Destiny Tech100 CEO Sohail Prasad on making private tech accessible: $100M Anthropic stake, 35 portfolio companies

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What's going on? Hey, how's it going?

Great for great to finally have you on the show. We met once. I think it was too long ago to remember what we were even talking about, but it's great to great to see you again and uh a lot going on in your world. So, why don't you kick off quick kind of background on yourself and then let's talk about Destiny.

Sure. Uh great to see you. Thanks for having me. Um founded Forge, a stock market for private companies back in 2014. uh took that public in 2022 and then Schwab bought us last year um and in 2020 started a company called Destiny to bring public access to private tech. So along the way, um, I realized that there's such a big inequity. Um, most people in the world that use, you know, all the companies that are advertisers for you guys that are tech companies in our everyday lives, you have no way of owning that and wanted to create a way for anyone to own a piece of that future from the convenience of their brokerage account.

Uh, very very cool. I've been, yeah, following Destiny since you since you launched it. Uh, how long did it actually take to get it up and running? There's a number of groups now that have seen what you've done or maybe had a similar idea and are trying to bring products to market. Uh but you've been you've got a nice little head start. I guess I guess the journey really did start with Forge. Uh it was uh uh probably couldn't have pulled Destiny off without having having done that first and had all of that understanding of of the market. But um but yeah, what what are uh what were kind of like what was the logic around the decision for for kind of the current structure and all the decisions that made uh that went into uh building the initial uh product and then kind of where is it going from here?

Sure. It um thinking about what the dream product is, it kind of looks like QQQ for private tech. That that's a dream. Anyone can buy it on any given day. Anyone can sell it. has exposure to a broad base of private tech companies. Now, structurally, there are definitely challenges. Um, you know, an open-end ETF. Um, you don't have enough liquidity in the underlying private companies that would support uh the creation of uh shares on a given basis or redemption on a daily basis. So, we looked across the market at what kind of structures are possible and ultimately decided that a listed closedend fund gets that intraday liquidity. uh it's listed on the NYC, it's accessible. Um but you're still able to go invest in these companies. So it took us quite a while. Um we spent 19 months uh waiting for registration with the SEC uh in the first time. We listed in March of 2024. Uh and then we spent another 15 months waiting uh for the SEC to approve our shelf.

Overnight success. I love it. Uh walk me through the mechanics of the closed end fund. That means that uh you you own uh shares in private companies. When I buy shares in Destiny and then I go to sell them, I'm not selling them to you. I'm selling them to Jordy. Is that right? Or someone else on the in the market.

Exactly. So, we trade intraday on the NYSC. Market just closed, but um yeah, anytime you want, you can go into your uh Schwab account. Uh you can buy DXYZ, you can sell it. Um and it's all effectively secondary market trading. they're not creating or redeeming shares. Now, last year we got approval from the SEC uh or got effectiveness to raise up to a billion dollars opportunistically.

Um [snorts] and that allows us to issue new shares, use the capital we raise from that and then invest in new companies.

Okay. So, if there's a if there's a delta in NAV to market cap, it's because there's expectations about what you'll buy with that with those shares maybe.

Yeah. Early on there was uh a huge delta as people found out that this was even possible back in 2024. Um and I think that was just people realizing, oh wow, I can actually do this. I I don't have to go anywhere. I don't have to make a new account. I can buy this. And people got really excited.

Um and now you know that um premium has come down.

Um just as we've gotten more mature, I kind of we had a decision to make when we brought it to market, which is we wanted to have a portfolio of the top 100 private tech companies. should we wait until we build a whole portfolio? Should we um just list it uh with no companies in the portfolio? And we decided, hey, we'll build it effectively in public. So, we listed with 20 some odd companies. Today, we have 35 and we're kind of growing that over time.

What uh what what were the conversations like originally with companies? Obviously, you're not always buying direct access or not getting direct exposure, but you're buying uh into uh SPVS or things like that, but what were the conversations like in the beginning? How are they going now uh with with Robin Hood's new product? It sounds like uh at least some of it is is actually being uh uh like uh authorized by the company or they're like effectively signing off on it or cool with it. I'm sure in other cases companies um are are less excited about it but like give us give us the an overview there.

