Despite the fact that SpaceX and other private enterprises now lack a market, they will soon be synthetically traded on ethereum.
PrePO just raised $1.1 million in a seed round led by Apollo Capital, The LAO, Maven 11 Capital, and mStable, Illuvium, Alchemix, dHedge, Zed Run, SocietyOne, and BetaShares founders.
“One of the best uses of a permissionless network is to create public markets for firms or initiatives that do not currently have one. You have a terrific project when you combine that with a team of extremely strong and motivated builders,” Maven 11 Capital’s Mathijs van Esch remarked.
Xavier Ekkel, a software engineer, is leading the project. He previously worked at Cava, a graphics design software that is similar to Adobe but for social media photographs, and Cava is valued at $6 billion.
“Access to pre-public assets should not be limited to a select group of investors. “PrePO will finally provide everyone access – something that can only be accomplished through the power of decentralized finance,” Ekkel explains.
Technically, the design resembles that of Uniswap. Liquidity providers, collateral, and other factors combine to make this a potentially orderless exchange, and the smart contract runs on its own.
Setting the price is the more challenging aspect theoretically. Alex Cowan, a prePO spokesperson, told us:
“Analyst reports determine the base level valuation – prePO then sends upper and lower bands, and traders between these bands enable price discovery – through this speculation, prePO can calculate an estimated asset valuation.
For example, if SpaceX’s newest projected valuation is $75 billion, the pre-IPO market COULD be worth $60 billion to $160 billion,” he emphasizes.
They go on to say that if the market hits the higher end, a new market with a new range might be created, thereby making this price discovery for non-publicly traded businesses like McLaren, Reddit, SpaceX, OpenSea, Zapper, and dYdX.
This hasn’t yet gone live, and it’s unclear what it’ll look like once it’s implemented in hard code, but the idea is that after the company goes public, the prePO price will be set at the firm’s opening price on the first day of trading.
In principle, and maybe in practice, this can allow investors to bet on startups as early as the seed stage, as well as mature companies that will most likely go public at some time, with the investor profiting from the price appreciation that occurs once the company goes public.
“When the asset goes public, you can exit your investment at a final settlement price, which is based on the price at the conclusion of the first day of public trading for stocks or a time-weighted average price for tokens,” they explain.
If the company does not go public by the expiry date, the settlement price is assumed guaranteed by the collateral, with one allowed to exit at the bottom of the range.
So it adds a new dimension because you’re betting not just on valuation but also on whether the company goes public, which makes it potentially interesting for both general investors who can tap into private companies and VC investors who want to directly fund them and receive more information on the public synthetic market for private companies.
That’s because, if a company like SpaceX is undervalued on prePO due to a lack of knowledge or other factors, someone like Elon Musk may remedy the situation by personally engaging, bringing new efficiency to the market.