Private Markets: $65T Held Hostage

Transcript

The number is pretty big, 65 trillion. Just to give you guys a visual aid for that. If you would have $100 bills, put it end to end from the Earth, you would get two third of the distance towards the Sun. That's how big this number is. And we are here to talk about this specific number and what it is about and what we can actually do for it or what we are doing on Second Lane on this number. Let me just go with one by one. First off, I've been in the space for 10 years. I've been doing secondary markets for 10 years, connecting people in crypto, bridging liquidity A to B to C, seeing how it works.

We work with 60, 70,000 LPs, individual investors, high network uh people, uh VCs, funds, whoever you can imagine. These are all in regards to safe sauce, uh locked tokens, foundation treasuries, all sorts of options. And that at some point translated into Second Lane, into creating Second Lane, which is right now with my co-founders being uh diversified uh around the world. And that has been the brand. Our introduction value has been into 5 billion.

That's the range and above, 70,000 institutional clients. And dozens of LPs. Why I mentioned LPs specifically is because Second Lane sets up SPVs and through us people invest into those type of deals as well. And that's an interesting setup. At some point, we saw in 2023 that the market was evolving, evolving into a different direction in which infrastructure is needed, a network is needed so that you can work through that as well.

And that's where this whole component arise. And the next thing, and you guys probably know this, the pre-IPO era. Most people are trying to get to these deals like Anthropic, Anduril, you name it. And we have options for each and every one who is interested in those kind of deals to get actually in those type of deals as well. That's what we do, and that's what we set up. And we provide liquidity pre-IPO, pre-TG, but also sometimes post-TG as well. Because as you can imagine, liquidity is sometimes very scarce. And if you want to sell 10-20 million, you can't sell it on a liquid or illiquid asset. Not not possible. That's why they reach out to us.

And then they try to get these things done through our venue in some cases. Second, um why talk about equities in a crypto conference? Probably all of you are looking at me like, uh is this the right type? Well, it is. Why? Because in the last couple of years, the most biggest IPOs and most wealth generations were all from crypto happening through. You can see the name, obviously Coinbase, Circle, Bullish, um BitGo, Gemini. Coinbase even went to a direct listing. It didn't even do an IPO. It was like straight out of the boot and get done with it.

The next to follow is obviously Kraken, Blockchain, Ledger, all these guys. And SecondLane is an investor in Kraken specifically as well. But it will follow on Polymarket, on Calaxy, and others will follow as well. I don't know if you guys noticed, but Poly is sitting somewhere around 15-ish billion. Calaxy is sitting around 20 billion even. So, keep in mind that that is also the origination of these type of deals and inside. So. Going back to This is the picture that I I actually starting to show you guys.

Look at this number, 65 trillion. That's the number that we will hit at 2032. And it is still the liquidity margin sits on the other side, which is 2%. 2% is being transacted on secondary markets. The 98% is like nobody is even touching that at all. And that's insane. Um 16 trillion at this moment, currently, McKinsey reports. We use all sorts of data, McKinsey, Jefferies, PitchBook, Carta, you name it, Dakota, all sorts of options to generate our own data, and we kept our data for the last 5-6 years

just to showcase everybody where it's heading, where it's coming from, and how the value is being generated over the course of the year. Um 240 billion in 2025, but in the first two quarters of this year, we are already sitting at 121 So, it's going bigger. This year it will generate more volume, but still not good enough. But it needs to grow much bigger at that point.

In the first half, um Evercore, um 65 trillion volume under 0.4%. That's what it is at this point. That's not definitely by far not there yet. Um to go further, this is the slide that is the most interesting one for each and every one that invests out there through funds or yourself, whatever you can imagine. Like the liquidity pressure is insane. There 32,000 private equity funds out there whom are still there and waiting for their moment of liquidity. And liquidity moment means IPO or being bought out by someone, or the

company does nothing and just buys you out at some point. That's the other option of dissolving as well. So, that's 3.8 trillion of value sitting on the side, nothing happening on those specifically. And in the last 7 years, the DPI on these funds have moved from 70% 70 cents to a dollar into the range of 4 to 20 cents. 4 cents is literally of the last 6 to 9 months, basically. Which is an insane level. So, if I were to invest a dollar into a fund, I would get 4 cents back in return.

Within a year or two or three. That's horrible returns on on any given investments that you would do, on any given fund out there. So, what this does is it creates a friction on a different level. What I mean by that is, if I were to invest in a fund and they would give me 4 cents back next year, I wouldn't make that investment into that fund anymore. I would say, "You know what? To hell with it. I'm going to do something else. I'm going to not invest. I don't have the capital to invest." So, that given fund won't have the capital to reinvest that amount of money into the next generation of founders.

And that's a horrible setup because it isn't it becomes a structural thing. It's not a cyclical thing. It becomes structural. So, they won't be able to invest in another fund. And they won't be able to invest in another founder. And that another founder wouldn't be able to just create that tech anymore. And then the loop goes around and around and around. And that's why the reason why this thing dropped from 70 cents to the current 4 cents at this moment. So, the funds are definitely smart in putting money into wherever they want to put money.

But at the end, they're not good enough into getting their money out. They need to have proper liquidation strategies. That's what they're actually missing at this point. And the key point on this thing is liquidity. Liquidity isn't there. And if it is there, they're not tapping into it in the proper manner. That's what they should be doing. The biggest IPO ever, SpaceX. Insane value. Around two, everybody loved it. But at this current moment everybody is hoping for the next one. And the next one is probably Anthropic.

