Anduril's COO highlights a dangerous trend of "wildcat" secondary market brokers selling access to company shares they don't possess. These deals often involve multiple layers of SPVs with hidden fees. He warns that many retail investors will discover their shares don't exist during a major IPO, leading to significant financial losses.
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Alpha ton Capital publicly announced a $30M investment in Anduril to become a public proxy for the private company. Anduril's CEO, Palmer Luckey, immediately refuted the claim and blocked the share transfer, exposing the high-risk nature of this 'treasury company' strategy without prior, explicit consent.
Media reports of "manic activity" in secondaries are misleading. The market isn't irrational; it's simply experiencing massive growth. Annual volume has surged from ~$40 billion to over $200 billion in a decade, making experienced buyers exceptionally busy.
Franchise brokering lacks the licensing and disclosure requirements common in fields like real estate. Brokers can operate without certification and earn commissions up to 60% of the franchise fee, creating a powerful incentive to sell you on a limited set of partner brands rather than finding the best fit.
The traditional IPO exit is being replaced by a perpetual secondary market for elite private companies. This new paradigm provides liquidity for investors and employees without the high costs and regulatory burdens of going public. This shift fundamentally alters the venture capital lifecycle, enabling longer private holding periods.
Individual investors buying shares in private AI companies through brokerage platforms are at a significant disadvantage. They are typically last in line behind institutional investors, resulting in higher entry prices and fees, making it a poor strategy for accessing the AI boom.
Venture capitalist Bruce Booth explains that bankers, lawyers, audit firms, and VCs all have strong financial incentives for a company to go public. This creates systemic pressure that may not align with the company's best long-term interests.
Matt Grimm of Anduril highlights that many secondary share offerings are structured as "forward contracts," which he calls notoriously hard to settle and explicitly disallowed by his company's bylaws. This means investors in such SPVs face extreme counterparty risk and may never actually take possession of the shares.
For trillion-dollar private companies like SpaceX going public, the traditional 90-180 day lockup period is inadequate. The massive volume of insider shares hitting the market at once could crash the stock. Investment bankers are now designing staggered lockup releases to manage this unprecedented liquidity event.
Companies like SpaceX and OpenAI command massive private valuations partly because access to their shares is scarce. An IPO removes this barrier, making the stock universally available. This loss of scarcity value can lead to a valuation decline, a pattern seen in other assets like crypto when they became easily accessible via ETFs.
Anduril's co-founder set a precedent for founder transparency by publicly exposing an unauthorized SPV selling forward contracts for company stock. He detailed how the deal violated bylaws and charged exorbitant fees, a powerful warning for investors in private secondary markets.
