Jason Kirby: Welcome back, everyone. Welcome to Fundraising Demystify. Today we have Alex Simpson joining us, founder and CEO of Openstock. Welcome to the show, Alex.

Alex Simpson: Thanks, thanks Jason. Good to be here, man.

Jason Kirby: Now, I'm excited to have you share your story with the audience. Today, we're mixing things up a little bit. We're talking not just about your history with open stock, but also the liquidity markets overall and introducing our audience to this concept. I'm really excited to have you on the show. It'd be great for you to give the audience a little bit more about you and your background and how that ultimately led you to launching Openstock.

Alex Simpson: Sure, pleasure to connect here. Originally from South Africa, been in the US for about four and a half years. My background's been as a builder, a co‑founder in B2B fintech for about 12 years—mobile point‑of‑sale to BNPL for B2B. I’ve also advised and helped grow early‑stage fintechs. That led to a strong network in pre‑IPO and late‑stage private companies and a clear need in private stock liquidity. We started with lending to shareholders, and naturally that led to a much bigger market focused on LPs in traditional and late‑stage funds.

Jason Kirby: Let’s unpack that. Many early founders focus on raising venture capital, but as companies scale and stay private longer, there’s a path toward generating liquidity as a private company. Founders, early shareholders and employees aren’t getting big liquidity events and face limitations. Can you share what Openstock is doing for this market?

Alex Simpson: It’s only for a subset of companies, but for late‑stage companies that are pre‑approved, we provide loans to specific shareholders—covering things from exercising options to outright liquidity—so they can get tangible value from illiquid stock. For companies, it helps incentivize employees. Because the secondary market has many variables, people often prefer short‑term financing to maximize upside.

Jason Kirby: Most people know secondaries—sell shares, trigger taxes, lose upside. You’re collateralizing options or equity and providing a loan so they keep upside while getting liquidity, correct?

Alex Simpson: That’s correct. But our focus now is more on the LP space, given where the secondary market is.

Jason Kirby: Interesting—so only LPs that have positions in these companies?

Alex Simpson: In the funds, not necessarily the companies. We shifted to LPs of credible funds—late‑stage funds from B to A grade—that’s our primary focus now.

Jason Kirby: That opens liquidity for LPs who’ve had little liquidity the last few years, needing to meet capital calls or invest across asset classes. Good niche, likely less competitive. How much capital did you raise to get off the ground?

Alex Simpson: Mix of debt and equity. We currently have a fund with $800 million focused on this asset class. Loans are sizable, and despite the large fund, the market is bigger—so we’re growing.

Jason Kirby: From a fund perspective—are these VC funds or private equity funds? What types?

Alex Simpson: Mainly private equity and private credit. We’re more reluctant with VC due to risk profile, though we’ve done some. Primarily real estate, private equity and private credit.

Jason Kirby: Those are more predictable than venture volatility. You’re tapping a very large alternative market. Why is this product so important right now?

Alex Simpson: Leverage. If you see future upside but liquidity takes longer, many stay bullish. Instead of selling at a discount—or being unable to sell—LPs can leverage the position, take an interest hit and find arbitrage or meet needs (alternative investments, taxes, personal). It’s about giving flexibility.

Jason Kirby: Is this timely only now, or increasingly pertinent? Were there other solutions like this but less accessible?

Alex Simpson: Depends on the fund’s asset class. Many banks offer this to clients in funds held by the bank. We’re more fund‑agnostic and asset‑agnostic, offering solutions across LPs and funds.

Jason Kirby: Who do you cater to—family offices or institutional LPs?

Alex Simpson: Small institutions and family offices/high‑net‑worths. We work through them or directly through the fund.

Jason Kirby: Do you build the relationship with the fund or the LP?

Alex Simpson: A mix. Lots of referrals LP‑to‑LP or via the fund, based on liquidity needs.

Jason Kirby: Across asset classes, where is liquidity tightest?

Alex Simpson: It’s less about fund type and more about use of funds. Timely events (tax bills), personal events (divorce), or opportunity cost (a time‑sensitive allocation). Liquidity needs are time‑dependent.

Jason Kirby: So it’s more about term length than asset class. Are we talking six‑month terms or five‑year terms—what are the unit economics?

Alex Simpson: Roughly 25–30% LTV. Terms from six to 60 months (about five years).

Jason Kirby: And pricing? Prime plus, subprime—how do you set rates?

