Private markets have an information problem
Private markets have an access problem. They also have an information problem. An investor should be able to answer what they own, what it is worth, and why. WLTH is introducing Adjusted Market Cap so corporate actions stop producing the wrong performance answer.
For years, the conversation around private markets has focused on access.
- Who gets to invest?
- What is the minimum investment?
- Who qualifies?
- How can opportunities traditionally reserved for venture funds, institutions and wealthy investors become available to a broader market?
These are important questions, and solving them is a large part of why WLTH exists.
But as private-market access improves, another problem becomes increasingly apparent.
Private markets don't just have an access problem. They have an information problem.
An investor should be able to answer three simple questions:
- What do I own?
- What is it worth?
- And why is it worth that amount?
In private markets, the third question can be surprisingly difficult to answer.
The journey from private to public isn't a straight line
Imagine investing in a private company several years before it goes public.
You know the valuation at which you acquired your position. Eventually, the company lists on a public exchange and suddenly has a live share price and publicly observable market capitalization.
It seems logical to compare the two.
If the company was worth $100 billion when you invested and is worth $500 billion today, you might reasonably assume that the underlying investment has increased by 5x.
But that calculation assumes something important:
That your proportional ownership of the company hasn't changed.
Over several years in the private markets, that is often not the case.
- Companies raise additional financing.
- They issue employee and management equity.
- They acquire other companies using shares.
- They merge with other businesses.
- They reorganise share classes.
- They split shares.
- And when they eventually go public, they may issue significant amounts of additional equity.
None of these events necessarily removes shares from an existing shareholder.
But they can change what those shares represent.
SpaceX provides a useful example
SpaceX illustrates this particularly well.
Investors who acquired SpaceX while it was private may naturally compare their original acquisition valuation with the company's later public market capitalization.
But significant corporate events occurred between those two points.
Most notably, SpaceX merged with xAI through an equity transaction. New equity was issued in connection with the merger, increasing the overall capitalization of the combined company and diluting the proportional ownership represented by existing SpaceX shares.
SpaceX subsequently issued additional shares as part of its public listing, creating further dilution for earlier shareholders.
There have also been other changes to the company's capitalization over this period.
An investor's underlying shares haven't simply disappeared as a result.
Instead, the denominator changed.
The same number of shares can represent a smaller percentage of a company after that company has issued substantial amounts of additional equity.
That distinction matters when calculating investment performance.
The strange period between an IPO and liquidity
There is another complication specific to private-market investing.
A company becoming publicly traded does not necessarily mean that an earlier private-market investor immediately receives freely tradable public shares.
Positions can remain subject to:
- lock-ups
- vesting periods
- transfer restrictions
- conversion processes
- and administrative settlement
This creates an unusual transitional period.
The company is public, but the investment still carries the economic history and restrictions of a private-market position.
There is now a live public market capitalization on one side and an earlier private-market investment on the other.
Simply connecting those two numbers can produce the wrong answer.
Introducing Adjusted Market Cap
This is why WLTH is introducing Adjusted Market Cap for assets where material corporate actions make a simple comparison with headline market capitalization potentially misleading.
Adjusted Market Cap isn't a different opinion about what a company is worth.
The public Market Cap tells you what the market values the company at today.
Adjusted Market Cap helps explain what that valuation means for an earlier private-market position.
Where appropriate, it accounts for material corporate actions that occurred between the acquisition of the underlying investment and its current valuation.
These can include:
- mergers
- new financing
- additional share issuance
- IPO issuance
- employee or management equity
- share conversions
- reorganisations
- and other changes to the company's capitalization
The objective is to create a more like-for-like reference point for understanding the performance of the original investment.
Not a black box
There is an important principle behind this.
WLTH's Adjusted Market Cap should not be an opaque internal markdown that users are simply expected to accept.
The adjustments should originate from identifiable corporate actions.
Wherever reasonably possible, those events should also be independently verifiable by users through their own research.
Depending on the asset, evidence may come from:
- regulatory filings
- IPO documentation
- company announcements
- merger disclosures
- published share counts
- financing announcements
- administrator reporting
- and other reliable sources
Take SpaceX as an example.
A user can independently research the xAI merger and the equity issued through that transaction. They can examine public listing documentation and changes in outstanding shares. They can follow other disclosed changes to the company's capitalization.
WLTH's job is not to obscure that information behind another calculation.
It is to bring those events together and translate their cumulative economic effect into something understandable within the investment experience.
Over time, we want users to be able to move beyond simply seeing an adjusted number and understand the corporate actions behind it.
The legacy infrastructure problem
This might sound like something investment infrastructure should already do.
Often, it doesn't.
Private-market information remains fragmented across:
- brokers
- issuers
- SPVs
- fund administrators
- cap tables
- shareholder notices
- regulatory filings
- PDFs
- and emails
A corporate action may occur at the issuer level. Another may be reported by an administrator. Another becomes visible in an IPO filing years later.
Eventually someone has to reconstruct the history.
This is a legacy infrastructure problem.
And as private-market investing becomes available to a much larger audience, it becomes increasingly difficult to justify.
Access needs an information layer
Tokenization is often discussed in terms of access, liquidity and settlement.
Those things matter.
But digitising private-market ownership also creates an opportunity to improve something more fundamental: the information attached to an asset throughout its lifecycle.
A private-market position shouldn't just be a number sitting in an account.
It should have a history.
- Acquisition
- Financing
- Dilution
- Corporate actions
- Splits
- Mergers
- Listing
- Vesting
- Distribution
Each event changes, or helps explain, what the investor owns.
Our longer-term objective at WLTH is to make that history increasingly visible and understandable.
Because opening private markets to more investors without improving the information available to those investors only solves half the problem.
Access was the first problem private markets needed to solve.
Knowing exactly what you own — and why it's worth what it's worth — is the next one.