Let me use that. Everybody whom doesn't know about this is they're being valued at two trillion as well. Currently, last round as was at 935 At this moment, literally on the secondary market, we are seeing 1.3 1.6 trillion. Assets being moved and left and right. And that's the tricky piece of this puzzle as well because if you value it off the secondary market and it goes IPO and it drops just like SpaceX did where is the liquidity on the whole thing? That becomes the issue on the whole thing. So, on the left side, on the right side, no cash back, no LPs to commit, no next fund, founders get don't get anything.

And that becomes a structural issue on the whole setup. So, what I would love to have is not a markup on paper and NAV asking me like, "Hey, this could do another three, five, six X." No, not interesting. I would want to see a distribution. Because then I know that I have my returns, that I have my capital back at some point. Which is the issue at this point. Going back to our problem which is at this moment, if you look at what we are doing is we are trying to do trades of 2013 into in infrastructure which is in built in 1990. And And the core issue.

Because we have Telegram groups, we have WhatsApp groups, we have spreadsheets that people are working through. They're looking at it and trying to match people with one another. And it doesn't work. Wild West brokers trying to get as much as money in in between. And even for us, if we are working with one party, there are like sometimes three, four parties in the middle of us and another potential buyer or seller whatsoever. At that that point, we just pass. We're saying, "Not interested in this." Why? Because the value of that asset goes higher and higher and higher, and it's no more interesting for us to do that type of deal as well.

So, this is what we want to change. Create an infrastructure that attends to this specific um need of whoever is out there as an investor, as a founder, as an advisor, you name it. Because everybody needs liquidity at some point. What we have done on Second Lane side, we have just created six steps that we follow on each and every deal. Each and every deal is pretty similar to each other. So, we begin with the origination.

Someone comes to us and says, "I want to buy XYZ or sell XYZ." We check that. We vet that given person. The next phase is due diligence. Due diligence means KYC, KYB that person. See whom it is. Is it the person that it needs to be or is it someone from, pardon my language, North Korea, which you want to avoid, obviously. So, that's a check that we do on our side. Third one is the actual matchmaking itself. Because then you can see if there is a potential buyer or seller on the other side with whom you can actually match this given person. And if the pricing and the structure of the deal works as well, because it needs to be risk-free. What I mean by that is if I were to buy Polymath, I would want to

own the shares on paper so that I can go somewhere and go to that given fund and say, "Hey, I own XYZ shares. Could I have them under my Carta account?" That should be a possibility to certain degree. That's what matchmaking means. Third is obviously pricing and structure, so that you can match that, confirm that on paper, and actually sign the contracts. That's another part. Five and six are the most cumbersome processes. Why? Because five is basically a settlement. What it means is going to the actual foundation and talking to them into allowing you to obtain your assets.

If they don't allow it, then I would probably recommend pass on the deal. Because it is too risky to buy something and put an X amount of capital and and you don't have even the rights for that asset. So, I would rather tell you at that point, don't do it. Because there are better deals out there probably. You would see another deal. And the last one is obviously getting into actual shares on paper, on your name, so that you can see that you own the certificate of that share, or at least that you can say that I'm an LP in this fund who is on the cap table.

That's the actual proof that you can show to these people and to yourself as well. Um so, that's basically the turnaround of this thing is the most horrible thing, which is between 30 to 90 days. That's the liquidity gap on this whole setup. Like, I'm going to do an experiment that the like here. Let's see if this works. Does anybody here owns a token? Like, raise your hands if you own a token. Right? Okay. Next one. Raise your hand if you own a token and if you could sell that equity within 2 weeks.

Nobody, right? That's the liquidity gap that I have. Nobody's able to sell that asset within a time frame of 2 weeks. On the token side, you could probably sell it because the chain is there, the liquidity is there. You can just pop up Cow protocol, Uniswap, whatever you can imagine, and just sell it and move on. And on other side PA, not possible. You would need to go to multiple venues or guys like us, talk to them, and see if it is possible, if it is demand. And that's what we are trying to resolve on our side.

The 30 to 90 days problem is not only a problem on paper, but it becomes only a structural money problem itself as well. Because they're two folds to it. A, if you want to go to a lawyer and talk to them and to getting these docs done, it takes you 25K up to 200K to get this done. That's a lot of money. And when you have a higher volume, then it gets you much lower. That makes much more sense on that level. So, that's the ratio that needs to be get done. This is um post listing, structuring, due diligence. All the brokerages who have tried to get this done have failed.

Why? Again, listing isn't liquidity. So, you need to get proper attendance, get proper liquidity done by that level as well. That makes much more sense. Due diligence, structuring, settlement, approvals, and post uh servicing. These are the core components that we need to have. Tokenization, regulation, and AI. Tokenization handles the settlement. Regulations lets the institutions come in because it needs to get done. And see, AI reads the paperwork because hundreds of docs, you can't read them anymore.

Stripe did the same thing as well. And we want to do the same thing for Second Lane on private market as well. Build the rails, let it grow, and build the whole thing on our level as well. Final top up is about Morgan Stanley buying equity uh Zen and buying Char Forge Global, you can see that they're already buying the rails. So, we need to build it up as well. Because it is becoming a structural thing on our level, definitely. When liquidity flows, it becomes a habit.

That's what it is. Right now, everybody is just doing certain things and hoping for the best. It's not going to work anymore. So, we need to change and evolve that setup, that mindset on its own. And the last piece of the puzzle, this is what I want to attend to, how it is, how it can be changed, and where the actual upside is. Currently, it's sitting at 100 billion. It needs to go to 65 trillion in the next couple of years. There's a huge gap missing there. So, if I were you, and you were looking for liquidity, I would actually ask you the question, if I want to invest in this asset, how can I get in, but also get out of this asset?

That should be your question, not if this project is a good investment. Do the follow-up question there as well. That's it. That's wrap. Thanks thanks for the time.