Alex Simpson: Depends on underwriting. We quote based on the borrower and risk.

Jason Kirby: So it can become an arbitrage or tax play; if the new opportunity’s yield exceeds the borrowing cost, it’s worth it—similar to margin for retail traders. This creates more accessibility for private markets where public markets are easier to underwrite. What excites you most about working in this field?

Alex Simpson: Seeing how investors think about money at specific times. Liquidity and leverage as utility, not just risk. In markets like this you see which funds pay true liquidity/dividends and which are truly long‑term—and which investors have conviction. Many just want the capacity to make more good decisions; we enable that.

Jason Kirby: Any interesting anonymized examples you can share that your liquidity enabled?

Alex Simpson: A classic case: borrow at ~10% and deploy into a 16% yield—netting ~6% in a year. Used at the right time, leverage can seize opportunities and create profit.

Jason Kirby: Simple interest‑rate arbitrage. On return profiles—what are LPs capturing in private credit with high rates?

Alex Simpson: Broadly mid‑ to high‑teens (e.g., ~14–18%) depending on underlying assets. We’re not only in private credit; that’s just a reference point.

Jason Kirby: Are those returns net of fees? And are they accessible to smaller or retail investors?

Alex Simpson: It varies by fund. As for smaller investors via platforms, I’m not sure.

Jason Kirby: Do borrowers ever deploy to riskier assets like crypto—and would you underwrite that?

Alex Simpson: We don’t restrict use of funds, so some transactions may have gone to riskier assets, but we don’t target high‑risk funds; we focus on conservative, traditional funds.

Jason Kirby: How do you help GPs with LPs asking “when are distributions coming?” Walk us through your process.

Alex Simpson: We get GP consent, underwrite the fund, then communicate terms to LPs—either via the GP or directly—based on fund valuation. Loans are offered on standardized terms once we’re comfortable.

Jason Kirby: Funds mark their own assets—do you do an independent view?

Alex Simpson: Yes, we underwrite independently.

Jason Kirby: Do you often see disparity between the fund’s NAV and your underwriting?

Alex Simpson: It varies. VC is more disparate; otherwise it depends post‑underwriting—no single answer.

Jason Kirby: On VC valuations—the Bolt saga is a cautionary tale (from $11B to ~$300M). How do such things happen?

Alex Simpson: It’s a private company we didn’t work with, so I can’t comment on specifics.

Jason Kirby: Given your operator background, how has that shaped what you do today?

Alex Simpson: If you don’t raise the right capital, it becomes debt‑like unless value‑add. Be real about product‑market fit. Know the difference between a feature and a business. Get perspective from players—even competitors—without oversharing IP. Dive in, learn, and be prudent.

Jason Kirby: Founders fear idea theft. Your take on talking to bigger players?

Alex Simpson: Be thoughtful, but openness can help. Approach potential competitors transparently to learn if the space supports multiple players and how you might collaborate—share carefully.

Jason Kirby: Great point. Anything else founders overlook?

Alex Simpson: Regulation. Some regions are more feasible than others for certain products. Be aware of regulatory constraints early.

Jason Kirby: How long did it take from idea to partnering with an $800M fund and transacting?

Alex Simpson: The idea wasn’t novel—larger private lenders did this ad‑hoc with clients over years. The opportunity was to scale it. Markets and valuations changed; lots of learning along the way.

Jason Kirby: Did incumbents or customers push back?

Alex Simpson: Absolutely. You maintain respect, nurture relationships and keep going.

Jason Kirby: Parting advice for GPs managing LP relationships?

Alex Simpson: Set expectations: value‑add vs. passive LPs. Understand liquidity constraints (secondaries, lending, etc.). Ask why they invested and what they’ll need over time. Consider third‑party liquidity as an option—not an obligation. Every fund’s unique; communication and expectations matter.

Jason Kirby: You mentioned you only work with about 10% of funds you underwrite. Why?

Alex Simpson: We must keep a clean book—be extremely prudent with loans. A reputable co‑investor doesn’t guarantee outcomes; rigorous underwriting is essential.

Jason Kirby: What common attributes help a fund pass the cut?

Alex Simpson: No single checklist—over 200 data points and a primarily quantitative approach. Think like a PE/growth investor underwriting a secondary; it’s complementary to LP position buying.

Jason Kirby: Alex, thanks for opening our minds to this side of capital markets.

Alex Simpson: Thank you, appreciate it.

Jason Kirby: Thanks for being on the show.