Join the Tokenization Revolution: Securitize Offers a Turnkey Securities Token Platform

Securitize is one of a handful of platforms positioning itself to facilitate the tokenization and trading of securities. This will be for funds, companies, and other asset classes. The turnkey platform wants to simplify the process of securities on blockchain from login to the lifetime of the asset. Securitize seeks to enable it all: A one stop digital investment bank of sorts with full automation at a far lower cost. Removing the bankers can remove a lot of unnecessary friction. The company states that Realcoin, Lottery.com and others have already worked with Securitize to raise capital and drive value to both issuer and investor and there is a lot more in the pipeline. For trading of securities, Securitize recently inked an agreement with OpenFinance Network – another emerging Fintech in the blockchain based security space. When the agreement was announced, Juan Hernandez, CEO of OpenFinance said that entering an agreement with Securitize ensures high quality and compliant security tokens will be available on OFN.

Early last month at a security token event in Manhattan, CI had a chance to sit down with Securitize co-founder and President Jamie Finn. He shared a long list of issuers already in the Securitize queue seeking raises from $30 million and up to $700 million (a significant amount of money). Finn said they currently have a list of 1000 applications with a nominal value of $15 billion. Sure. That’s a lot and he recognizes that not everyone will be successful in hitting their max goal but still, the company appears to be experiencing some solid demand. Finn said they will generate tens of millions in revenue this year. He predicts over $100 million in 2018 as the Reg D / Reg S offerings continue to ramp up.

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Finn said they have plenty of people who would like to do a Reg A+ security offering. Under Reg A+, both accredited and non-accredited investors may participate in an offering,  but to date none of these filings have been qualified by the Securities and Exchange Commission (SEC) – a bottleneck that should soon open up.

Securitize was born of necessity. Finn, and co-founder and CEO Carlos Domingo, tried to do a tokenized venture fund and Domingo came up with the idea to create a platform. Domingo wrote a Medium post and things came together from there.

Finn views Securitize as more like Carta, a digitized stock management platform. He mentions Harbor as a competitor. Finn said he does not like things with friction and clearly the traditional security issuance process has a lot of it. Being a family office investor, he is used to investing in startups and the challenges incumbent to the process.

“If you invest in a startup you have no liquidity. There is no transparency. You have no idea what is going on. I thought that if I did this on a [blockchain] platform it would be so much better.”

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And so he he created one.

“We are not a broker dealer,” says Finn. “If you are going to advise somebody, you have to be an RIA. We focus and execute. When people go very broad they don’t succeed.”

I asked Finn if the big investment banks will eventually put them out of business. Traditional banks may be slow out of the gate but they still have massive resources and some are keen to innovate. Finn believes that Securitize will be “heavily used by banks.”

Finn explained that if you want to do a debt issuance on their platform, you simply “just do it.” As they complete more issuances they gain more and more experience. Finn believes there is a lot of value that cannot easily be transferred to traditional firms still sitting on the sidelines. For all of the big banks, this is not a money making business for them. “They don’t make money on IPOs anymore.”

Finn shared that he is meeting with Fidelity, a Fintech friendly firm, later in the week to discuss collaborating on projects.

“I have little doubt the future will be tokenized. I don’t know when it will happen …  This is just fundamentally better.”

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I asked Finn which iterations of blockchain they are using (or considering) beyond Ethereum. He said they are looking at Cardozo and EOS but will not use Stellar. Of course, blockchain technology enables are far more streamlined process. KYC and AML can be automated. Dividends immediately paid. Each time a token is traded the transfer of information is instantaneous. Most, perhaps all, back office functions will be part of the automated process. Securitize is said to be set up to operate in multiple regions including Europe and Asia. This makes it simpler for issuers and investors as investing is a global marketplace – as it should be.

Finn shared that they have about 20 different partnership conversations ongoing.

Finn said he expects Securitize to do more than 40 issuances in 2018 alone but “the math indicates we will do a lot more [than that].”

I asked Finn about Spice VC, another company Finn is affiliated with and Domingo is listed as Managing Partner.

Spice VC has a mission to “tokenize the world.” Spice VC believes the ownership of all assets, will eventually be digitally recorded on a blockchain. Finn said that he is a seed investor in the fund. He shared they are working with UK investment crowdfunding platform Crowdcube where they have an affiliate program in place. Spice VC is said to be live on Crowdcube where they tombstone their deals on the site thus opening up opportunities to European investors (although a quick visit to the site does not show any public facing ICOs).

“I think brands matter. I think the same is true in Crypto. I think that is why Bitcoin matters. You can ask your mother about Bitcoin and she will know it,” said Finn. “I would really like to see the market capture the opportunity. Its here but we have to be mindful how we execute it. We are all building a market. If we attack each other it is not going to work. For us the blockchain is important but that is not the most important thing we are concerned about. We want an environment that is stable and works.”

 

 


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