Wall Street is lending billions to tech founders, and the real payoff isn’t interest

Here’s a move straight out of the relationship banking playbook: lend money to someone today so they’ll remember you when the real payday arrives tomorrow. That’s exactly what Wall Street’s private wealth divisions are doing with founders and early employees at the hottest AI and tech companies, extending loans backed by illiquid private stock in a calculated bet that these borrowers will become spectacularly wealthy clients once their companies go public. The strategy is working, at least by the numbers. Goldman Sachs has seen its private wealth management loan balances in San Francisco jump 50% since 2023. JPMorgan has reported a tenfold surge in global demand for private bank lending in recent months. These aren’t random credit lines. They’re carefully placed chess pieces on a board that leads directly to the largest wave of US IPOs since 2021. The loan-to-IPO pipeline Founders and early employees at private companies often find themselves in an awkward financial position: wealthy on paper, cash-poor in practice. Their net worth is locked up in shares they can’t easily sell. Meanwhile, mortgages need paying, tax bills come due, and stock options need to be exercised before they ...