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Fintech prime brokerage Clear Street is launching an innovative platform offering accredited investors pre-IPO access to high-growth private companies, starting with the $188 billion AI giant Databricks. This move by Clear Street, which recently postponed its own IPO, addresses growing investor demand for early stakes in Silicon Valley’s hottest startups and follows similar expansions by Wall Street rivals like Goldman Sachs.
The platform aims to bring transparency to private markets through dedicated research, even as the deals involve indirect investments via SPVs, prompting a disclaimer from Databricks regarding its non-involvement.
In a significant move to democratize access to exclusive private market opportunities, fintech prime brokerage startup Clear Street is rolling out a new platform designed to offer accredited investors pre-IPO exposure to some of Silicon Valley's most coveted private companies. The initiative kicks off with Databricks, the artificial intelligence software titan recently valued at an astounding $188 billion, as CNBC first reported.
Clear Street’s foray into pre-IPO investing comes after the firm itself recently shelved plans for its own initial public offering. According to Uri Cohen, CEO and co-founder of Clear Street, the core objective is to "remove friction and give more people the ability to invest in more products." Cohen highlighted the increasing trend of wealth creation occurring in private markets, fueling a strong desire among both retail and smaller investors to participate.
This strategic launch by Clear Street underscores a broader trend on Wall Street, where firms are racing to capitalize on the surging demand for private company investments. With startups opting to remain private for longer, a substantial portion of their value appreciation happens before they ever reach public markets. This dynamic has driven affluent investors to seek early stakes in high-profile companies such as Databricks, Anthropic, and OpenAI.
Notably, this initiative follows Goldman Sachs' recent expansion of its own offerings for wealthy clients and family offices seeking direct investments in fast-growing private entities.
However, the mechanics of Clear Street's offering reveal an interesting nuance: Databricks is not directly involved in these transactions. Instead of purchasing stock issued directly by Databricks, Clear Street investors acquire an interest in a special purpose vehicle (SPV). This SPV, in turn, holds a stake in a third-party fund that is the actual owner of the Databricks shares. According to Clear Street, the external fund remains the legal shareholder of record from Databricks' perspective.
This indirect investment structure is particularly noteworthy given recent actions by AI startups like Anthropic, which earlier this year cracked down on unauthorized secondary transfers, even voiding unapproved SPVs and indirect share sales that circumvented corporate transfer rules. Despite these complexities, Clear Street CEO Uri Cohen affirmed that his firm would act as the counterparty and stand behind the deals, explicitly stating, "If there is a risk, we are taking it."
A spokesperson for Databricks, however, clarified in an email that the startup "does not have any engagement or relationship with Clear Street."
Bond Sale Fuels Expansion, Eyes 2027 IPO
Clear Street intends to expand its new platform rapidly, aiming to feature as many as 30 startups by the end of the year. The focus will primarily be on tech firms with valuations ranging from $5 billion to $20 billion, typically six months to two years away from a potential IPO.
To enhance transparency in what are traditionally opaque private markets, Clear Street is also launching a dedicated private company equity research division. This team will be headed by analyst Owen Lau, striving to bring public-market-style insights to private investments.
This expansion comes at a pivotal time for Clear Street itself. Earlier this year, the firm, last valued at nearly $12 billion in a private funding round, paused its own IPO plans in February amidst broader market volatility affecting broker and fintech valuations.
Despite the temporary halt to its public listing, Clear Street reports being cash-flow positive. The company further bolstered its financial position with a $400 million investment-grade bond offering, providing ample liquidity to build out its new private market infrastructure. Cohen expressed confidence in the firm's standing, stating, "We're in a position of strength, so the decision was shelved for better timing." He added that Clear Street is "definitely going to look towards a '27 listing, depending on the market conditions."
