I recently had the pleasure of interviewing Darren Marble, CEO of Issuance. Through his role as CEO of CrowdFundX , Darren has extensive experience marketing Reg A+ IPOs and Digital Security Offerings to institutional and retail investors. This experience perfectly aligns with Issuance (a platform that connects digital security issuers with investors) as Darren knows what investors are looking for, and what is needed for a successful and compliant offering. Check out the interview below to learn more about Issuance.
RS: Can you tell us a little bit about what Issuance does and the long-term vision?
DM: Issuance is developing a technology-enabled investment bank for digital securities issuers–a modern Goldman Sachs. Our vision is to be the leading investment bank for digital securities, which we believe is the next mega-trend in capital markets.
We believe in regulated markets, investor protection, and are confident that the U.S. will be the leading market globally for digital securities.
RS: Issuance recently announced the acquisition of CrowdFundX, how will this acquisition be integrated with Issuance?
DM: Issuance has executed a Letter of Intent (LOI) to acquire the assets of CrowdfundX (CfX), a FinTech marketing firm known for marketing some of the industry’s most notable digital securities offerings (DSOs) and Regulation (Reg) A+ IPOs. Some of CfX’s clients include Drake’s Virginia Black Whiskey, KODAKOne, and tZERO, among others.
The dominant investment banks of the future will effectively blend digital securities technology with traditional financial services. Issuance at its core is a technology company, while CfX is a services company with notable industry clients and established revenue streams. As such, CfX is a natural acquisition for Issuance.
The transaction, which is expected to close in February, 2019, will be subject to due diligence and definitive legal documents acceptable to all parties. Once completed, the CfX brand will be sunsetted, and Issuance will be the enduring brand.
RS: How is your platform different from similar issuance platforms like Securitize, for example?
DM: Issuance is in the business of deal marketing and capital raising, which is the biggest pain point in the market. We act as a bridge between tokenization platforms and secondary trading platforms, since neither of these players are true capital raisers.
In September, we announced a strategic partnership with Securitize to give their clients exposure to the right network of investors and increase their likelihood of funding. Conversely, Securitize offers a proven tokenization solution for our clients, who require a proven compliance solution for the trading of their digital securities.
RS: How does Issuance market to potential investors?
DM: Issuance is developing an app that will allow issuers to market their deals directly to authenticated, interested investors. Issuers will pay a fee to Issuance each time they send a message to an investor on our platform, with the fee varying based on the type of investor messaged. For instance, a message to an institutional investor will carry a higher fee than a message to an accredited investor.
Issuance is in the process of partnering with a broker-dealer, which will allow us to capture success fees when investors sourced through Issuance invest into a deal.
The Issuance app is expected to be available in mid 2019. In the interim, we are selling traditional advisory and marketing contracts where Issuance serves as an introducer between our issuer clients and our network of investors. We have trusted relationships with some of the most active digital asset investors around the world, and have successfully sourced capital through this model for multiple clients. Our advisory and marketing engagements are sold in a fee-for-service model where Issuance is paid a flat fee month-to-month.
RS: Your website notes that Issuance “provides unique incentives for investors”, can you tell us what incentives Issuance offers that sets it apart?
DM: Investors generally want access to the best deals in the highest discounted rounds. Issuance has access to some of the industry’s most proprietary, desirable deals, which is an incentive for investors–particularly institutional investors and digital asset funds–to work with us.
As an example, we just signed a NASDAQ-listed biotechnology company running what it believes to be a historic digital securities offering (DSO). The company has a $250 million market cap and has been publicly traded on NASDAQ for more than a decade. This is one of most unique DSOs in the industry, and Issuance has exclusive access to the deal. The initial reception from our investors has been incredibly positive, and will further credentialize Issuance as a firm with true proprietary deal flow.
RS: Issuance “allows investors to only receive certain deals”, can you tell us how this works and how it is beneficial to investors and issuers?
DM: The problem with current platforms is that they are issuer-focused, and they market every deal they take to every investor in their database. Moreover, the majority of investors on these platforms are self-directed retail investors. This approach has resulted in a lose-lose-lose scenario for issuers, investors, and platforms alike. It’s one of the big reasons no equity crowdfunding platforms have had any real success to date.
Our strategy to solve this problem is counterintuitive, yet simple: Issuance will solve for investors first. Our app will cater to investors–the most sought-after segment of the market–and ensure that we protect both their privacy, and, more importantly, their time.
The Issuance app will gather investor profile and deal preference information up front during the sign-up process, which can be completed through the app itself, or through our institutional sales reps who will input profile information on behalf of investors.
