Connect with us

GSR Capital to Invest in tZERO at $1.5 Billion Valuation

mm

Published

 on

  • Up to $270 million in tZERO equity (at $1.5 billion post-money valuation)
  • $30 million purchase of tZERO Security Tokens from Overstock.com
  • Up to $104.55 million in shares of parent company Overstock.com common stock

SALT LAKE CITY, Aug. 09, 2018 (GLOBE NEWSWIRE) — Overstock.com, Inc. (NASDAQ:OSTK) and t0.com, Inc. (“tZERO”), announce that the companies have both signed term sheets with GSR Capital, a Hong Kong based private equity firm, to invest up to $374.55 million in exchange for common equity in blockchain subsidiary tZERO and common equity in Overstock.com. Overstock and GSR Capital have also entered into a purchase agreement pursuant to which GSR Capital will purchase $30 million in tZERO Security Tokens from Overstock.

As part of the term sheet agreement, GSR Capital will purchase up to 3.1 million shares of OSTK common stock at a five percent discount to the closing share price on August 1, 2018. GSR Capital will also invest up to $270 million for up to 18% of tZERO’s equity at a valuation of $1.5 billion (post-money). Additionally, pursuant to a purchase agreement, GSR Capital will purchase from Overstock $30 million in tZERO Security Tokens. These tZERO Security Tokens were purchased by Overstock during the recently-closed tZERO Security Token Offering in a non-cash transaction in which Overstock forgave $30 million in tZERO intra-company debt. GSR’s Security Token purchase agreement replaces the GSR letter of intent previously announced on June 29, 2018.

The equity transactions are subject to definitive documentation and other customary closing conditions. They also provide GSR Capital with certain rights to allocate a portion of the investments to third-party designees.

“We are honored to have GSR Capital as a strategic investor,” said tZERO CEO Saum Noursalehi. “The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”

“GSR Capital has the prescience to understand the disruptive power of blockchain capital markets,” said Patrick M. Byrne, founder and Chairman of tZERO, and founder and CEO of parent company Overstock.com. “They are aligned with our vision for the future of capital markets built upon the speed, trust, and security of the blockchain. And most importantly, they think big, and want to help us scale this vision globally as quickly as possible.”

“GSR Capital is very excited to partner with tZERO in its effort to expand the global footprint for blockchain-enabled asset trading including stocks, bonds, commodities, etc. We have a long-term view on how we want to scale this platform on a global basis,” said GSR Capital’s Chairman and founder, Sonny Wu.

About Overstock.com

Overstock.com, IncCommon Shares (NASDAQ:OSTK) / Series A Preferred (Medici Ventures’ tZERO platform: OSTKP) / Series B Preferred (OTCQX:OSTBP) is an online retailer based in Salt Lake City, Utah that sells a broad range of products at low prices, including furnituredécorrugsbedding, and home improvement. In addition to home goods, Overstock.com offers a variety of products including jewelry, electronics, apparel, and more, as well as a marketplace providing customers access to hundreds of thousands of products from third-party sellers. Additional stores include Pet Adoptions and Worldstock.com dedicated to selling artisan-crafted products from around the world. Forbes ranked Overstock in its list of the Top 100 Most Trustworthy Companies in 2014. Overstock regularly posts information about the company and other related matters under Investor Relations on its website, http://www.overstock.com.

About tZERO

t0.com, Inc. (“tZERO”) is a majority owned subsidiary of Overstock.com, focusing on the development and commercialization of financial technology (FinTech) based on cryptographically-secured, decentralized ledgers – more commonly known as blockchain technologies. Since its inception, tZERO has pioneered the effort to bring greater efficiency and transparency to capital markets through the integration of blockchain technology.

About GSR Capital

GSR was founded in 2004 by Sonny Wu and Richard Lim. Today, “GSR Ventures”, “GSR United Capital” and “GSR Capital” are three independent yet complementary teams set up by the partners in 2016 with the aim of sector leadership and going global with unique investment strategies and resources. GSR Capital has offices in Beijing, Hong Kong and the USA.

O, Overstock.com, O.com, Club O, Main Street Revolution, and Worldstock are registered trademarks of Overstock.com, Inc. O.biz and Space Shift are also trademarks of Overstock.com, Inc. Other service marks, trademarks and trade names which may be referred to herein are the property of their respective owners.

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include all statements other than statements of historical fact. Additional information regarding factors that could materially affect results and the accuracy of the forward-looking statements contained herein may be found in the Company’s Form 10-Q for the quarter ended March 31, 2018, which was filed with the SEC on May 8, 2018, and any subsequent filings with the SEC.

Media Contact:

pr@overstock.com

Investor Contact:

ir@overstock.com

SOURCE: Overstock.com, Inc.

GSR Capital to Invest in tZERO at $1.5 Billion Valuation

Source: Overstock.com, Inc.

Referenced Stocks: OSTBPOSTK

Crowdfunding

Mr. Wonderful Aligns Efforts with Equity Crowdfunding Platform ‘StartEngine’

mm

Published

on

Mr. Wonderful Aligns Efforts with Equity Crowdfunding Platform 'StartEngine'

Wonderful News

In a piece of positive news, popular crowdfunding platform, StartEngine, has announced the arrival of a new shareholder/investor – Kevin O’Leary (AKA Mr. Wonderful).

Moving forward, Mr. Wonderful will assume the role of strategic advisor for the platform.  In doing so, StartEngine stands to greatly benefit from his vast network of connections, and the public attention that he is afforded.

