From the Securitize listing practice, understand the paradigm shift of venture capital in the primary market.

Written by: Prathik Desai

Translated by: Saoirse, Foresight News

Want to sell me a product? There's no need for long-winded explanations of functions; first, prove that you are using it yourself. Amazon builds its business on AWS, and all products sold on the platform run on the same set of servers that are open to competitors. If a company is unwilling to use its own products, how can it persuade customers to buy?

Securitize's main business is providing infrastructure for asset tokenization, dedicated to promoting publicly listed companies, private equity funds, and asset management institutions to put various securities on the blockchain. To demonstrate the value of stock tokenization in the market, the best example is undoubtedly to first tokenize its own stock, which is exactly what Securitize has done.

On July 2, 2026, Securitize co-founder and CEO Carlos Domingo 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 blockchains. This is not a packaged derivative model but a direct registration of equity ownership on the blockchain, independent of traditional centralized registration institutions. On the first day of listing, common stock worth approximately $270 million completed on-chain registration.

The choice of a company to advance stock tokenization simultaneously with its listing will inevitably attract regulatory scrutiny. The vast majority of newly listed companies would deliberately avoid such risks, but Securitize actively chose to face regulatory examination.

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

This article will explore how tokenized stock will fundamentally reshape the suite of services that venture capital firms rely on a bundled Term Sheet (investment term sheet) to provide to startups.

What does a Term Sheet actually include?

Founders seek venture capital (VC) investment, the appeal is not just to obtain funds. Whenever a VC signs a Term Sheet, it essentially commits to providing a package of bundled services.

• First, funding support. The VC commits to investing capital to help the company achieve growth and expansion from zero to one.
• Second, valuation pricing. All private companies need to be valued, and in the private market, the valuation work is usually led by the lead investor.
• Third, value endorsement (Curation). A well-known institution appearing on the shareholder registry conveys a signal to the market that the target is worth investing in, helping the company attract subsequent investors, commercial clients, and top talent.

VCs can also leverage industry connections to link companies with corporate clients, experienced technical talent, and core industry resources. In some cases, VCs may also attach implicit commitments for follow-on investments: continuing to invest as the company develops. Finally, and crucially, the Term Sheet comes with corporate governance provisions. As the counterparty to the investment transaction, VCs typically obtain board seats, information rights, protective provisions, and the authority to set restrictions on equity transfer.

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

This bundling model can exist stably in the long term due to the closed nature of private equity to ordinary investors. Ordinary individual investors wishing to trade private shares and participate in price formation rely heavily on the cooperation of companies.

This image shows that the traditional Series A investment term sheet belongs to the bundling model: a single Term Sheet provides funding, pricing, value endorsement, industry resources, follow-on investments, and corporate governance all packaged together, and founders cannot choose to purchase separately.

Last month, I explained how blockchain infrastructure dismantles the functions of banks in IPO underwriting. Now, the similar technology supporting stock tokenization further reveals: VCs no longer monopolize the valuation pricing power of private companies.

However, there is a key prerequisite constraint.

When Securitize advances stock tokenization, it is already a mature enterprise that has been operating for ten years, with audited financial statements, publicly disclosable cash flows, and a platform that hosts tokenized assets worth over $4 billion, providing ample information for market valuation. In contrast, a Series A startup can only be judged based on the founder's experience, personal reputation, and business concept. While both types of assets are equity, the core basis that supports their valuation is entirely different.

This precisely reflects the core significance of value endorsement in the Term Sheet. For Series A projects, the value of the VC is not merely having its name on the shareholder registry, but also provides credit endorsement for companies that lack publicly operating data. Late-stage firms like SpaceX and OpenAI are more likely to achieve equity tokenization, as their operational characteristics are close to those of public companies, and even before formally listing, secondary trading markets, tender offers, perpetual contracts, and broker research already establish price references.

Although the difficulty of landing equity tokenization for early-stage companies is higher, and the market lacks sufficient data for fair pricing, this cannot stop the dismantling process of the VC bundled services.

Wave of Service Unbundling Approaches

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

Tokens traded on Solana and Avalanche chains have the same legal effect as publicly traded stocks on the New York Stock Exchange. Each token enjoys complete equivalent voting rights, dividend rights, and residual asset claim rights, and is neither a simple price-tracking synthetic derivative nor a revenue certificate representing shares held by offshore special purpose vehicles (SPVs). The tokenized common stock of Securitize is fully equivalent to the off-chain native stock SECZ rights.

Investors often confuse the ownership nature of various types of on-chain stocks available on the market. In the article "Who Really Holds Your U.S. Stocks? 83% of Stocks Are Nominally Held by This Institution," Vaidik outlines two mainstream 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 SPVs hold 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 basis on which the entire venture capital business model relies.

Once equity can be continuously priced and freely transferred, the services originally bundled in the Term Sheet no longer need to be sold in packages, and various needs can find lower-cost, more efficient independent solutions.