By gathering profile and preference information up front, Issuance knows what deals investors are interested in seeing, and what deals they have no interest in. When an issuer pays a fee to market their deal to an institutional investor, for instance, that deal will only be sent to an investor who has explicitly expressed interest in that type of deal.
Think of it as a matching technology. By better matching the right deals, to the right investors, at the right time, we increase conversion, and everyone wins.
RS: Can you tell us some more about the ranking system that exists within the platform?
DM: We are developing an algorithm that we can share more about when we launch.
RS: What is the most important criteria you can recommend to issuers to achieve a high ranking within the platform?
DM: Issuance is focused on working with established businesses and publicly traded companies. Ultimately, issuers whose deals are the most highly de-risked, and offer the most fair and compelling terms to investors, will have a higher ranking on our app.
RS: Issuance offers aftermarket services, can you tell us a bit about those services and the benefits?
DM: Issuance offers aftermarket support services for issuers who successfully raise capital and list their digital securities to a secondary trading platform. Raising capital is only half the battle: issuers must continue to aggressively market to investors post-raise in order to increase the visibility, liquidity, and market cap of their digital securities.
Aftermarket support is one of the most overlooked yet critical services that digital securities issuers will need to succeed long-term. Issuance currently offers aftermarket support contracts with 6-month or 12-month terms, with our 12-month terms offered at a slight monthly discount.
RS: Is there anything else you want to share about your project?
DM: Issuance is currently raising our own round of capital, and some of our current and committed investors include Alpha Omega Capital Partners, Slim Ventures, Proactive Capital, and Business Instincts Group, to name a few.
If you’re looking to invest in the digital securities ecosystem, and want a company with a proven team, traction, and revenues, I’d say we’re a great bet–and our investors would agree. To access our complete investment package, please visit www.issuance.com.
Syed Hussain, CEO of Liquidity – Interview Series
Syed Hussain is the co-founder and CEO of Liquidity Digital, a blockchain based fintech firm that is building an end-to-end investment banking ecosystem for the digital economy.
Prior to this, Syed had served as the CEO of the Americas for BANKEX, a global blockchain firm focusing on the tokenization of assets; as the Director of the Eastern US for Blueprint Technologies, a digital transformation consultancy
Antoine: You have quite the background in tokenized securities having previously being CEO of BANKEX. Could you tell us a bit about your experience with BANKEX, and how it has prepared you to be the co-founder and CEO of Liquidity Digital?
Syed: In times of struggle, I become stronger. My character is defined not by my successes, but by my reactions to disappointment. BankEx under delivered on its promises to the market. The excess of funding created a lack of focus rather than a platform of support. I have learned. I will apply the knowledge, strength of character and a team that shares my vision, we will succeed.
Antoine: What inspired you get involved in digital securities initially?
Syed: My love for solving problems. I was inspired by the intellectual design of Satoshi’s whitepaper on Bitcoin and was searching for a practical, business use case for this new technology. Digital securities provide me with this stimulation and opportunity to learn an impressive team to grow a solid, revenue generating organization in this new industry.
Antoine: Liquidity Digital is developing a regulatory compliant ecosystem for the creation of digital assets. This is a three-step process which includes Security Structuring, Regulatory Compliance Issuance, and Post Issuance Modules. Could you tell us about the security structuring and how Liquidity Digital handles this?
Syed: We initially consult directly with clients to understand their business needs. Internally we structure a deal that is suitable for their use and will hire outside consultants on a per need basis. We will also refer to third party legal and accounting teams to provide a due diligence analysis of the issuer and then of the security and the structure.
Antoine: The second step is the regulatory compliance which is what many are most concerned about. Can you let us know how Liquidity Digital handles this?
Syed: We will be relying on third party legal on a per issuance basis. Most likely we will be using a combination of Reg D and Reg S offerings.
Antoine: Do you also handle international regulatory compliance?
Syed: Yes, we will be relying on legal counsel as well as broker-dealers who are registered in their operating regions per that local jurisdiction.
Antoine: The third step is the Post Issuance models. Is this managing cap tables? What else does it involve?
Syed: Yes, cap table is part of post-issuance. As is tax reporting, investor relations, voting rights management, dividend distributions and buybacks. What we do not do is secondary trading. For this service, we will be relying on a network of partners who are registered to handle digital securities in their jurisdiction.
Antoine: For a company who is interested in signing up with Liquidity Digital. What do they need to have ready before they approach you?
