Terrence McMenamin joins us now. He is the CEO and co-founder at TechDollar. Nice to see you here today. Thanks for having me. So let's talk all about the private company trap. Let's assume, I wish this were true, that I had a multi-billion dollar private company, and on paper, I'm a millionaire and I'm crushing it, but I might not have access to that. Where do you step in from there?
Many such cases. Obviously, equity timelines have stretched, right? I used to see around five to six years to IPO. Now we're seeing on average around 11. That leaves a lot of engineers, guys like yourself, running multi-billion dollar companies that are quite paper-rich, but not able to afford engagement rings, down payments on homes, quality of life improvements, cover, you know, tuition bills, things like that. So that's where TechDollar comes in.
And I know you want to build the borrowing system around that wealth, even if so much of it is on paper for far too long for those people. You call it the credit layer for private markets. What does that actually mean?
Basically means that no one's built the plumbing. What Tech Deli has done is we've come in and we've basically re-looked and repriced what has essentially been evaluated as speculative venture across asset classes and frontier AI labs, robotics, compute, chip adjacency, you name it. These assets are basically hardening as collateral and so should the borrowing markets around them.
Usually if someone sells, there are, in addition to many other things, capital gains taxes you gotta pay. Borrowing inherently looks a fair bit different. Talk to me a bit through the math, the actual taxation. Make it make numbers and sense.
Yeah, so no tax advice coming from me. I'm sure there's lots of great accounts that can do that. But obviously selling is a taxable event. Borrowing at funding is not. When you sell, you basically give up all your upside. Borrowing allows you basically retain what you've put so much value into building without having to surrender, you know, the growth of that asset behind it. And you also don't have to give up what would be say you're sitting on a million dollars of equity in your frontier AI company. You might take home $600,000 after taxes. If you borrow against it, you'll take home much more than that. So the outcome's the same in terms of liquidity, but it's much more favorable for you in terms of how much cash you can actually tangibly realize.
There's a lot of challenges to private companies. There is no continuous, let's say, public price discovery, for instance. And I wonder what, historically, that does to lenders who are looking at all this amazing technology, you know, AI, robotics, space engineering, whatever it is, for companies that are still private.
Yeah, so what we do is we look at mark to market rather than looking at stale funding rounds. That allows us to basically evaluate more realistically what the actual collateral is worth and make our lenders who are providing liquidity to our borrowers much more comfortable.
What are the trends that had to come together to make this possible now?
It's growth of the asset class, right? It's maturity for robotics, for AI, for semiconductors. As collateral hardens, obviously the risk decreases in terms of lending against these assets.
What most excites you, not just about where you are now, but what this could be tomorrow?
What could it look like? It's a big unlock. It allows the guys who have put the most value and time into building these companies, who are fundamentally changing our day-to-day lives, improve their day-to-day lives themselves, while getting to keep the upside of the companies behind them.
Terrence McMenamin, CEO, co-founder of Takedollar. My man, well done. Thank you. Come back on the show any time.
