The speed at which funds flow into tokenized private equity funds may be much faster than the speed at which they can be withdrawn. Even though asset management companies are using blockchain technology to convert fund shares into digital tokens, a lack of liquidity could still mean that investors have to wait for months to find buyers. A New York-based startup, Fission, is developing a system with the goal of allowing investors to sell their tokenized fund shares within seconds, bypassing this waiting period.
The startup announced on Thursday that it had completed a $10 million Series A financing round to address liquidity issues. Fission was founded in 2024 by CEO Jonathan Shaffer, Chief Revenue Officer Steve Bendit, and Chief Technology Officer Chris Humphrey. This financing round was led by Pantera Capital and was completed in September, with Circle Ventures, Borderless Capital, and Ari Rubenstein also participating in the investment. Fission refused to disclose its valuation.
Although tokenization has helped investors bypass cumbersome paperwork and invest in funds managed by large firms such as BlackRock, Apollo, or Janus Henderson, it does not guarantee that they will be able to find buyers when they wish to sell their holdings. Fission takes a different approach by acting as the buyer itself, allowing investors to sell through its platform, rather than waiting for the fund to process redemptions. Investors connect their digital wallets and submit sale requests, while Fission handles the legal and transaction execution mechanisms in the background.
Shaffer said to Fortune, "Normally, it would take about 200 days to sell such products. After paying a fee, you can now sell them and get your funds back, and the transaction will be settled in 90 seconds or less."
Lack of exit channels
As asset management companies move fund shares and investment products onto digital ledgers, tokenization is attracting more attention on Wall Street. BlackRock expanded its product line in August by launching two tokenized money market products; JPMorgan Chase' asset management department also increased its investment in this area, launching a second tokenized money market fund for U.S. investors in May.
This round of promotion has also extended to the brokerage distribution sector: Federated Hermes, an investment management company based in Pittsburgh, announced this month that it has reached a partnership with Prometheum. They will offer tokenized funds through brokers, with the first product expected to be launched at the beginning of 2027.
However, the issue of liquidity still exists. In June, the digital investment platform InvestaX stated that most investors in tokenized private lending products subscribe or redeem through the funds themselves, rather than selling their holdings to other buyers. Earlier on, a report released by the International Organization of Securities Commissions (IOSCO), an organization of global financial regulators, found that companies have made faster progress in creating digital tokens than in establishing markets where investors can buy and sell among each other.
Pantera Capital General Partner Franklin Bi said to Fortune: "The current development of tokenization is indeed mainly focused on the bridging layer and the issuance layer... but what Fission is concerned about—the issues after tokenization—almost no one is really focusing on."
The founder of Fission has personally encountered this problem. Shaffer once served as an investor in the hedge fund Point72 under the umbrella of billionaire Steve Cohen. He observed that although private equity fund shares were tokenized on Wall Street, it did not reduce the waiting time required for investors to cash out. After conducting in-depth research on the relevant mechanisms, he contacted Bendit who was responsible for business development at Securitize at that time. Securitize is a company that puts financial assets onto the blockchain. After discussing for over two years why the liquidity of funds remained a persistent issue, the two collaborated with Humphrey to establish Fission in an attempt to create a faster exit channel for investors.
Shaffer indicates that this startup currently has 8 employees, with team members distributed across Long Island and Los Angeles. Its majority of clients are institutional investors or organizations that hold assets on the blockchain. These include hedge funds in the United States and abroad that hold tokenized private credit or equity assets, crypto organizations that manage treasury assets, as well as stablecoin issuers that allocate their reserves into interest-generating tokenized investments. There is also a small but growing number of high-net-worth individuals who use this platform to sell their personal holdings.
Before this round of Series A financing, Fission had completed a pre-seed financing of $1.6 million, led by SALT Fund and Kraynos Capital. Existing investors New Form, gumi, Cryptos Capital, Anthony Scaramucci, Manhattan Venture Partners, Reflexive Capital, and Lattice Capital also continue to provide support.
