- Ondo Finance has launched Ondo Private Markets, offering tokenized notes tied to private companies and pre-IPO opportunities.
- The product is available only to eligible non-US investors and carries issuer credit risk rather than direct ownership of company shares.
Ondo Finance has launched Ondo Private Markets, a new platform designed to bring exposure to private companies onchain through tokenized pre-IPO notes.
The product targets private-market opportunities that are typically difficult for investors to access or trade. However, the new tokens have a different structure from Ondo’s existing tokenized public equities and are currently available only to eligible non-US persons under Regulation S.
Ondo Private Markets Targets Private Companies
Ondo Finance is expanding its tokenization strategy beyond public stocks and into private markets.
The new product allows investors to gain economic exposure to private companies through tokenized notes. The notes are linked to the per-share value of a company’s common stock during a qualifying liquidity event, such as an IPO or acquisition.
However, investors do not receive actual shares in the underlying company. The tokens do not provide voting rights, dividends or direct ownership. Instead, investors hold contractual claims that can generate a payout if the referenced company experiences a qualifying exit.
The Notes Carry Issuer Credit Risk
The structure of Ondo Private Markets differs significantly from Ondo’s tokenized public equities. Ondo’s existing tokenized stocks are backed by the corresponding securities held with a broker-dealer. The new private-market products are instead unsecured obligations of Ondo Global Markets (BVI) Limited, a bankruptcy-remote special-purpose vehicle.
That means investors are exposed to the ability of the BVI-based entity to meet its obligations. The distinction is important because investors are not holding the underlying private-company shares directly. Their exposure comes through the note issued by the SPV.
First Product References an AI Company
Ondo Finance’s first Private Markets offering provides exposure to an unnamed artificial intelligence company through a tokenized note. The note is tied to the company’s common-share value at a qualifying liquidity event, such as an IPO or acquisition.
However, Ondo has not disclosed the name of the company behind the first product. This limits the amount of information investors can use to assess the underlying business, leaving them more dependent on Ondo’s selection process and valuation.
That lack of transparency matters more in private markets, where financial and operational information is generally less accessible than it is for publicly traded companies.
Ondo Takes On Private-Market Platforms
Ondo is entering a market that already includes established private-share platforms such as Hiive and EquityZen. These platforms have developed secondary-market systems that allow eligible investors to access private-company shares. Traditional private-market transactions can face delays, however, including issues related to right-of-first-refusal provisions.
Ondo is taking a different approach by putting its notes onchain. The company says the notes can be transferred and used within blockchain-based financial applications. This could make private-market exposure more flexible and potentially allow the assets to interact with the wider DeFi ecosystem.
US Investors Are Excluded
Ondo Finance’s push to make private-market exposure more accessible does not extend to US investors. Ondo Private Markets is currently offered only to eligible non-US persons under SEC Regulation S.
This means US retail investors cannot subscribe to, purchase or redeem the tokenized notes. The restriction creates a clear gap between Ondo’s broader goal of expanding access to private companies and the regulatory limits surrounding the product.
For now, investors outside the US are the ones who can access Ondo’s new private-market offering, subject to the platform’s eligibility requirements.
A New Test for Tokenized Private Assets
Ondo Private Markets represents a significant expansion of the company’s tokenization strategy. It moves beyond tokenized Treasuries and public equities into the more complex world of private-company exposure.
The product could benefit from faster settlement and onchain transferability, but its structure also introduces additional risks.
Investors are not simply taking exposure to the referenced private company. They are also taking on the credit risk of the SPV and relying on the legal terms governing the notes.
As tokenization expands into private markets, that distinction will become increasingly important for investors evaluating the risks behind onchain assets.
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