Tokenized Equity is Disrupting the One-Stop Financing Business of VCs

Understanding the changes in the primary market venture capital paradigm through the listing practices of Securitize.

Written by: Prathik Desai

Compiled by: Saoirse, Foresight News

Want to sell me a product? Don’t give me a long-winded introduction about its features; first, prove that you are using it yourself. Amazon builds its business on AWS, and all the products sold on its platform run on the same servers that are open to competitors. If a company is not willing to use its own product, how can it convince customers to buy it?

Securitize’s main business is providing asset tokenization infrastructure, aiming to help public companies, private equity funds, and asset management institutions put various securities on the blockchain. To demonstrate the value of tokenizing stocks, the best example is undoubtedly to first tokenize its own stock, which is exactly what Securitize has done.

On July 2, 2026, Carlos Domingo, co-founder and CEO of Securitize, rang the bell at the New York Stock Exchange, completing the company’s listing. On the morning of the listing, the company’s stock was simultaneously launched in token form on the Solana and Avalanche public chains. This is not a derivative packaging model; rather, the ownership of equity is directly registered on the blockchain, independent of traditional centralized registration institutions. On the first day of listing, approximately $270 million worth of common stock was registered on-chain.

By choosing to advance stock tokenization simultaneously with its listing, the company is bound to attract regulatory scrutiny. Most newly listed companies would deliberately avoid such risks, but Securitize actively chooses to face regulatory scrutiny.

This raises a thought-provoking question: If public companies can issue tokenized stocks at the time of listing, why can’t private startups replicate this model during their Series A financing stage?

This article will explore how tokenized stocks will fundamentally reconstruct the service system that venture capital institutions provide to startups based on a bundled Term Sheet.

What Exactly Does a Term Sheet Include?

Founders seeking venture capital (VC) investment are not just looking for funding. Whenever a VC signs a Term Sheet, it essentially commits to providing a package of bundled services.

• First, financial support. VCs commit to investing capital to help companies grow from zero to one.
• Second, valuation pricing. All private companies need valuation, and in the private market, this work is usually led by the lead investor.
• Third, value endorsement (Curation). Having a well-known institution on the shareholder list sends a signal to the market that the target is worth investing in, helping the company attract subsequent investors, business clients, and top talent.

VCs can also leverage industry connections to connect companies with corporate clients, experienced technical talent, and core industry resources. In some cases, VCs may also provide implicit commitments for follow-up investments: as the company continues to grow, they will follow up with additional investments. Finally, and crucially, the Term Sheet includes corporate governance clauses. As part of the investment transaction consideration, VCs typically obtain board seats, information rights, protective clauses, and the power to set restrictions on equity transfers.

This entire package is the complete service package that VCs sell to startups in a round of financing.

The reason this bundling model can exist long-term is that private equity has long been closed to ordinary investors. Ordinary individual investors who want to trade private shares and participate in price formation heavily rely on the cooperation of companies.

This image illustrates that the traditional Series A investment Term Sheet belongs to a bundling model: a Term Sheet provides a complete package of six categories of services—funding, pricing, value endorsement, industry resources, follow-up investments, and corporate governance—all at once, and founders cannot choose them separately.

Last month, I explained how blockchain infrastructure can split the functions of banks in IPO underwriting. Now, similar technologies supporting stock tokenization further reveal that VCs no longer monopolize the valuation pricing power of private companies.

However, there is a key prerequisite constraint here.

When Securitize advanced stock tokenization, it was already a mature company operating for ten years, with audited financial statements and publicly disclosable cash flows. The platform has tokenized assets exceeding $4 billion, and the market has sufficient information for valuation. In contrast, an A-round startup can only be judged based on the founder’s resume, personal reputation, and business concept. While both types of underlying assets are equity, the core basis for supporting valuation is entirely different.

