Private markets have a new problem.
For years, the issue was access. The best private companies were locked behind relationship networks, fund allocations, family offices, SPVs, and minimum tickets most investors could never meet.
That problem still exists. But a second problem is becoming more visible. The first wave of products trying to open pre IPO exposure often prices that exposure badly.
Not slightly badly. Structurally badly.
Access is not the same as fair pricing
People want exposure to the next generation of private technology giants. That demand is rational because private markets have become too large to ignore.
Many existing products are static wrappers around scarce assets. They acquire a limited amount of underlying exposure, issue a limited amount of product, and then let secondary market demand set the price.
When demand spikes, the product cannot easily create new supply backed by newly acquired shares. So the wrapper rises above the value of what it represents.
That premium is a scarcity tax.
The scarcity premium loop
A private company can be priced fairly while the product giving access to that company is priced very differently. That gap is the problem.
Across tokenized single name products, listed private tech funds, and static access vehicles, the same pattern keeps appearing.
- Demand enters.
- Supply cannot expand.
- Wrapper price rises.
- Premium to NAV expands.
- Buyers overpay for access.
- The cycle repeats.
Crypto already learned this lesson
Bitcoin went through a similar evolution. Before spot Bitcoin ETFs, early trust products gave investors a way to access Bitcoin through traditional brokerage accounts. But shares could trade above or below the value of the Bitcoin held by the trust.
The ETF model improved this by making supply more adaptive. Creation and redemption mechanisms allow shares to be added or removed as demand changes, helping market price stay closer to underlying value.
The early trust model provided access. The ETF model improved pricing.
Private markets are now at the same point. The first wave of pre IPO products provided access. The next wave needs better pricing architecture.
The Hecto approach
Hecto is building toward a more adaptive pre IPO index structure, not a static wrapper around scarce exposure.
The goal is a model where demand, issuance, underlying acquisition, and NAV alignment can work together. Private shares may be sourced through platforms, SPVs, direct routes, GPs, family offices, banks, or other controlled channels.
Those shares can then be placed into appropriate vehicles, held through custody infrastructure, and represented through receipt logic on Canton where suitable.
The important piece is the flywheel. When demand creates a premium to NAV, qualified participants can help mint. Minting increases supply. Fresh capital can be deployed into additional underlying exposure. Expanded supply helps compress the premium.
A healthy pre IPO market does not just need a token. It needs a mechanism that lets supply respond when demand arrives.
