note.
- Contract terms: The events that trigger settlement and the formula used to calculate the payout can affect the instrument’s value.
Consider two investors who are equally optimistic about a company’s future.
One expects a public listing within two years. The other believes it could take seven years.
Even if they agree on the company’s long-term prospects, they may disagree on what a note linked to its future value is worth today.
The investor expecting a longer wait may demand a lower price because their money could remain tied up for longer.
This is why the price of a private-company note cannot automatically be treated as the company’s fair market value.
A falling price does not necessarily mean the business is deteriorating. It could reflect concerns about the issuer, a longer wait for settlement or a lack of buyers.
Likewise, a rising price does not guarantee that the underlying company is becoming more valuable.
What happens if the company performs well but the issuer cannot pay?
This is where the structure introduces a risk that investors should not overlook.
When someone owns shares in a company, their investment is directly tied to their ownership interest in that business.
A noteholder has a different relationship. Their contractual payment depends on the issuer fulfilling its obligations.
Even if the referenced company performs well, the noteholder still depends on the issuer’s ability to pay.
Because the notes described in the source are unsecured obligations, they do not give holders a claim to specific collateral simply by virtue of owning the instrument.
If the issuer faces financial difficulties, investors could face losses or delays even when the underlying company remains successful.
This creates two separate questions for anyone evaluating the product:
How well might the company perform?
And:
Can the issuer honour the contract if the qualifying event occurs?
Both matter, and neither should be ignored in favour of the other.
Why the IPO market matters
The value of these instruments is closely connected to the conditions surrounding private-company exits.
For many investors in private businesses, an IPO or acquisition can provide an opportunity to realise value. However, neither event is guaranteed to happen on a particular schedule.
The source cites data from Benzinga showing that seven sizable US IPOs were postponed or withdrawn in the third quarter of 2026, compared with four in the second quarter and three in the first.
Renaissance Capital also reported that Oura postponed a planned $2.1 billion IPO in which 73% of the shares offered were secondary shares.
These examples illustrate the uncertainty surrounding the timing of public listings.
A company may remain attractive to investors while postponing its IPO because market conditions are unfavourable or the timing is not right.
For a noteholder, a delayed listing could mean waiting longer for a qualifying payout.
The company may continue to develop its products, grow its customer base and attract investment. Yet the contract’s settlement conditions may remain unmet.
A strong company does not automatically translate into a quick exit for an investor holding a note linked to its value.
This is an important distinction for anyone evaluating private-market opportunities based on expectations of an upcoming IPO.
Could these products change private markets?
The broader idea behind these instruments is not entirely new.
Economist Kenneth Arrow explored the concept of contingent claims in work published in 1953 and translated into English in 1964.
A contingent claim is a financial contract whose payout depends on a particular event or the value of an underlying asset.
Options are a familiar example. Their value depends on the price of an underlying asset and the terms of the contract.
Private-company notes apply a related principle to a different setting. Their payouts are linked to the value of a private company’s shares when specified events occur.
The wider significance is that financial exposure can be separated from direct ownership.
In principle, this allows different investors to hold different types of claims associated with the same business.
One investor may own shares. Another may hold a contract linked to the company’s future value. The two investors are exposed to some of the same business developments, but their legal rights, risks and potential outcomes are different.
This could create additional ways for eligible investors to participate in private markets.
It also introduces more financial instruments that need to be understood on their own terms.
More ways to gain exposure do not necessarily mean better pricing, greater transparency or lower risk.
The usefulness of these products will depend on their contractual structure, the quality of the available information, the reliability of the issuer and whether a functioning market develops for the instruments.
What should investors examine before considering a private-company note?
The idea of accessing private-company value without buying shares may sound straightforward. The actual investment decision is not.
Before considering such a product, investors should examine several questions.
1. What exactly am I buying?
Understand whether the instrument represents shares, a claim on an asset or a contractual obligation issued by a separate entity.
2. Who is responsible for paying me?
Identify the issuer and assess the risks associated with relying on that entity to fulfil its obligations.
3. When can I receive a payout?
Read the qualifying-event definitions, settlement conditions and deadlines. Do not assume that a funding round or private share sale will trigger payment.
4. Can I sell before the payout event?
Check whether transfers are permitted and whether there is evidence of sufficient trading activity. The existence of a trading platform does not guarantee liquidity.
5. How is the payout calculated?
Understand the valuation reference, calculation method and contractual terms that determine the amount payable.
6. What information supports the price?
Private-company financial information and secondary-market indications may be incomplete, unaudited or based on limited transactions. They should not automatically be treated as reliable measures of fair value.
7. What happens if something goes wrong?
Review the consequences of issuer insolvency, company bankruptcy, regulatory restrictions and other events that could affect payment or trading.
These questions are not unique to tokenised products. They are basic considerations whenever an investment’s value depends on a contract rather than direct ownership of the underlying asset.
The bigger picture
Private-company investing is gradually developing beyond the traditional choice between buying shares directly and waiting for a company to go public.
Products such as Ondo’s private-market notes introduce another possibility: holding a contract linked to a company’s future value.
That distinction may create additional opportunities for eligible investors, but it also changes the nature of the investment.
The holder does not become a shareholder. They do not acquire voting rights or dividend entitlements. Their outcome depends on the contract, the issuer, the timing of qualifying events and the market for the instrument itself.
For investors, the challenge is to separate the appeal of the underlying company from the risks of the financial product.
A promising company and a well-structured investment are not necessarily the same thing.
As private-market products evolve, understanding the legal claim behind an investment may become just as important as understanding the business behind it.
The real question is not simply whether a private company will become more valuable. It is whether the contract you hold gives you a reliable and clearly defined way to benefit if it does.
Data point of the day
7 sizable US IPOs were postponed or withdrawn in the third quarter of 2026, according to Benzinga’s figures cited in the source. That compares with four in the second quarter and three in the first.
The figures illustrate the uncertainty surrounding IPO timing, although definitions of a sizable IPO may differ across data providers.
Investor glossary: Contingent claim
A contingent claim is a financial contract whose payout depends on a specified event or the value of an underlying asset.
For example, a private-company note may pay an amount determined by the company’s share value when a qualifying event occurs. The contract establishes the conditions and calculation used to determine the payout.
A question for the community
Would you consider investing in a contract linked to a private company’s future value if you did not receive actual shares?
Would the possibility of accessing a company before its IPO interest you, or would the lack of direct ownership and the additional issuer risk make you hesitate?
Share your thoughts in the comments.