Kristin Myers: Every day on this show, we put a private company in the hot seat and ask when they think they're going to be ringing that big bell behind me. But today's guest would say that the question about when companies are going public is a little bit out of date.
Instead, what do investors actually own when they buy into a company that isn't public yet?
Today's company segment is helping investors answer that question. But first, let's take a look at the company.
The road from an idea to the opening bell starts right now.
What if you didn't have to wait for the opening bell to invest in some of the world's most talked-about companies?
Companies are staying private longer, creating a growing market for investors who want in before the IPO. And that's the opportunity Augment is going after.
The company is building a marketplace designed to bring something private markets have traditionally struggled with: access, pricing, transparency, and liquidity, giving qualified investors the ability to buy and sell exposure to hundreds of pre-IPO companies.
And Max Melmed, Augment's Director of Strategic Partnerships, has spent more than a decade at the intersection of trading, brokerage, and private markets.
But here's the billion-dollar question: Can private markets ever trade with the efficiency of Wall Street? And when everybody wants a piece of the next big IPO, how do you know what that private company is really worth?
From Startup to Stock Exchange, Max Melmed is next.
And joining us now is Max Melmed, Director of Strategic Partnerships at Augment. Max, thank you so much for joining us.
Max Melmed: Thank you for having me. I appreciate it.
Kristin Myers: So I want to talk about Augment's line, which is that private markets were meant to be liquid, which is very interesting to talk about because we're actually talking about private markets, which a lot of folks say have a liquidity problem when you are trying to buy into them before that IPO.
So talk us through what you guys mean when you say that the private markets are meant to be liquid.
Max Melmed: Yeah, yeah, absolutely. So first off, thanks. I appreciate you having me.
And from the noisy floor, maybe counterintuitive as we talk about, like, building out private markets. And a lot of people, historically, the dream was to get up there and ring the bell.
And you had folks like Amazon, who went public at a $450 million market cap, and Microsoft went public sub-$1 billion.
And when that happened, a lot of the general public got to participate in their growth.
Now, because of a whole host of trends, we're seeing these companies stay private longer. But ultimately, that creates issues where, whether it be founders, employees, investors, they may want liquidity.
And on the other side, investors who want access to invest in the companies that they know, the companies that they love.
And that has been problematic to date.
So basically, Augment, we make it really easy to invest in private companies. And then we've also recently launched some capabilities to make it so that you can actually sell those investments while the company is still private.
Kristin Myers: Okay, so talk us through how. Let's connect those dots.
You're a regular investor and you want to get into a company before an IPO because that's where a lot of the money is made, right? But that door has really been locked to a lot of investors.
So how does Augment essentially solve that problem that you're talking about, which is that previously you used to be able to participate in a company's success prior to going public? How are you guys solving that issue?
Max Melmed: Yeah. So a lot of these companies, as they're staying private longer than ever before, they're required under 12(g), once they cross 2,000 investors, to become a public reporting company.
So what that ultimately has led to is larger investment minimums and kind of keeping the doors closed to institutional investors.
Basically, what Augment has created, The Collective, is our master series structure.
Basically, we set up an SPV where we can go out and buy the stock, whether in a primary, a tender, or in a secondary where we're purchasing those shares, putting that in a special purpose vehicle, and then we make that accessible to accredited-or-better investors.
We could touch on that, but effectively, they're accessing that investment through our SPV, all electronically, all via our desktop application or our mobile app.
But that ultimately brings the investment minimums down, and it makes the process much more seamless and straightforward for regular investors.
So we bring those minimums down from maybe $1 million, $5 million, $10 million, in some cases even like $100 million, to $10,000.
Kristin Myers: So let's talk a little bit about that. Accredited investor, $250,000, essentially. Is that limit right to become an accredited investor?
So this still isn't for everyone, right? The access has opened up a bit, but it's not necessarily opened up to every retail investor that's essentially out there.
Talk us through a little bit about that, that sort of limit. That's a legal limit, isn't it? And do you still think that that's a piece that might still be broken? Because it sounds like you're trying to democratize access.
Max Melmed: Yeah. So it's interesting. Our compliance folks may ask me to make sure people know private investments are illiquid or speculative. These are risky companies. You may not have access to full information.
So it does make sense to have some sort of gating to make sure that people understand the risks of what they're getting involved in.
And it is a regulatory requirement. So we limit our investments to accredited investors. Certain are only available to qualified purchasers, certain transactions only to qualified institutional buyers.
So right now, those limits are either income, net worth, or licenses.
I do believe it's a little bit broken. I mean, it makes sense, but I think we're seeing some changes, the request for, like, an accredited investor test.
