In the latest episode of Capital Ideas, hosts Nick Morgan and Dara Albright of the Investor Choice Advocates Network (ICAN) sat down with Jim Row, founder and managing partner of Entoro, a technology-enabled investment bank specializing in alternative assets. During the discussion, Row shared his insights on the challenges plaguing capital markets, the role of overregulation, and the opportunities for innovation.
Entoro and Capturiant: A Dual Vision
Row introduced Entoro as a multifaceted firm encompassing broker-dealer services, a commodity pool operator, and one of the earliest 506(c) offering platforms. Entoro leverages technology to facilitate investments in alternative assets, helping issuers navigate a challenging regulatory landscape.
Row also highlighted Capturiant, a sister company that focuses on engineered solutions in environmental asset exchanges. Based in Houston, Capturiant specializes in carbon credits, water rights, and other environmental assets—a natural extension for a region rooted in oil and gas. Notably, Capturiant secured a license in the Bahamas to operate a digital asset registry and exchange for environmental assets, though Row decided not to pursue it due to regulatory hurdles.
The Overregulation Conundrum
One of Row’s central themes is the impact of overregulation on innovation and market access. Row argued that excessive regulations from entities like the SEC and FINRA create an environment that stifles creativity and competition. “Good regulation is fine,” he said, “but too much regulation kills all innovation.”
He shared an example from 2017 when his firm facilitated a simple Reg D offering that tokenized a cap table using blockchain technology. Instead of being celebrated as a pioneer, Row faced 18 months of scrutiny and costly legal battles to prove compliance. “A lot of people are afraid to innovate,” he noted, “which ultimately hurts smaller investors who have fewer opportunities.”
Row also criticized the outdated accredit investor standards that restrict access to alternative investments based on income or net worth, rather than financial literacy or research capabilities. “Why should someone’s ability to invest be tied to their bank balance?” he asked, advocating for a test-based approach to accreditation.
The Shrinking Public Market
Row and the hosts discussed the dramatic decline in the number of publicly traded companies in the U.S., which has fallen from over 7,000 in the 1990s to around 4,000 today. This trend, compounded by the rising costs and complexity of going public, has led many companies to remain private longer.
The shrinking public market not only limits investment opportunities for average investors but also increases systemic risk. “With fewer public companies and more money chasing them, PE ratios are stretched, and the market becomes more vulnerable,” Row explained. He also pointed out the lack of meaningful diversification, as the bulk of market capitalization is concentrated in a small fraction of companies.
Regulatory Irony
A recurring theme in the interview was the irony that regulations intended to enhance systemic stability often create greater risks. Row argued that overregulation limits the pool of public companies and forces investors into a narrow set of opportunities. “Does anyone remember 2008, 1999, or 1987?” he asked, pointing to historical market collapses exacerbated by concentration and systemic vulnerabilities.
The conversation also touched on the inefficiency of keeping zombie companies on public exchanges. Row suggested that inactive or underperforming companies should be delisted to focus resources on viable enterprises.
Innovation in the Face of Adversity
Despite these challenges, Row remains optimistic about the potential for innovation in capital markets. He highlighted the role of technology in democratizing access to information and facilitating due diligence. “In the age of AI and the internet, why do we make it so hard to raise capital?” he asked rhetorically.
Row emphasized the importance of fostering a regulatory environment that balances investor protection with the freedom to innovate. He called for a reevaluation of accreditation standards, a reduction in unnecessary regulatory burdens, and greater support for private market transactions.
Closing Thoughts
Jim Row’s insights underscore the need for a fundamental shift in how we approach regulation and innovation in capital markets. His dual focus on technology and sustainability through Entoro and Capturian offers a glimpse into the future of investment banking—one that prioritizes efficiency, inclusivity, and environmental responsibility.
As capital markets continue to evolve, voices like Row’s serve as a reminder that fostering innovation requires a delicate balance between oversight and opportunity. By addressing these systemic issues, we can create a more dynamic and equitable financial ecosystem for all.
Nick Morgan is President and Founder of ICAN, the Investor Choice Advocates Network, a nonprofit public interest litigation organization dedicated to serving as a legal advocate and voice for everyday investors and entrepreneurs. He was previously a partner in the Investigations and White Collar Defense Group at Paul Hastings law firm. Morgan also previously served as Senior Trial Counsel in the SEC’s Division of Enforcement.