Deutsche Börse makes strategic investment into private derivatives trading platform

The exchange group has invested $3 million into Caplight Technologies to expand its derivatives trading and hedging capabilities on private company shares.  

Deutsche Börse Group has invested $3 million into Caplight Technologies, a platform designed to enable institutional investors to hedge, generate income or take long and short positions on private company stock using structured products and synthetics.  

The company, founded by Javier Avalos and Justin Moore in 2021, aims to bring public equity market-like transaction data, execution, and settlement mechanics to the private markets, thus allowing many large institutional investors to access the private markets for the first time.  

Venture capital-backed private companies represent over $3.8 trillion in value across over 1,000 companies, according to CB Insights. Caplight’s platform offers investors the ability to make long and short directional investments on Venture-backed private company stock using proprietary financial products and unique price discovery tools. Investors utilise the Caplight platform for the purpose of hedging, income generation, shorting, or investment strategies on private company stock. 

“Until now, the VC asset class has existed ‘long only’, meaning no ability to hedge or make directional investments. Caplight gives investors the tools to actively manage their risk across illiquid assets. We’re incredibly excited to be turning the hedging of private company stock into a product,” said CEO Avalos.  

Earlier this year, Caplight completed the first ever call option on private company stock, and is currently working on plans to explore collaboration opportunities with global derivatives exchange Eurex, a wholly owned subsidiary of Deutsche Börse, to bring structured pre-IPO investment products to the global financial markets. 

The latest raise from Deutsche Börse brings Caplight’s funding to $10 million, including a $5 million seed round led by Better Tomorrow Ventures that was completed in January 2022. Other investors include Fin Capital, Susquehanna Private Equity Investments, LLLP, and Clocktower Ventures.