So if you can prove that you understand the risks involved, and you kind of take a step back, I can go to Atlantic City. I can put it all on black. I can go buy a scratch-off. I can go get on Kalshi and bet.
Yet I can't invest in Anthropic or OpenAI or Stripe or some of these kind of generational private companies that are worth tens or hundreds of billions of dollars.
It feels slightly broken.
At the same time, I understand where the regulators are coming from because these are risky investments. So having some sort of gating and some sort of, kind of like, approval process in order to be able to access these.
Today, it's by the accredited investors.
Kristin Myers: I see your point because we always talk about how the market is not gambling at all, and no one should even think about it as gambling.
So the point being that, therefore, you should give access, a more regulated access, to more folks around something that isn't gambling instead of allowing everyone to just go throw their money down on the roulette table.
Max Melmed: And so the other markets, touching on it, like gambling or sports betting, those are effectively negative-sum games.
And then the dollars are going towards keeping the lights on at the casino or at the sports betting venue, whereas the dollars here are going to fund kind of future innovation, entrepreneurs that are going and building a better future for us.
So it's a positive-sum game, in effect, in the markets.
It feels like we should maybe see some regulatory changes there. I think trends are trending in the right direction with the JOBS Act and some of the new regulations that have come about. It opens up access a little bit more.
But right now, we're still limited to accredited investors or better.
And then there's also limits on the number of investors that could participate. So we have to keep all of that in mind.
But then ultimately, trying to solve it in order to bring that minimum down, in order to provide that access, utilizing technology to make the process more seamless.
And previously, you maybe needed to limit the minimum because it costs tens of thousands of dollars to process these transactions, whereas now we can actually bring that minimum down to $10,000.
Kristin Myers: So as you were talking a little bit about, you know, the SPVs, essentially that's the way that an investor can access this private market through Augment.
There's a lot of ways that people are trying to tackle this question, right? I cover a lot of ETFs. A lot of folks are talking about wrapping private markets inside of ETFs.
Now there's closed-end funds, and then, of course, there is the SPV.
Talk to me a little bit about why you think the SPV is really the best vehicle to do this, as opposed to the ETF, as opposed to a closed-end fund, or even, again, waiting until just, you know, that company goes public and you can access it on the public market.
Max Melmed: Yeah. So I think there's a lot of different vehicles and a lot of different structures or wrappers ultimately attempting to solve the same challenge, with people on, like, existing investors, founders, employees needing liquidity and others who want to access these.
So the market is developing products and services to kind of satiate that demand on both sides.
The listed closed-end funds I think are very interesting. It's easily accessible. Tax documents are nice and easy. It fits within your existing brokerage account.
The challenge, when you have a liquid structure built on top of illiquid vehicles, you end up with a premium or discount to NAV, and you end up where certain people may not understand that the NAV of this portfolio is, call it a dollar, but because it's just based off supply and demand, it's trading at $3 or $4.
So it's tricky. The portfolio may be considered a great portfolio, but the price you're paying is tricky.
There are interval funds, there are tender-offer funds, there are traditional funds. We've even seen some innovation from the crypto community developing pre-IPO perps, effectively allowing people to express their buy or sell interest.
All of those other products don't necessarily solve the core issue. They're effectively trying to hack the demand, right, that exists, and I get it.
But a real institutional investor, and about 80% of our volume and our customer base is institutional, they want a product. They want a wrapper that actually tracks the underlying and can be kind of one-for-one with the underlying shares.
They can pay a one-time upfront fee, and we have a zero-zero model, meaning we charge no ongoing management fees and no carried interest for our single-asset SPVs.
Kristin Myers: Okay, so we're going to dive into that a lot more after the break. But I want to back up just a second ago.
Let's say you're someone, you're an engineer, you're working at a startup, you've got a company, you've vested your shares. What do you do?
Because, as you mentioned, it's a long time, a lot longer now, before companies go public.
I'm sure we've got a lot of folks out there that are doing very well. They've got equity. They have no idea what to do with it.
Max Melmed: So it's interesting. That's effectively the founding story of Augment.
So Noll, our CEO, was Berkeley, Google, Rubrik, software engineer, super bright. He had worked for Rubrik for a while. He was getting ready to propose, getting ready to buy a house, and had 99% of his net worth locked up in Rubrik stock.
So he went out to the market to try to find some liquidity. In that process, he learned how it works and, ultimately, how this market doesn't work.
So that's where he met our other co-founder, Adam Crawley, who brings kind of the institutional experience from building out the institutional desk at SharesPost.
Right now, people don't necessarily know how they can get liquidity. And if you think about it, like, you're not an expert.
My wife in biotech, she's not an expert in fintech or finance. She doesn't know where to start. She doesn't know what to do. She doesn't know what it means, what are the tax consequences, and also, what should I be selling this asset for, right?
