BroadChain learned that at 13:46 on April 24, after pushing private company valuations to hundreds of billions or even trillions of dollars, venture capital firms are facing a core challenge: how to find enough buyers to absorb their exit demand. This is not an accusation of illegal activities in the San Francisco venture capital scene, but a critique of an unethical behavior that profoundly violates the original social contract of capitalism.
The United States has never established a European-style high-welfare state in its history. Its original social contract is: the stock market is the welfare system. Traditional fixed-benefit pensions have been replaced by 401(k) plans, with social security serving only as a safety net. The implicit rule is that every ordinary worker becomes a shareholder, and capital appreciation drives upward mobility for all laborers. Even with stagnant wages and widening wealth gaps, the compound growth of retirement accounts maintains social tolerance. Passive index funds are the pure embodiment of this contract—cashiers, teachers, and plumbers can all share in market returns without risk.
This contract requires three conditions: the public market is a place of value creation, wealth growth is broadly inclusive, and each round of capital increment is captured by index funds. Today, all three conditions have completely collapsed. When companies go public only after reaching valuations of tens of billions, the public market no longer creates value but only distributes it. Everything in the current stock market is wealth redistribution rather than compound growth. Figma's stock price halved compared to its private valuation after listing, and Klarna's valuation plummeted 90%—this is not a system bug but a design feature.
The industry opens private markets to retail investors under the guise of "democratizing investment" and "narrowing the wealth gap," but in reality, it allows retail investors to catch the peak of a decade-long private market bull run. Private venture capital products targeting retail investors are not investment opportunities but tools for insiders to distribute illiquid assets at high prices. Naval Ravikant's promotional logic precisely confirms this point.
The crypto world was the first to master this extraction playbook: project teams hold large amounts of locked tokens, retail purchasing power dries up, and unlock deadlines approach with no buyers. The solution is to repackage these tokens as compliant equity assets, allowing traditional financial institutions to buy them legally. Tokens that retail investors would not directly buy suddenly become "stocks," institutions buy them compliantly, retail investors follow through brokerages, and positions are smoothly distributed. The SEC turns a blind eye, founders successfully cash out, and buyers become extraction targets from day one.
After validating this in the crypto space, the San Francisco venture capital ecosystem has expanded it to the trillion-dollar mainstream capital market. Private venture capital products targeting retail investors are the first channel, and Nasdaq's proposed listing rule changes are the second channel.