For mature companies with valuation foundations, funding raising and valuation pricing will gradually be undertaken by the market layer: the market will form fair prices, and capital will follow the price flow. Currently, the total value of tokenized equity lock-ups for Ondo Global Markets has already surpassed $1 billion; on the Hyperliquid platform, Cerebras's pre-listing perpetual contract price diverged from its Nasdaq opening price by only 1.3%.

Project endorsement and networking resources still need to be anchored to investors, but lead investing and brand credit no longer need to rely on the complete system of large institutions like Sequoia or a16z. Elad Gil has established a single-person fund of about $1.5 billion, capable of leading investments and providing brand endorsement solely based on personal and rolling funds.

Segmented professional service providers undertake various supporting needs: Fairmint and Pulley manage equity ledgers; Coinbase acquired LiquiFi in July 2025 to lay out the token exercise track; Echo, acquired in October 2025, specializes in financing tools; Magna and Sablier handle staggered exercise business. Founders in 2026 can independently combine the complete set of tools, achieving backend capabilities that used to be purchased in a bundle only from VCs.

Corporate governance is moving towards programmability. Fairmint's architecture supports continuous fundraising models similar to SAFE (Simple Agreement for Future Equity), capable of automatically completing equity conversion according to predefined rules; exercise lock-up periods and cash-out rules are enforced by smart contracts, no longer relying solely on lawyers drafting written documents.

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

Secondary liquidity channels continue to expand, providing internal employees and early investors with more exit options. Employees and angel investors of tokenized private companies no longer have to endure a long wait for an IPO to liquidate their holdings.

Continuous liquidity is the profound change brought about by tokenized stock trading. Liquidity fundamentally reshapes the logic of how founders and employees view equity. When shares can be traded at any time, the interest game behind exercise lock-up periods and cash-out windows changes accordingly. In the past, employees often needed to wait four years for an opportunity to participate in a tender offer; now they can connect to the secondary market anytime. However, this new model also presents trade-offs.

Similar cases have already emerged in the crypto industry: second-layer network governance tokens like Arbitrum ARB and Optimism OP can be traded upon listing, and after the exercise expiration, the team may sell off their concentrated tokens, detaching the token price from the network's actual operating conditions, forcing founders to spend a significant amount of energy monitoring market prices and diverting focus from product development.

Of course, this analogy has its limitations: ARB and OP are governance tokens, not equity of enterprises, and their prices reflect more on ecological activity rather than corporate operating performance. But the exposed conflicts of incentive mechanisms are highly similar. Reg D 506 (c) qualified investor access, rule 144 lock-up requirements, and multi-year lock-up agreements can mitigate the phenomenon of concentrated sell-offs but cannot eliminate the problem at its source. Tokenized equity opens up a new exit channel for internal holders, breaking the traditional mechanism of the private market that has long relied on time to smooth out liquidation pressures.

However, the follow-on investment that founders generally value most remains the last section of the entire VC service package that does not yet have a mature tokenized alternative.

The reason lies in that all current landing regulatory frameworks — including the SEC-approved DTCC pilot, Nasdaq token trading system, and related services set to launch by DTCC in October — are all aimed at already-listed companies like the Russell 1000 constituents. At present, there are no compliant channels supporting the public trading of tokenized equity for Series A startups on the aforementioned platforms.

What core values will still remain in the hands of VCs?

With the arrival of the streaming era, the music distribution process has been completely commoditized, but record companies have not disappeared. Anyone can list songs on Spotify; what cannot be commoditized is the A&R artist discovery business: selecting creators worth investing in, building artist brands, and unlocking industry resources unreachable by data alone. Transformed record companies ultimately evolve into institutions that conduct value judgments based on data. Originally integrated businesses are split among various service providers, while record companies retain the scarce value judgment link.

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

What will always be scarce is the investors who can facilitate the next round of financing solely based on their own reputation, persuade major clients to switch suppliers, and attract experienced talent to leave big firms and join startups. Token technology cannot substitute for founders in completing business value endorsement.

However, any wave of service unbundling will ultimately be followed by a new round of consolidation, and the leaders of the consolidation are often new entrants. The London financial "Big Bang" in 1986 split brokerage from market-making businesses, and in just ten years, universal banks re-integrated various segmented businesses.

After the London "Big Bang" reform introduced electronic trading, the trading hall of the London Stock Exchange lost its necessity. Source: Getty Images, BBC

For decades, founders proactively approached VCs because only here could 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 connecting to funding, one providing pricing, and one solving governance needs. Founders still need all services, but they no longer need to purchase everything from a single institution.

This fundamentally changes the early decision logic of entrepreneurs. Founders are no longer forced to grapple with "which fund to allow on the shareholder registry to solve all developmental problems at once," but instead gain the autonomy of choice: which business to operate through market mechanisms and which aspects to entrust to subjective judgments of trusted individuals.

The standardized processes in the Term Sheet will be the first to undergo tokenization transformation, as these businesses are easiest for the market to undertake; the value judgment segment will be the last to be digitalized and may perhaps never be fully digitalized, since the market will always need human intervention for this service. A Series A startup may be able to implement equity on the blockchain in the future, but it still needs someone to make the judgment: is this equity worth pushing to market.