So there's a lot of challenges in terms of the process, in terms of the pricing, and then also challenges in terms of, like, the minimum amount that you need to be able to sell in order to make it worthwhile to go through the process.
So today, a lot of it happens kind of via phone calls, via emails. It's a little bit inefficient.
But a lot of different companies are building solutions to provide that liquidity to employees. We haven't focused on that as much, even though we do help there. We've been focusing more on institutional investors and institutional sellers.
So larger holders or that fund. For example, Databricks, I think the seed round was 14 years ago. The traditional VC fund is a 10-year lifecycle, maybe one- to two-year extensions. Now they need liquidity as well.
So this challenge exists for employees, and it exists for institutional investors.
Kristin Myers: Now, here is the number underneath this entire conversation: the year 1980.
Now, the median age of an American company going public at that time was about six years old. Now, today, in 2026, it is more than 14 years.
The company didn't get slower. The money just got easier.
Now a company can raise billions without ever filing with the SEC, so there's really no longer much reason to hurry up and go public.
There are more than 1,400 private companies now worth over $1 billion. But back in 2013, there were only 39.
So the growth that used to happen in front of everybody, through public filings at public prices, now happens behind a closed door. And now everyone is arguing about who gets into that room.
So we're back now with Max Melmed, Director of Strategic Partnerships at Augment, who, again, has been talking about solving that problem, about getting into that closed room, folks getting in on those investments before they go public.
So you were talking a little bit before the break about cryptocurrency, because I want to ask about that.
You wrote a piece about crypto exchanges where you said that perpetual futures on SpaceX that were listed on those exchanges, you said, well, I don't know if this is a quote, but you said that you're not investing in a company, you're trading a press release.
At the time, you were referring specifically to SpaceX. Talk us through that.
Max Melmed: Yeah. So I think the crypto space is fascinating. I think the pre-IPO product is an interesting one.
And in financial markets, there's a lot of different tools, structures, and instruments. And depending on the problem you're trying to solve or the intent that you have, you may want to utilize a different tool.
So personally, I paid a lot of tuition when I was just learning about the market, and I wanted to express a short position or put on a short position, and I bought [unclear in original transcript], which was like an ETF and triple-leveraged short position.
Kristin Myers: Yep.
Max Melmed: I didn't realize that that's really a short-term instrument, and by holding that long-term, you're just going to get crushed by the fees. So you may even be right in that...
Kristin Myers: You would have been right, actually. If you shorted SpaceX, you probably did really well on that.
Max Melmed: You know, I wouldn't short it. I wouldn't bet against Elon, and the market could stay irrational longer than you could stay liquid. So I'll be careful there. And I've learned my lesson.
But really, the perps, with the way that they work and the funding rate and the, like, pricing mechanism, you could effectively be right, but you could end up getting your position eaten up by fees.
So it's a more short-term instrument.
And if you want to express that interest and you want to trade, it's actually really interesting as well because there's no limit on the number of underlying holders. So it's more of an international product than a U.S. product.
But one of the challenges you have with liquidity is with these vehicles, you're typically limited to 99 investors.
The odds of a buyer and a seller matching when you're 99 is much less than when you have hundreds of thousands or millions of holders.
So perps are an interesting product, but if you're looking for short-term exposure or to put on either, like, expressing long interest or short interest for a short time, it makes sense.
But for long-term investments, which is what a lot of these private investments are, it's not really the right vehicle to execute on that.
Kristin Myers: Right. And I want to pick back up on that liquidity thing again because we keep circling it.
But I want to talk about fees quickly because we found examples where it's about 1.2% in funding fees daily. Not annually, daily.
Max Melmed: Yeah.
Kristin Myers: Who is that product for? That's pretty expensive. So, I mean, extraordinarily expensive.
Max Melmed: It's a shame because some of the challenges that exist in the market, and you have some of these regulatory constraints, so there's an attempt to solve the problem and an attempt to provide access and kind of democratize access.
But ultimately, the product that gets in front of retail, for the most part, ends up being either a diluted product or a more expensive product than the product that institutional investors are able to access.
So our attempt is to provide that institutional-quality product in a structure and at a minimum investment size and with a seamless investing experience so that a traditional investor can get exposure.
Kristin Myers: Okay, so going back again to liquidity, because when I hear this, I think that an SPV might improve liquidity, but it doesn't necessarily always solve the illiquidity that exists inside of the private market, right?
And then you also have, there's a lockout period after that product, or, well, essentially that company goes public. So when folks are trying to exit that position, they can't necessarily.
So again, talk us through that. How are you guys thinking about, again, making the illiquid liquid? Because if you try to sell, you have to sell it to someone else within, that's another accredited investor that wants to buy into that SPV.
