Alon Goren has been involved with the Fintech industry for a very long time. From the very early days of regulated crowdfunding (JOBS Act of 2012) to the emergence of crypto and the advent of digital assets, Goren has pretty much seen it all.
Several years ago, Goren and partner Josef Holm launched the Crowd Invest Summit which quickly morphed into the Crypto Invest Summit as the potential of blockchain took hold. Now the event is established as “CIS” the largest blockchain-focused conference on the West Coast today.
Goren and Holm’s partnership has extended beyond successful events. The two partners have launched a venture firm, Goren Holm Ventures (GHV), part of the Draper Venture Network, to help finance the emerging digital asset sector from their vantage point of the hot LA blockchain scene.
Next week, CIS will take place in LA. A reportedly sold-out event as part of LA Blockchain Week. CIS has also inked a new partnership with the City of Los Angeles to host a shark-tank like pitch event, dubbed BlockTank LA.
In advance of CIS, Crowdfund Insider sat down with Goren to discuss his thoughts on the future of digital assets.
You have observed the transition from the hyperkinetic days of ICOs to regulated digital securities – how do you see regulated digital assets progressing?
Alon Goren: I don’t think that I have been shy publicly about what I feel are unfair, outdated and unamerican securities laws. I believe that people operating in good faith should have significantly less restrictions than they have now, especially when it comes to garnering support and investment from their own communities and the public. It’s why I got into crowdfunding so early and in the first place. That said, people committing fraud should be punished to the full extent of the law.
The beauty of technology and truly digitizing the ownership of assets are that, if done right, the onus of adhering to regulation, whether you believe them to be just or not, can be significantly reduced by, or completely handled by the underlying platform or infrastructure that you are transacting on.
This is NOT currently being done with the “digital securities” and the current generation of issuance platforms out in the wild.
The first generation was an interesting and exciting test-case but these aren’t much more than bells and whistles pointing at existing traditional securities meant to make the transfer and trade a bit easier. But that’s not necessarily bad, it’s just that we probably weren’t ready for it until now and didn’t fully understand what we needed when we began on this journey.
It doesn’t make sense to build a 6-lane highway before you can mass-produce an automobile or even know what a modern automobile is or looks like. We’re there now and you’ll see some interesting products that really start to fulfill the promises of Digital Securities.
In my opinion, it’s not a matter of IF we will see the adoption of Security Tokens / Digital Assets or whatever the term du jour is, it’s a matter of WHEN.
Until the underlying platforms exist to support regulation, I believe it will be impossible to see significant traction in this space because the major financial institutions who underwrite, custody and control trillions of dollars worth of assets have little to no incentive to do so.
Regulation enforcement or compliance on face value may not seem to be the motivating factor and may not even feel like the most important factor to those institutions, but without a platform where existing regulated entities can operate and participate to fulfill their portion of the process, the massive burden and hurdles to overcome in releasing institutional control over the decades of processes and partners they’ve built their empire atop of falls completely on their shoulders, which means anything new adopted by them can only be a modification or potential optimization of the current system, instead of meaningful change that creates a new, efficient, global securities marketplace.
I am a co-founder of Ownera, an institutional platform being built to enable the digitization of trillions of dollars worth of regulated financial products. I am obviously all in on this industry and this idea and believe that all securities will be digitized.
The definition of what a truly digital security is constantly changing, but the constant is that if major global financial institutions cannot participate because of technology scalability reasons, compliance incompatibility, technical debt, the inability to create permissions to enforce regulation, privacy or data, we will not find a global infrastructure.
These institutions would love a system that enables frictionless distribution, compliance, regulation enforcement that also lowers costs and creates efficiencies. It’s a no brainer. That system is coming and that system will change ownership of assets forever.
What are the biggest hurdles to the growth of this sector of finance?
Alon Goren: I feel I sort of addressed this in my overly robust answer above, but bottom line, it’s education, People have no idea what they are selling or buying when it comes to today’s products, and they can’t trust what they don’t know. As the traditional finance world learns about these products, the adoption of them will increase exponentially.
How do you see the traditional finance world interacting with disruptive firms in the digital asset sector? Partnering? Or will they just move quickly and create their own once digital securities are the norm?
Alon Goren: The current issuances and platforms, in my opinion, are an MVP (minimum viable product) and are not a threat or option to the existing sector. It’s a single-use case example of a product that could become something exciting in the future. A prototype.
OK. So…will they create their own? Maybe.
Maybe acquire one of the platforms being built. We’ll see. I don’t think that is in their best interest though, long term. They all have technology, systems and platforms of their own right now. It works for them, but they don’t get the benefits we discussed earlier. I believe that the path of least resistance, in this case, is also the path that will lead to the biggest benefit to institutional players and the world. And that path is to integrate an underlying protocol such as Ownera into their current structure.
It will enable them to run business as usual, but also get them the benefits of efficiency, scale, compliance, and distribution previously not available or at best more costly and cumbersome. At least that’s how we feel about it at Ownera, and Ownera is releasing it’s revolutionary Digital Securities API at CIS on October 15-16 to enable just that.
What about non-traditional assets and tokenization? Will this become a reality? If so, what do you envision?
Alon Goren: Absolutely. Everything that can become digital will. No matter how niche the market.
We saw it with the music industry and entertainment industry with digital distribution and it will continue in all industries. The people demand more and more control, convenience and transparency in every aspect of life more and more each day because of technology. These systems will be created to support that.
GHV recently participated in a funding round of Innovesta. Why did you decide to invest in the firm?
Alon Goren: We met Yali and Keren years ago in the crowdfunding space and immediately got along great with them. They are incredible entrepreneurs and good people who I believe will continue to attack a problem that they are very passionate about and I have always believed in. The stars finally aligned and we got the opportunity to work with them and we jumped at the chance. The people are always the first reason we’re in, the fact that their product is very exciting and innovative seals the deal. 🙂
As CIS founders, you are engaged in the LA Blockchain sector. Why has blockchain seen such development in LA?
Alon Goren: LA has a very cool, interesting and diverse (on may different levels) tech culture which I think is open to new ideas and opportunities in a way that other communities are not. It’s also become a target for venture capitalists leaving silicon valley and has the entertainment connection that creates a polarizing dynamic of folks that are focused on quality content but also the monetization of that content.
The traditional startup world that you think of (the Facebooks, Ubers, etc…) don’t quite have the same culture of building and optimizing for revenue generation that Los Angeles has. I’m not sure exactly why that culture exists here, maybe because we had less access to capital in the past, or other factors, but it exists here and because of that, I feel the startup community is different. Blockchain is an extension of that.
Everyone may feel that way about their own home though, so who knows. I love it because I wouldn’t want to live anywhere else for personal reasons outside of work and I believe where you live is increasingly less important for business.
I love the blockchain community here because it’s my community. Is it better than everywhere else? Probably. 😛 In all honesty, I don’t know if it’s different or unique.
I think it is but I only get to visit other communities at 2-day conferences and don’t really know. I’ve met some of the smartest people in the world on the internet, abroad and in my own backyard, so I don’t really love the idea of geographic focus although it’s fun to support local communities, sports, etc… Half of our portfolio companies (maybe more) are not even from California. 🙂 #LONGLA!