By David Tollemache, Co-Founder of Techdollar
In 2023, the collapse of Silicon Valley Bank was the second largest bank failure in US history. Six weeks later, First Republic surpassed SVB’s scale in its own collapse. What got lost in the fallout was what SVB and First Republic did for rank-and-file tech employees: they lent against their private stock. This was a precious liquidity outlet for employees holding equity value that wouldn’t go public for years, removing one of the only ways to turn their paper wealth into usable capital.
The big banks that absorbed the wreckage haven’t replaced what was lost. The JPMorgans and Goldmans of the world built their securities-based lending businesses around public assets, often rejecting pre-IPO equity as acceptable loan collateral for most clients. But what the market needs now more than ever is lending infrastructure built for the private equity assets employees hold, designed to meet their day-to-day financial needs without forcing them to sell too early.
Venture Credit Has Outgrown Its Label
In an earlier era, trapping personal net worth in illiquid stock wasn’t a crisis. IPO used to be a predictable finish line. Employees joined early, accepted below-market salaries in exchange for equity, and expected to see it realized in five years, but that timeline to IPO has since more than doubled. More importantly, the companies themselves have changed. Today, there 1,500 pre-IPO unicorns, up from 39 in 2013. These are no longer venture-stage risks. They’re capitalized, revenue-generating businesses operating at the frontier of AI, compute, and robotics. What looks like “venture” is increasingly something closer to private infrastructure — just without the liquidity layer.
Part of the reason is structural. With the market still treating late-stage private equity like speculative venture, lending against private stock remains fairly exotic — a favor select banks do for their best clients. But that framing ignores the fact that employee held pre-IPO equity has become a meaningful part of global wealth, a shift which liquidity constraints have masked. This results in a massively underserved market for those businesses’ employees, whose equity is backed by enterprise value far greater than the venture-backed startups of the early 2000s.
Additionally, credit solves a problem that selling can’t. Selling triggers a tax event and surrenders the upside that made the equity so valuable in the first place. It’s the reason why even when companies do make tender offers, many employees, like in Anthropic’s case, choose to decline. A loan against private equity lets an employee cover a down payment, or ride out a job transition without sacrificing what is often the foundation of their economic future. In short, credit buys time. And in private markets, time is often the most valuable asset. It lets the true value of the equity manifest on the employee’s timeline, instead of selling out early to a tender or waiting for an IPO.
What Comes Next
The gap left by SVB and First Republic won’t be filled by another regional bank, or even the megabanks that absorbed them. The old model depended on relationship bankers who knew a specific cap table because they also banked the company. That model doesn’t scale, and even when it existed, it served the top of the cap table more than the rank and file.
What the market needs is streamlined private credit infrastructure that treats private equity the way public equity has been treated for decades: as a legitimate collateral class with fair pricing and default mechanisms that protect the lender while treating the borrower fairly.
A decade ago, valuing a private company outside of a funding round was guesswork. Today, secondary data, tender offers, and 409As can surface defensible loan-to-value ratios that are responsive to market moves. Default mechanics, the other historical obstacle, have matured alongside pricing. A well-structured loan against private equity now relies on solid pathways to established secondary platforms, with margin thresholds tied to transparent valuations, and an understanding of each issuer’s transfer restrictions and rights of first refusal built into the underwriting from day one. The borrower and lender are aligned, and neither side has to depend on a relationship banker to broker an ad hoc solution.
The building blocks for a better private credit infrastructure are here, so is the demand. The borrowers this infrastructure serves are employees meeting ordinary financial needs that can’t wait on indefinite IPO timelines. Today, the tech employee holding their net worth in private equity has few quality options to meet them.Â
The bank that served the tech employee is gone. What replaces it will reflect the high quality of the assets employees actually hold. Priced by the market, available at scale, and finally worthy of the wealth it represents.