Syed: The ability to pass audit by a big four accounting firm. $150,000 in fees to Liquidity Digital due before raising capital to cover our advisory and technology costs. Another $200k – $300k set aside to create offering documents and for marketing and roadshow expenses.
Antoine: Are you currently only accepting United States clients? Are there restrictions on where corporations should be incorporated?
Syed: No, however we prefer US based clients due to the higher reporting and compliance standards. For clients incorporated outside of the US they would have to be able to also pass third party auditing from a large US-based accounting firm.
Antoine: Is there anything else that you would like to tell us about Liquidity Digital?
Syed: We eat securities for breakfast and shit them out as digital blocks.
To learn more visit Liquidity Digital.
Brian Collins, CEO at Horizon Globex – Interview Series
An experienced public and private company CEO, Brian founded Horizon Globex in 2010, which was listed on Nasdaq in 2012. From 1999-2010 Brian was CEO of Abbey Technology in Switzerland, specializing in the design of trading software for Swiss banks. Prior to this, Brian worked for Credit Suisse in Zürich designing and building proprietary equity trading solutions. Brian graduated in 1990 with a B.Sc.(Hons) in Computer Systems from the University of Limerick, Ireland.
AT: Horizon Globex features multiple products which target companies that are looking at launching a Digital Securities Offering. To begin, could you tell us about Tokenetics, and describe the issuance process?
BC: Tokenetics is our underlying digital security issuance, custody and disbursement software for issuers to launch a secure and compliant DSO. An issuer comes to us, and we collaborate with their team (including management, securities lawyers and investment bankers) to create an Ethereum ERC-20 smart contact for the digital securities that will be able to be issued pursuant to an exemption from the registration provisions of the federal securities laws such as Regulation D, Regulation S, Regulation A or pursuant to a registered offering on Form S-1.
We take a unique approach that we believe is most suited for today’s ever changing regulatory framework. Instead of integrating numerous layers of features onto a single digital securities’ smart contract, we prefer to apply additional regulatory compliance via “peered” smart contracts that are built alongside the primary-issuance smart contract, like our Transfer-Agent- Gatekeeper smart contract (via CustodyWare).
For example, if a holder becomes the CEO of the issuer (e.g. an affiliate who is now restricted from “insider” trading in the security), the issuer would be forced to burn the holder’s digital securities, reprogram with the new restrictions and issue a new token. With CustodyWare, the issuer can simply notify the Transfer Agent and the Transfer Agent c an input the CEO’s KYC’d wallet ID to the CustodyWare portal and apply relevant affiliate status restrictions on the securities in that wallet. Our approach puts control in the hands of properly SEC regulated Transfer Agents instead of developers or CEO’s.
AT: Tokenetics also offers secondary trading opportunities, could you describe these?
BC: The answer to this question lies in the ability for our software solutions to integrate with one another. Tokenetics integrates with KYCware, our white label investor onboarding and KYC identity verification smartphone app. AMLcop, our watchlist management sanctions and PEP screening solution, also integrates and acts as the gatekeeper for our entire ecosystem as an investor must be whitelisted to participate. Then, on completion of an offering and its potential holding period (e.g. SEC Rule 506(c)), a Transfer Agent utilizes CustodyWare, our Transfer Agent custody portal, to transfer the digital securities to a regulated ATS for compliant secondary trading. Our use of a Transfer Agent allows issuers to exercise good control, ensuring the identities of investors remain intact throughout the lifecycle of the digital securities. Ensuring that investor identities are known in the same way as traditional securities means that proxy notices can be sent, voting can be done, dividends can be paid, escheatment can be managed, and state and federal laws complied with for estate management and regulatory reporting.
We’ve also developed a dollarized secondary trading solution to provide liquidity assurance to investors and offer new investors the ability to take part in the secondary market, with trading-pairs priced in fiat. Investors both deposit and withdraw funds in fiat, minimizing risk of cryptocurrency regulatory and AML exposure.
AT: CustodyWare is another one of your products which describes itself as a compliant agent custody solution. Could you elaborate on what this product does?
BC: We believe that CustodyWare is the first regulatory compliant product for U.S. Transfer Agents to custody and manage digital securities on behalf of their clients pursuant to an SEC registered or a registration-exempt DSO. The CustodyWare portal integrates with ERC-20 issuances and supports all major Transfer Agent functions including issuance, custody, transfer query, reporting, affiliates and release, providing Transfer Agents with the ability to fulfill the same role for digital securities as they do for traditional securities. All transactions are signed by the Transfer Agent and are transparently and immutably stored on the Ethereum blockchain.
