Fintech brokerage Clear Street has launched a new platform designed to offer accredited investors access to late-stage private companies before they go public. The initiative begins with AI software firm Databricks, currently valued at $188 billion. This move aims to expand investment opportunities in private markets, where significant wealth creation now occurs as startups increasingly delay their initial public offerings.
Uri Cohen, CEO and co-founder of Clear Street, stated the goal is to remove friction and give more people the ability to invest in more products. He noted that a lot of wealth creation has shifted to private markets, and both retail and smaller investors want to participate. The demand for exposure to high-growth private companies like Databricks, Anthropic, and OpenAI has surged as these firms remain private for extended periods.
The firm’s new platform will feature as many as 30 startups by the end of the year. These companies are primarily tech firms with valuations ranging from $5 billion to $20 billion, typically six months to two years away from an IPO. To support this expansion, Clear Street is also establishing dedicated private company equity research, led by analyst Owen Lau. This effort seeks to bring transparency, similar to public markets, to the often opaque private investment landscape.
Understanding Private Market Access
The process of investing in Databricks through Clear Street’s platform involves specific mechanics. Investors do not directly buy stock issued by Databricks. Instead, they acquire an interest in a special purpose vehicle (SPV) that holds a stake in a third-party fund. This external fund is the actual shareholder of record for Databricks.
Databricks has clarified its position on these arrangements. A spokesperson for the company stated that Databricks “does not have any engagement or relationship with Clear Street.” This underscores the indirect nature of these investments. Uri Cohen affirmed that Clear Street, as the counterparty, would stand behind the deals, accepting any associated risk.
Addressing Market Complexities
The structure of these deals highlights a complex reality in today’s private markets. Earlier this year, some AI startups, including Anthropic, took action against unauthorized secondary transfers. They voided unapproved SPVs and indirect share sales that bypassed corporate transfer rules. This demonstrates the careful navigation required in the evolving private market landscape.
The trend of companies staying private for a decade or more has shifted how private market liquidity operates. Traditionally, pre-IPO shares traded through informal networks or specialized platforms. Clear Street’s approach aims to introduce more structure and accessibility to this segment of finance. This strategy aligns with broader trends where institutional capital increasingly consolidates around late-stage winners, a pattern observed across global fintech investment.
Clear Street’s Strategic Timing
Clear Street’s private markets expansion comes at a significant time for the firm itself. The company, a fintech brokerage, was last valued at nearly $12 billion in a private funding round earlier this year. In February, Clear Street had paused its own plans for an initial public offering.
The decision to focus on democratizing access to high-growth tech firms also reflects a broader industry movement. Wealth management firms are increasingly prioritizing AI and diversified solutions, leading to a surge in WealthTech investment. Goldman Sachs, for instance, has also developed a new platform to expand its offerings for wealthy clients and family offices seeking direct stakes in fast-growing private companies. This indicates a growing appetite for secondary liquidity and structured access to private market opportunities.
Clear Street’s initiative represents a strategic move to capitalize on the extended private phase of high-value companies. It attempts to bridge the gap between early-stage wealth creation and public market access for a broader base of accredited investors, while navigating the inherent complexities of private share ownership.