This precisely reflects the core significance of value endorsement in the Term Sheet. For A-round projects, the value of VCs is not just their names appearing on the shareholder list; it is also about completing credit endorsement for companies lacking publicly available operational data. Late-stage companies like SpaceX and OpenAI are more likely to achieve stock tokenization, as their operational characteristics are close to those of public companies. Even before officially listing, secondary trading markets, tender offers, perpetual contracts, and broker research reports have already formed price references.

Although the difficulty of implementing stock tokenization for early-stage companies is higher due to the lack of sufficient data for fair pricing, this does not prevent the unbundling of VC’s service package.

The Wave of Service Unbundling is Coming

Securitize is not the first company in the U.S. to bring listed stocks onto the blockchain. In 2021, Exodus completed a practice on Algorand, and digital asset and data center company Galaxy Digital also issued on-chain equity. However, Securitize achieved an industry breakthrough, becoming the first company to issue native on-chain equity on the same day as its listing.

Tokens traded on the Solana and Avalanche chains have the same legal effect as stocks circulating on the New York Stock Exchange. Each token enjoys equal voting rights, dividend rights, and rights to residual assets; they are neither purely price-tracking synthetic derivatives nor revenue certificates held by offshore special purpose vehicles (SPVs). Securitize’s tokenized common stock is completely equivalent to the off-chain native stock SECZ rights.

Investors often confuse the ownership nature of various on-chain stocks in the market. Vaidik, in the article “Who Really Owns Your U.S. Stocks? 83% of Stocks in the Market Nominally Belong to This Institution,” outlines two main types of “stock tokens”: one type is natively issued by the issuer (e.g., SECZ, Exodus), where the token itself represents equity; the other type belongs to a custodial packaging model, such as xStocks and Robinhood stock tokens, where the SPV holds the real shares, and investors only have the right to claim profits. Only the first type of token carries complete shareholder rights, which is the foundation upon which the entire venture capital business model is built.

Once equity can be continuously priced and freely transferred, the various services originally bundled in the Term Sheet no longer need to be sold as a package; all types of needs can find independent solutions that are more cost-effective and efficient.

For mature companies with a valuation basis, fundraising and valuation pricing will gradually be taken over by the market: fair prices will be formed by the market, and capital will flow with the prices. Currently, the total value of tokenized equity locked by Ondo Global Markets has exceeded $1 billion; on the Hyperliquid platform, the pre-IPO perpetual contract price of Cerebras has only a 1.3% deviation from its Nasdaq opening price.

Project endorsements and networking resources still need to be anchored by investors, but lead investment and brand credibility no longer have to rely on the complete systems of large institutions like Sequoia and a16z. Elad Gil has established a single-person fund of about $1.5 billion, which can complete leading investments and provide brand endorsements solely based on personal and rolling funds.

Specialized service providers are taking on various supporting needs: Fairmint and Pulley are responsible for equity ledger management; Coinbase acquired LiquiFi in July 2025 to layout the token exercise track; Echo, acquired in October 2025, focuses on financing tools; Magna and Sablier handle installment exercise business. Founders in 2026 can independently combine a full set of tools to achieve backend capabilities that could only be purchased in a package from VCs in the past.

Corporate governance is moving towards programmability. Fairmint’s architecture supports a continuous fundraising model similar to SAFE (Simple Agreement for Future Equity), allowing for automatic completion of equity conversion according to preset rules; the exercise lock-up period and cash-out rules are enforced by smart contracts, no longer relying solely on lawyers to draft written documents.

In the era of tokenized equity, the investment term sheet achieves service unbundling: the six functions originally encompassed by a single Series A Term Sheet are split, with funding and valuation handled by the market, credit endorsement and networking provided by anchored investors, and equity operations and corporate governance managed by specialized technical service providers, allowing founders to purchase each service separately as needed.

Secondary liquidity channels continue to expand, giving internal employees and early investors of companies more exit options. Employees and angel investors of tokenized private companies no longer have to wait long for an IPO to reduce their holdings and realize cash.