AT: In January 2019, you signed a deal to license CustodyWare to VStock Transfer, LLC “VStock” an SEC registered transfer agent and registrar. Could you tell us a little bit about this agreement?
BC: The agreement with VStock is a licensing agreement which enables VStock to expand upon their traditional business as a leading stock Transfer Agent and registrar firm and begin taking custody of digital securities issued pursuant to Regulation D, Regulation A, Regulation S, or registered offerings filed on Form S-1. We have licensed VStock Transfer our “portal” for them to manage holders and affiliates of digital securities, cancel and re-issue tokens if a holder’s private key is lost/stolen, and act as a paying agent to distribute dividends, etc.
AT: The third product that you have for STO solutions is KYCWare. There’s been a lot of KYC products that have hit the market, what differentiates yours?
BC: I think one of our biggest differentiators is our methodology and level of security when it comes to the protection of users’ sensitive information. We don’t perform KYC/AML “verifications” ourselves. Instead, KYCWare provides clients with a white-label mobile app solution and back- end portal to streamline the collection of CIP, KYC and AML information without ever sharing sensitive data with a third-party.
How it works is investors or customers are onboarded through a client-branded KYCWare app which incorporates advanced identity verification technology such as anti-gaming video interview solutions, machine readable ‘MRZ’ scans of passports, security hologram checks for IDs, and more unique layers and updates from traditional identity checks.
On the back-end issuers or customers are run through our AMLCop, anti-money laundering software solution. Then all this sensitive customer information is stored in memory until a representative of the company (whether it be a designated KYC/AML representative or broker- dealer engaged by a DSO issuer) downloads and reviews the submissions on an SEC Regulation S-P compliant medium (for example we recommend clients use a FIPS compliant external hard disk). We take this approach because in the eyes of the regulators, the issuer is ultimately responsible for making sure that all investors are properly K YC’d and AML’d, not the third-party who could further outsource the data to be verified.
AT: You’ve entered into a software license agreement with Tripoint Global Equities in order to provide them with software support to the BANQ branded security token platform. What is the BANQ platform?
BC: BANQ is the online division of TriPoint that is focused on private placements, Regulation A IPOs and digital security offerings. In addition to supporting the BANQ platform, Globex announced that we entered into a software licensing agreement with First Growth Funds Limited (FGF) to power fully regulated and compliant security token offerings in Australia and New Zealand. FGF is a publicly traded fund listed on the Australian stock exchange and is a diversified Investment company which focuses on increasing shareholder value by making investments across a broad range of asset classes including listed equities, private equity and token offerings.
AT: What’s the Globex API?
BC: The Globex API is simply a way for our four software applications to interact directly with Ethereum. Typically, if a company wants to integrate with Ethereum, they could use an open source API or a third-party resource but our ethos for software has always been to create the solutions ourselves. By doing this, if there’s an issue, we have total control over fixing the problem.
AT: One of the more interesting offerings on your website is that you offer a ‘Turnkey Financial Portal’ that can be branded to a company’s brand. What capabilities will these financial portals offer?
BC: The branded financing portals offer many benefits. On the front-end, issuers present investors or customers with an on-brand investment process from start to finish, maintaining a sense of trust and a seamless user experience. On the back-end, issuers, and their bankers, experience a hosted web portal where they can securely and compliantly manage their customers and necessary reports with no IT experience needed.
AT: You recently had some exciting news with Timeless Luxury Group AG, licensing the Globex full suite of blockchain software solutions to power its DSO, is there anything that you would like to share with our readers about this partnership?
BC: This is a key announcement because it showcases our blockchain software stack’s ability to address all aspects of a digital securities offering. The relationship began with an understanding of Timeless Luxury Groups’ desire to access US capital along with foreign investors in a fully compliant DSO and grant investors the right to a percentage of any future profits.
This offering marks the first offering in the United States to use an SEC registered Transfer Agent for the issuance and custody of digital securities. CustodyWare is being licensed by Timeless Luxury Groups’ designated transfer agent, VStock Transfer, granting VStock the ability to custody Ethereum ERC-20 securities while compliantly maintaining the identity of holders to facilitate the future payment of any dividends in US dollars and any other transfers that the Transfer Agent is responsible for administering (e.g. holds, releases, transfers, etc.).
AT: Is there anything else that you would like to share about Horizon Globex?