Yeah, but with the secondary market it's always even for the last you know 15 years uh been case by case basis. Some companies have really active secondary markets and they facilitate it. Uh others try to keep more of a tight control. Um from day one with Destiny what we did is make sure we have flexibility to invest across the board. So we've invested in companies that are doing primary rounds. We recently invested in a company called Skilled AI. Uh SoftBank led that round and we were uh a part of that round. Um we partnered with Beast Industries um and are working directly with them. Um and then at the same time we can also opportunistically buy through secondary markets. So sometimes they're employees or early investors that need liquidity um and they come directly to us and we can buy from them. uh what uh part part of the part of why Destiny is exciting and other products are exciting is that uh is that every anyone can get exposure to the asset class. The uh the the challenge is that oftent times by the time you know a company's amazing and it should be in the Destiny 100 it's already been marked up to 50 60 you know billion or or whatever the number is sometimes 80 you know in the case of SpaceX you know hundreds of billions uh what are your plans around obviously picking companies at the super early stage uh is hard it's also very risky like part of the appeal of Destiny is that you're you're getting exposure to companies that we already know are like solid, they're well capitalized, they're hopefully leaders in their market, but uh how are you thinking about like qualification uh for um for Destiny and would you ever go earlier stage? Is that too risky? All that stuff.

Yeah, that that's one of the reasons we decided to call it the Destiny Tech 100 and target building out a portfolio of 100. Um you want to have enough range in there so you can have some of the uh early unicorns, you call it one, two, three billion dollar companies uh that have in many cases um product market fit. They they have growth but they have uh you know more room to grow. Uh as well as at the same time some of the larger companies that are tens now hundreds uh of billions of dollars and beyond. And so we will have over time a mix of those companies so that we can kind of get some of those uh earlier stage uh albeit still late stage bets um and others that are you know the blue chip mature companies. Oh. Uh, how do you think about the actual investing strategy? Is are there any like I mean you mentioned like post unicorn are there heruristics or firm rules that are in a bylaw in bylaws or are you just sort of like the fund manager and you're tasked by the shareholders to make the best investments that are according to your own intuition, skill, obviously your incredible background, all of that. But uh how do you think about the actual capital allocation question?

Yeah. Um so right now the portfolio is in progress. So you look sometimes we might be overweight one company. Uh for a while SpaceX was greater than 40% of our portfolio that's come down. Um and so we're kind of in this building phase. As we reach a more steady state, we want to be reflective of the latest stage ventureback ecosystem. Um so we actually publish uh rules and eligibility criteria. um on our website we're like you know companies had to raise uh recent rounds of uh financing uh they um other kind of growth metrics and and TAM that we look at um but generally speaking we don't want it to be you know whatever we like on a given Monday we want to say hey we want overall latestage ventureback exposure and where we get to use our discretion is hey what's the right um time to buy this what's the right structure what's the right pricing um things like that where if you just had an index, you would be a forced buyer at any price at any structure. And so it gives us the ability to go and find uh unique opportunities in the primary secondary markets and actually invest behind that.

Uh what what's the process when a company in the portfolio IPOs? You have a number a number of portfolio companies that will be IPOing or should IPO this year? uh there's a lockup period and then I imagine uh uh you guys plan to exit those positions and then recycle the capital. But how are you thinking about that?

Yeah, we so we want to be long-term capital partners for the company. Um and so generally once a company goes public, we're not selling our shares immediately. We'll wait um for a few years. Uh Instacart was one of the companies in the portfolio that went public and uh we waited for a few years before we slowly started divesting that position. And so that's how we're trying to balance, you know, the two things, which is our public shareholders are looking to us for exposure into private markets, but we also want to be great partners for companies um and smooth their transition as they go public.

It's amazing. Well, congrats on all the progress. What was the uh so so what was the talk about the most uh recent acquisition uh or or investments you guys are in uh anthropic with for $100 million breakdown some of the new companies. Yeah, we so we just uh announced a couple weeks ago that we uh closed a $und00 million investment secondary purchase in Anthropic. Um I mentioned Skilled AI East Indies.

He's like, I can't let you get out of here without a gong. I knew it.

That's right. Uh very cool. Well, yeah, we're excited to uh continue to follow Destiny and and the overall uh overall market. Uh you guys have definitely led led the charge. Second time leading the charge I felt like with Forge. You guys were very ahead of the curve and and ahead uh here as well. So great to have you on.

Thanks. More to come.

Amazing. We'll talk to you soon.

Cheers.

Have a good one.

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