Clear Street Launches Private Markets Platform With Pre-IPO Access to Databricks

Cloud-native financial infrastructure technology firm Clear Street has launched Clear Street Private Markets, a unit offering investor access, execution, liquidity, capital efficiency and private market research within the firm's existing platform. The offering opens with pre-IPO access to data and AI company Databricks, which Clear Street describes as the first in a pipeline of anticipated potential investment opportunities for qualified purchasers and accredited investor clients.

The initiative places the firm alongside a growing set of brokers and platforms competing to intermediate access to late-stage private companies, a market that has expanded as companies stay private for longer and employees and early backers seek routes to sell. Databricks is among the most highly valued private technology companies and has been one of the more actively traded names in the secondary market.

The structural element that distinguishes the offering is financing. Clear Street's credit financing desk is to provide capital efficiency to Private Markets clients, meaning positions in private company exposure can be financed rather than funded entirely in cash. Lending against illiquid private shares is uncommon, since the collateral cannot be marked or liquidated in the way listed equity can, and it is typically the constraint that keeps pre-IPO allocations off margin.

"Clear Street Private Markets embodies exactly what we stand for: innovation and access. Investors demand exposure to the most important private companies before they list, and we've created a way to do it, and do it better. Our pipeline of potential issuers is exciting. Our clients are particularly excited about our ability to offer margin within this ecosystem. It's like nothing else available to investors today. We are also building out private company research led by equity analyst Owen Lau, and Clear Street clients will have the Private Markets portal embedded in their Clear Street account." - Uri Cohen, Chief Executive Officer and Co-Founder of Clear Street

Clear Street says the offering is intended to address problems investors commonly encounter at traditional entry points to pre-IPO investing, citing opaque structures, fragmented documentation and exposure that is merely synthetic. Those three complaints map onto how much of the market has worked to date: access often arrives through layered special purpose vehicles where the underlying terms and fee stack are difficult to see, documentation is assembled deal by deal, and in some cases the investor holds a contractual claim referencing a company's shares rather than an interest in the shares themselves.

Participation is restricted to qualified purchasers and accredited investors, and each participant receives an offering memorandum setting out the full terms.

Clear Street is a technology firm whose stated mission is to give sophisticated investors access to every asset in every market through a unified platform built for speed, transparency and scale, providing tools and service once reserved for the largest institutions on a single, cloud-native, end-to-end capital markets platform. Research for the new unit is to be led by equity analyst Owen Lau.

Found this interesting? Become a member of LiquidityFinder and get daily industry news direct to your inbox — join here.