So how does that work?
Max Melmed: Yeah. So it's a great question.
And I think you can have the greatest legal structure on the planet, you can have the greatest technology on the planet, but if you don't have a buyer and a seller, you don't have liquidity.
So last week, we actually launched our Private Liquidity Network.
So for over a decade, private markets have been attempting to solve kind of that investment process. The next step, and what we've enabled, is the sell button.
So once somebody makes an investment in the SPV, you're effectively holding units of that SPV. And now, after the requisite holding period, and there's lots of different resale exemptions, but after the requisite holding period, we enable an investor on our app to go in and hit the sell button.
So they can effectively place a sell limit order, so they can sell that private investment while the company is still private.
In order for there to be liquidity, you need to have the buyer. And that's where we're building out the network, both of accredited and institutional investors.
And historically, Augment has been more of a B2C business. So we have a broker-dealer, an RIA, and the broker-dealer is also an SEC-regulated ATS, so we can facilitate that secondary trading.
But we're also expanding to deliver this product in a B2B capacity.
So one of the other challenges we've had in private markets are all of these different silos and walled gardens. So all of these networks are constrained to trading within those networks.
Now with Augment's PLN, we're basically able to build out a global network.
So if you have a buyer from one vehicle and a seller in another vehicle, we can have a mechanism to facilitate that secondary transfer.
Kristin Myers: Okay, so just to really connect the dots for everyone at home, then essentially you're saying you're trying to make your marketplace large enough that if you want to buy, you can because there's always going to be a seller there. And if you want to sell, you can because you're building out this network large enough that you're going to have a buyer available.
Max Melmed: So I will avoid the term "always" or "guarantee," but...
Kristin Myers: Your compliance would get on you for that one.
Max Melmed: But ultimately, the goal is to build out the tools, the infrastructure, to enable the secondary liquidity.
And we really believe, and we've seen it as well. So this was something that was on the Augment roadmap, but actually moved up in the priority because of the amount of demand, because of the turnover that we've had from existing investors.
So we ultimately had to productize this to deliver it so it's simple and seamless and in your pocket.
Kristin Myers: So I want to ask about, you know, the exit that happens, right?
Because I'm curious to know if there's a point where the thing that you've made valuable, essentially access, right, it disappears the moment that company goes public. That exclusivity is completely gone.
But that potentially means that the investor that took on that private-market risk, if they can't get out of that position, could potentially be left holding the bag.
So talk us through a little bit about that.
Max Melmed: Yeah, sure.
So I actually had Andrew Ryan from Alex. Brown, Raymond James on the podcast to really break down what happens post-IPO.
And a lot of times, that IPO, that is not your event. So when you're holding restricted stock, it's up to the issuers and the investment bankers basically to set the terms in the S-1 or registration statement to outline how long that stock is restricted.
Historically, we've seen, like, a 180-day lockup or a six-month lockup.
You've seen hybrid structures like Palantir. When they went out, 20% was freely tradable upon the IPO and 80% remained locked up. SpaceX had nine tranches, I believe.
So you're waiting for your restricted shares to become unrestricted and freely tradable.
At Augment, we always try to do a distribution in kind. So a lot of the other funds or vehicles, they may basically sell your position and then transfer you the proceeds after the IPO and the restricted, or, like, after the lockup period.
Whereas our belief is not necessarily telling you what to buy or sell, when to buy or sell. We just want to make it as easy as possible.
And if you want to make this investment and hold for the long term, great. You make the investment in private markets, and then once it goes public, once it's unrestricted, give the brokerage account details. We can effectively transfer those shares into your existing brokerage account so you can decide how long you want to hold it or when you want to sell it.
But the IPO is not your event for restricted shares. You are going to be locked up.
Kristin Myers: All right, I've got like 15 more seconds. I want to ask you a little bit about what's next for you guys. $12 million Series A funding round. What can we expect next for you guys?
Max Melmed: So I think the foundation is in place. We've got a little over 50 people on the team. Awesome teams across capital markets, legal, compliance, tech, product, marketing, and ultimately scaling.
So taking the solution that we've delivered and then delivering that more and delivering that globally.
So we touched on a little bit about the right wrapper, the right structure. I think we've got some exciting stuff coming there to deliver a better approach so that it can be scalable and accessible globally.
But really trying to remain focused and solve the core problem, because there's a real problem with a lack of liquidity, a lack of access, and a lack of transparency in private markets.
Kristin Myers: I wish I had more time to chat with you because, as you can tell, I absolutely love talking about this stuff.
Thank you so much. Max Melmed, Director of Strategic Partnerships at Augment. Thank you so much for joining us today.