BC: There is a lot of hype in the industry with companies making claims about what they ‘will’ create, or even more detrimental, making false claims about the capabilities of their existing companies. We like our approach of coming to the market with live and proven software. In two years, our team of developers built out a comprehensive suite of blockchain software solutions that address the full lifecycle of a compliant digital securities offering. With the continued input from our experienced tech, Wall Street and public company executives, we aim to continue developing and bringing to market technologically advanced products that power the next generation of exchanges and securities offerings in the US and worldwide.
To learn more visit the Horizon Globex.
Oliver Bolton, CEO of Almond Impact Ltd – Interview Series
Oliver Bolton is the CEO of Almond, a free app that rewards consumers for buying responsible brands and helps them understand and reduce their carbon emissions. They are currently accepting investors for their STO.
AT: What inspired you to launch Almond?
OB: 2 years ago my son arrived (and last month my daughter!), and with the climate crisis I can’t stop thinking about their future and what type of world they’ll live in. I really want to use my time to make a positive impact and have decided to focus on consumption which in the UK represents 50%+ of our personal CO2 emissions
AT: Almond has a huge environment mission which includes rewarding consumers for buying sustainable products. Can you tell us what some of these sustainability goals are? Does it involve reducing excessive packaging, sustainable harvesting of products, etc.
OB: Our overarching goal is to help people lower their CO2 footprints by at least 50% over the next decade (with a focus on consumption). Specific assessment metrics are still being developed and will be based on the UN’s SDG. Packaging, ingredients, processing and the LCA of products will all be contributing factories to certification. The foundation will ultimately develop its own impact assessment program for accreditation.
AT: Almond will enable consumers to learn about the carbon footprint of each product. Can you elaborate on how this is done and what information will be available to the consumer?
OB: Using the supply chain data (ingredients origin and production processes) and other product information that is uploaded, we can calculate an LCA CO2 footprint at point of manufacture. We then plan to use a dynamic per mile average CO2 score (to represent storage/distribution/display emissions) to calculate the footprint from point of production to point of consumption to create an estimated total footprint score.
AT: What type of process will brands have to go through in order to be selected for the platform?
OB: To start with we are aligning with best in class certification labels in their respective categories. For example ‘B Corp’ in Food & Drink and ‘Cradle to Cradle’ in clothing. Over time we will build out our own impact assessment which will integrate the supply chain data above, accreditation and a detailed business questionnaire to reach an Almond score (run by the foundation).
AT: You’re launching with food products initially, what are the other types of products that you plan to add to the platform?
OB: In 2019 we are piloting several cross-sector consumer products including food, drinks, clothing, health, beauty and fresh produce products. We want to include any consumer product (and some services) that contribute to our user’s carbon footprints
AT: Almond s launching in the United Kingdom first, what markets will you be targeting afterwards?
OB: The richest 10% around the world are responsible for 50% of CO2 emissions. The wealthiest consumers in developed economies will be our priority. A US pilot is planned for early 2020.
AT: The Almond token model has both a security token (ALMA) and a utility token to offer rewards (ALMD). Can you tell us about the use cases of the ALMD utility token?
OB: Due to the structure of the project, the tech and IP is owned by the foundation and can never acquired by a third party. The ALMA security token allows investors to exit their investment post their lock-up periods. We also hope to democratise investment into the project and will make ALMA security tokens available for purchase to the wider community through ALMD reward coins conversion. To clarify, the ALMD reward token is a fiat backed stable-coin rather than utility token. The reason for taking this route is that often products are sold in multiple countries so we need a cross-fiat global rewards currency. This ALMD stable-coin for good also opens up other potential opportunities for the project.
Can you tell us about the ALMA security token, and the benefits it offers investors?
OB: ALMA security tokens will offer similar rights to traditional equity such as ownership, dividend rights and are EIS eligible (subject to conditions). We plan to list them on an exchange in late 2019 to provide early liquidity to our investors.
AT: Investors are obviously interested in the business aspect of Almond. Currently, you plan on generating revenue via a ‘Tokenisation Service Fee’ which is a fee incurred by merchants. Can you tell us about this fee?
OB: There are multi income streams, the core being the Tokenisation Service Fee which is charged when physical codes are created to be placed on partner products. The fee structure scales down from 0.5% of the tokenised product’s retail sales value to 0.2% of retail sales value. Other income is projected from marketing and ecommerce solutions.
AT: In a perfect world, where do you see Almond being positioned in five years?
In five years we hope to have a presence in those key countries that are contributing to climate change and an active user-base around the world. We hope to show hard data and evidence that we are helping our users reduce their carbon footprints (in line with our 10-year plan to reduce by 50%) and evidence to show how we have helped responsible brands rapidly gain market share.
To learn more about Almond visit the Almond Website
Investor information is available here
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