Owners Versus Traders in Private Investing
Javier Avalos, co-founder and CEO of Caplight, on building synthetic derivatives of private stock
This is really an argument for splitting private market investing into two separate jobs. One job is company partnership, where a board member or early investor helps hire executives, shape strategy, and support the founder over years. The other job is pure price exposure, where a hedge fund or crossover fund mainly wants upside, downside protection, or a way to rebalance risk. Caplight is built around the idea that the second group should trade contracts on value, not wait through slow share transfers and company approvals.
-
Owning the actual shares in a private company comes with operational friction that does not exist in public stocks. Secondary trades can require company approval, transfer restrictions, and long settlement windows. A synthetic contract keeps the economic exposure while avoiding much of that delay.
-
That matters because many newer buyers in late stage private markets are not classic venture firms. They are pensions, endowments, hedge funds, crossover funds, and large public investors that already use hedging tools elsewhere. For them, privates as long only assets are an awkward fit.
-
The contrast with Carta, Forge, and tender offer platforms is concrete. Those systems help actual shares move from employees or early holders to buyers, often in company run liquidity events. Caplight is trying to let financially motivated investors trade around price without changing the cap table at all.
If this model keeps developing, private markets start to look more layered. Venture firms remain the hands on owners closest to the company, while institutions trade risk on top of them through options, hedges, and structured exposure. That would make late stage private stock easier to finance, easier to hedge, and less noisy for founders managing their investor base.