Destiny CEO Sees Private-Tech Fund Surge as a 'Discovery Process'

We have to start with the price action. You went public in late March. You’re up 500%. At one point that number was more than 1000%. And even by meme stock standards, that is truly wild. What do you make of the price action so far and who’s driving it? Is this retail investors or is this institutions we’ve seen interest from across the board? When you look at it, it really feels like this is a moment for the public markets and the private markets coming together. And so this is just you know over 2 billion of volume in the last 10 days alone. Yeah, it definitely has been staggering to watch and it’s interesting too because there are other funds that are trying to do this currently and in the past basically bring that private equity backed startups to the public. You have the Ark Venture fund for example. What differentiates DXYZ? The biggest thing when we were creating ADXYZ is thinking about how do we create a product that anyone can access from the comfort of their brokerage account that has the protections and liquidity of the public markets. And so the challenge with a lot of the pre-existing funds that have been out there is they don’t actually have intraday liquidity. So people can’t buy and sell when they need to and participate like they’re used to in the public markets. Well, with that intraday liquidity, of course, you have a lot of volatility, but you also have a huge premium. There’s a lot of focus on that premium. Just to lay out some numbers for our audience, your last calculated net asset value was $4.84 shares, currently trading above $50. If you put that another way, you have $54 million of assets, a market cap of around $600 million. Does that concern you at all? I think this is a discovery process. We’ve just been in the market for two weeks. And so over time, the market’s figuring out, wow, it is possible for the first time to have access to these kind of companies. And as more and more people are learning that, I think there will be more participants in the market and more stability over time. And of course, you calculate your NAV quarterly. But do you have any sense of whether your NAV has changed meaningfully since the end of last year? Don’t have anything to share there until our first quarter results are announced. OK, so we’ll have to stay tuned there, but let’s talk the path forward from here because I’m sure you’ve read it. But Matt Levine suggested in a column yesterday that actually that Destiny should issue more shares to capitalize on this moment and also lessen the premium that exists right now. Are you considering a move such as that we have all the tools of the public capital markets available to us? I can’t share any specific plans, but there’s a lot of opportunity when we decided to list the Tech 100, we have 23 companies right now and we’re building towards a portfolio of 100. Well, let’s talk about that little little bit more, like you said 23 right now you would like to get to 100. When might you get there and what’s your criteria for adding more companies to your holdings? When we created the fund, we wanted to create something that looked as close to beta exposure to the private markets as possible. And So what we did is we set up our eligibility and inclusion criteria which we publish publicly and then over time we’ll look to invest in all sectors and kind of late stage venture backed tech and how do you actually obtain the ownership in these privately held firms. That is one of the big questions buzzing around Wall Street right now. Do you do that through private stakes trading platforms? Do you invest directly? How do you actually do this? All of the above. We’ve made sure that we have a flexible mandate. So we actually in the last few weeks have had a ton of founders of Unicorn companies reach out to us wanting to be included in the Tech 100. We participate in the secondary markets. We invest in late stage rounds. So we try to get best execution for our portfolio. What do you think that shows that you actually have companies approaching you right now? Is that a desire for liquidity at this moment? No, it’s more a reflection of the fact that there’s a journey between a company’s private existence and its public existence. And so we’re seeing people want to help bridge that gap, start educating the market as to what their business is as they think about their trip path to public. Interesting. And of course it’s you have companies staying private for a lot longer, so that makes sense as well. But also when it comes to how you actually obtain these stakes in these private companies, it’s been written that of course you also do it through forwards contracts and there’s a lot of questions as to whether you could have companies come back and ask for their right of first refusal there. How are you approaching and thinking about that? Our role, you know, a lot of change makes people uncomfortable and that’s part of growth. And so our role right now is educating companies, educating the public as to how we access these companies over the long term. Having the flexibility in our mandate means we can look at all kinds of transaction structures to get the best execution possible. Again, whether that’s primary, secondary or through other means. Are you worried about potential litigation? No, we have. We’re I think a lot of people are excited to see this exist and let’s talk about your actual holdings right now. So as we discussed, you have 23 right now. By far the biggest is SpaceX, 30 something percent of your portfolio and then the next biggest holding is I think around 10% or so. Is that a reflection of the availability of SpaceX shares or is that a conviction that you have? No, it’s a reflection of the fact that the portfolio is still being built. And so over time as we continue to add names, that will fluctuate until we reach a more steady state around 100 companies. Once you get to that end goal of 100 companies, how will you weight the portfolio? Will this be equal weight? Will this be some version of market cap? Yeah, we definitely keep into account market cap. We’re going to wait into two sectors. One piece is you know the 7 1/2 to 10 billion plus dollar companies and then the other half will be the 750 million to about 7 to $10 billion companies. And so like you said, I mean you see a lot of opportunity in this space. You do have others pursuing something similar. The ARC Venture fund, you of course are publicly listed, you can trade it as an equity. How big do you think this market could be? Of course this opportunity for retail to invest in private companies. When you say five years in the future or so I I think it’s massive. I think there’s going to be a lot of people in the industry that are looking at this right now being like this is just has the potential to be a better product for venture. Over the last decade, a lot of venture has sold beta exposure as alpha and charged 2 and 20. And so in the long run, it’s not just individual retail investors, but also institutions that can have a liquid product that invest in the private markets. Do you have any concerns though about whether, you know, individual investors should be in private companies? Of course, some would argue that these companies are private for a reason, that they should be seasoned and come to the public markets first before you open up broad access. Yeah, that that’s one of the reasons why it’s valuable that we’re a portfolio of companies, not any one single company. And that’s we kept that in mind when deciding how to build this product. And before I let you go, we were taking a look at some of your filings. We found one from April 8th. It looks like it shows that you personally have sold about $5 million of stock. Is there any message for shareholders to take away from that? Yeah, so actually that was our parent company Destiny XYZ Inc that sold stock and it’s super important for us to be independent. And so that actually for us, allows us to grow our team, grow our products and offerings and serve the Tech 100. And so there’s been a lot of speculation on that. But for us, we have, we’re trying to build a real profitable business. We actually brought Destiny Tech 100 to market with zero banks. Oregon financial advisors involved, 0 distributors. And so we’re trying to build a product that’s actually interesting to people rather than another financial product that’s just sold.