Private equity has always prized control over convenience. Capital is raised with rigor, deployed with discretion, and—once committed—locked away in closed-end structures designed to resist the whims of public markets. Liquidity, if it comes at all, arrives late and negotiated.
Yet pressure is building. As institutional allocators seek more flexibility, and as private markets continue to grow as a share of global AUM, the friction baked into private equity’s secondary market is becoming a strategic liability. The market may be booming—estimated at $150 billion in transaction volume in 2024—but it remains thinly intermediated and chronically inefficient.
Now, two forces are converging to address this: artificial intelligence and blockchain. One gives the system real-time intelligence; the other provides a programmable substrate for trustless exchange. Together, they may not just lubricate the gears of private markets—they may change the machine itself.
Tokenization: The Infrastructure of a New Secondary Market
Tokenization isn’t just about slicing ownership into smaller pieces—it’s about making those slices tradable, verifiable, and programmable. When LP interests or SPVs are wrapped into blockchain-based tokens, and governed by smart contracts that define rights, transferability, and distributions, they become liquid in form—if not yet in function.
Platforms like Securitize have already issued over $4 billion in tokenized assets, including private equity-style funds. More critically, they operate a regulated Alternative Trading System (ATS), allowing compliant secondary transactions between qualified investors. This isn’t theory—it’s operational.
Redbelly Network is taking a protocol-first approach, building infrastructure that supports tokenized PE stakes with privacy and compliance by design. Ondo Finance, which began with tokenized treasuries and real-world assets, has its sights set on expanding the model to private credit and equity.
Nasdaq Private Market—long a broker of traditional secondary deals—has begun exploring token infrastructure that could move their $40 billion+ of traded volume into a programmable ledger environment.
Meanwhile, BlackRock’s partnership with Securitize to tokenize a money market fund marks the clearest signal yet that mainstream institutions see this as more than fintech futurism.
AI: From Valuation to Autonomous Execution
While tokenization lays the rails, AI drives the train.
Valuation has always been the sticking point in secondaries. Without a reliable, timely benchmark, buyers apply discounts and sellers hesitate. Quarterly NAVs are insufficient in an always-on market. That’s where machine learning steps in.
By ingesting financials, sector benchmarks, macro signals, and private transaction comps, AI models can generate NAV estimates in near real-time. Some platforms are already incorporating AI to dynamically price LP interests and provide predictive liquidity modeling.
More ambitious still are the intelligent agents emerging at the edge of this ecosystem. These are software routines—trained on sponsor mandates, fund rules, and market conditions—that can search secondary platforms, identify suitable counterparties, structure transactions, and initiate trades via smart contracts. Think of them as the quants of the private markets—without the latency of human approval cycles.
Tranche and Alto are among a wave of marketplaces experimenting with AI-native interfaces for secondary dealmaking. These platforms aim to automate matching, reduce bid-ask spreads, and surface liquidity pockets that traditional brokers miss.
A New Arena for Innovation
This technological transformation is not a closed loop. In fact, it creates space for new entrants—particularly those who understand both the nuances of private capital and the architecture of digital markets.
Some opportunity areas:
- AI Portfolio Orchestration: Tools that enable LPs to continuously rebalance their exposure across private vehicles, using AI to optimize for risk, yield, or sector tilt.
- Digital Custody + Compliance: As tokens proliferate, the infrastructure for holding, reporting, and auditing tokenized PE stakes becomes critical—especially for institutional allocators.
- Data Feeds + NAV Oracles: Private market valuation will require trusted, third-party oracles that feed off-chain data into smart contracts to enforce fair pricing.
- Secondary Market Intelligence: Platforms that map the liquidity landscape—tracking who’s buying, who’s selling, and at what terms—could become indispensable tools for sponsors and advisors.
Private Equity’s Next Operating System
The transition won’t be seamless. Regulators remain skeptical of anything that looks like a retail pathway into risky illiquid assets. Data privacy, counterparty risk, and jurisdictional tax regimes still pose friction points. And as with all technology adoption in finance, the early phase may benefit larger incumbents before democratizing access.
But make no mistake: the shift is underway. Private equity is slowly—inevitably—becoming programmable. Liquidity, once engineered in quarterly fire drills and negotiated exits, is becoming ambient.
For fund managers, this opens strategic questions: Should you tokenize future vehicles to expand investor flexibility? Should you partner with platforms integrating AI for secondaries? Should your internal ops teams prepare for agent-based portfolio management?
In our view, the firms that lead in this environment won’t just have the largest funds—they’ll have the most composable strategies. They’ll be fluent in code as well as capital. And they’ll know how to let machines do what humans no longer need to.