Continuous liquidity is a profound change brought about by trading tokenized stocks. Liquidity fundamentally reshapes how founders and employees view equity. When shares can be traded at any time, the interests behind the exercise lock-up period and cash-out window change accordingly. In the past, employees often had to wait four years for an opportunity to participate in a tender offer; now they can connect with the secondary market at any time. However, the new model also has its pros and cons.

Similar cases have already emerged in the crypto industry: governance tokens of layer-two networks like Arbitrum ARB and Optimism OP can be traded as soon as they go live, and after the exercise period, the team’s tokens are sold off in bulk, decoupling the token price from the actual operation of the network, forcing founders to spend a lot of energy monitoring prices and distracting from product development.

Of course, this analogy has its limitations: ARB and OP are governance tokens, not corporate equity, and their prices reflect more of the ecosystem's activity rather than company performance. However, the conflicts in incentive mechanisms exposed are highly similar. Reg D 506 (c) accredited investor access, Rule 144 lock-up requirements, and multi-year lock-up agreements can mitigate concentrated selling phenomena but cannot eliminate the problem at its root. Tokenized equity opens up new exit channels for internal holders, breaking the traditional mechanism of the private market relying on time to smooth out cash-out pressures.

However, the follow-up additional investment that founders generally value most is still the segment of the entire VC service package that does not yet have a mature tokenized alternative.

The reason is that all existing regulatory frameworks— including the SEC-approved DTCC pilot, Nasdaq’s token trading system, and the related business that DTCC will launch in October—are all aimed at publicly listed companies like Russell 1000 constituents. Currently, there are no compliant channels supporting the tokenized equity of A-round startups to be publicly traded on these platforms.

What Core Values Will Remain in the Hands of VCs?

With the arrival of the streaming media era, the music distribution segment has been completely commoditized, but record companies have not disappeared. Anyone can upload songs on Spotify; what cannot be commoditized is the A&R artist discovery business: selecting creators worth investing in, building artist brands, and connecting industry resources that cannot be reached solely through data. Record companies that have completed their transformation ultimately evolve into institutions that conduct value judgments based on data. The originally integrated business is split among various service providers, while record companies retain the scarce value judgment segment.

The venture capital industry is likely to replicate this evolutionary path. Tokenized stocks will gradually take over all procedural matters in the Term Sheet: ownership registration, price discovery, share transfers, and scheduled unlocking of exercises. The efficiency of blockchain in handling standardized processes far exceeds that of paper Term Sheets.

What will always be scarce are investors who can facilitate the next round of financing, persuade major clients to switch suppliers, and attract seasoned talent to leave large companies and join startups solely based on their reputation. Token technology cannot replace founders in completing commercial value endorsements.

However, any wave of service unbundling will ultimately usher in a new round of integration, and the integrators are often emerging participants. The 1986 London financial Big Bang split brokerage and market-making businesses, and within a decade, universal banks re-integrated various segmented businesses.

After the introduction of electronic trading in the London “Big Bang” reform, the trading floor of the London Stock Exchange lost its necessity. Source: Getty Images, BBC

For decades, founders have actively approached VCs because only here can they obtain a one-stop solution for funding, valuation, project endorsement, and governance support. Tokenized equity is like a long corridor with multiple independent doors: one connects to funding, another provides pricing, and another addresses governance needs. Founders still need all services but no longer have to procure them from the same institution.

This fundamentally changes the early decision-making logic of entrepreneurs. Founders are no longer forced to struggle with “which fund to let into the shareholder list to solve all development problems at once,” but rather gain the autonomy to choose: which businesses to operate through market mechanisms and which segments to rely on trusted individuals’ subjective judgment.

The standardized processes in the Term Sheet will be the first to complete tokenization; these types of businesses are easiest for the market to take over; the value judgment segment will be the last to be digitized, and may even never be digitized, as the market will always need humans to provide this service. An A-round startup may be able to achieve equity on-chain in the future, but it will still need someone to make the judgment: is this equity worth pushing to the market?

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