Caplight's synthetic derivatives for private stock
Javier Avalos, co-founder and CEO of Caplight, on building synthetic derivatives of private stock
Caplight is effectively rebuilding the missing middle layer that lets institutions treat private stocks more like tradable exposures than one off paperwork heavy share transfers. In public markets, a hedge fund can keep positions at its prime broker, price risk quickly, add a put or covered call, and settle fast. In private markets, the same investor usually has to source pricing by hand, wait on transfer approvals, and carry deal risk for weeks, so Caplight bundles derivatives, data, settlement, and broker workflows into one operating stack.
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The core pain point is not just finding a buyer and seller, it is getting from agreed price to closed trade. Spot secondaries can sit open for two to twelve weeks while shares transfer. A synthetic contract can settle much faster because the parties trade economic exposure instead of moving the actual shares.
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That is why the target customer is hedge funds, pensions, endowments, and crossover investors, not founders or employees first. These firms already use prime brokerage, margin, options, and risk systems in public equities, so every extra manual step in privates sharply reduces the odds they put on a trade at all.
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The market is splitting into layers. Forge, Carta, Nasdaq Private Market, and similar venues focus on moving actual shares or running issuer led liquidity programs. Caplight is building the risk management layer on top, more like the tools and pipes institutions use around the trade than the venue that sources the stock itself.
The next step is a private market that looks less like bespoke brokerage and more like a real asset class. As pricing tools, basket products, and hedges spread, more institutional capital can enter late stage private companies without accepting full buy and hold illiquidity, which should make private exposures easier to trade, finance, and manage at portfolio scale.