Raising Capital

Mr. Wonderful notes, in his inaugural address as strategic advisor to StartEngine, that crowdfunding comes with various benefits.  The following are examples of these benefits:

  • Flexibility of terms
    • Participating companies have greater control of their valuation, and share price
  • A potentially greater share of the company can be retained
  • With a greater number of shareholders, each act as ‘brand ambassadors’, providing much greater exposure to company operations.

Equity Crowdfunding

The JOBs Act, which was put into place during the Obama administration, laid the groundwork for Crowdfunding as we know it today.

Not all methods of crowdfunding are the same, however.  In the following article, we take a look at what differentiates equity crowdfunding from investing in stocks, and simple crowdfunding seen through platforms like Kickstarter.

What is Equity Crowdfunding?

Kevin O’Leary

After successfully building and selling his company, SoftKey, for a staggering $4 billion, Kevin O’Leary (aka Mr. Wonderful), rose to fame in the public eye via Dragons Den.  This fame was then solidified through years as a host on spin-off ‘Shark Tank’.

Mr. Wonderful Aligns Efforts with Equity Crowdfunding Platform 'StartEngine'

Kevin O’Leary (Mr. Wonderful)

Whether looking at his experience as an entrepreneur, investor, or TV personality, few have experienced success like Kevin O’Leary.  It is the culmination of these successes that has allowed him to become a prominent force in business.

Mr. Wonderful recently created an informative message, detailing his relationship with StartEngine, and what we can look forward to from the platform moving forward.

Kevin O’Leary has commented specifically on COVID-19 and how it relates to crowdfunding.

“With the coronavirus pandemic causing economic uncertainty, startups and small businesses are having an incredibly hard time accessing capital, so you’re going to see a material increase in interest in crowdfunding companies like StartEngine that are solving that problem…We’re going to look back on this period as the start of the rise of equity crowdfunding, and I think it’s an industry that StartEngine is going to win.”

Speaking with Howard

Upon announcing the development discussed here today, StartEngine CEO, Howard Marks, took the time to share his thoughts.

“We saw huge growth in crowdfunding during the last economic downturn when entrepreneurs needed to find alternative capital sources. We are similarly ready to provide a funding solution now, in what is shaping up to be another challenging period…With the high level of uncertainty, we’ve already seen venture capital and angel funding slow significantly. The opposite is true on StartEngine — we’re seeing tremendous interest from everyday investors in the opportunities on our platform.”

Howard Marks continued,

“Crowdfunding is unique in its ability to find large numbers of shareholders that are aligned with a company’s mission and goals and are not on compressed timetables — a problem that currently plagues the traditional private equity and venture financial services industry”

In our on-going interview series, we have in the past had the pleasure of having a thorough discussion with StartEngine CEO, Howard Marks.  This conversation provides insight into the beginnings of StartEngine, and how they grew into the platform we know today.

Interview Series – Howard Marks, CEO of StartEngine

StartEngine

Founded in 2014, StartEngine maintains operations in Los Angeles, CA.  To date, the company has helped hundreds of companies raise over $135 million in funding.  This funding was made possible through a network consisting of over 235,000 active investors.

CEO, Howard Marks, currently oversees company operations.

StartEngine Makes Inc Top 10 California Companies List

In Other News

Much like the blockchain sector, crowdfunding is young and still experiencing a period of discovery and growth.  In the past we have looked at various platforms which facilitate such methods of capital generation, in addition to operational differences between Canada and the United States.

Equity Crowdfunding in North America

Top 5 Equity Crowdfunding Websites

Spread the love
Continue Reading

Funds

Benjamin Tsai, President & Managing Partner of Wave Financial – Interview Series

mm

Published

on

Benjamin Tsai, President & Managing Partner of Wave Financial - Interview Series

Benjamin Tsai is the President & Managing Partner of Wave Financial. Wave Financial offers early-stage investment, asset management, and treasury management to further the growth of the crypto and digital asset ecosystem

What was it that initially attracted to becoming the President and Managing partner of Wave Financial, an early stage venture fund focused on crypto currency?

My experience is mainly in the finance space, both sell side with BofA Merrill Lynch for 12 years and buy side with AllianceBernstein for 3 years.  When I returned to Los Angeles, I started to get involved in blockchain technology and its various uses.  The most natural one was to apply it to finance, and that application was most interesting to me.  So when I met David Siemer, our CEO, we decided to put together Wave Financial, an asset management firm focused on blockchain/cryptocurrencies.

This platform allows me to explore the limits of the space, such as crypto derivatives.  We have recently launched the Wave BTC Income & Growth Fund, which is a fund that pays a target rate of 1.5% yield monthly by selling Bitcoin options in the market.  We believe this is an innovative product, first in the market, and should be attractive to both long time bitcoin holders and also new investors in crypto.

 

One of the index funds offered by Wave Financial is the ‘Select 20 Index’ which is a fund that rebalances itself monthly and provides exposure to the top 20 digital assets. How has this fund performed compared to a more activate trading fund approach?

Comparison between active and passive management is always difficult.  This is especially hard in the crypto world, where there is not any established benchmark.  We developed the Select 20 Index to serve as the crypto market benchmark that better reflects the market compared to just Bitcoin.  With the index as a baseline, we also have our fund which tracks the index.  Due to the low fees, we believe we are doing well to provide market beta to investors.

There are actively managed funds that may be doing better and worse, but they would have been taking higher risk compared to the market beta, and also have higher fees.  The outperforming ones would have been able to justify the higher risk and fees, but the underperforming ones obviously do not.  For an investor to determine which funds could outperform would be very difficult, as track records are very short, and the crypto market is still in its infancy.  It would be difficult to show how that alpha capture can be replicated going forward.

In summary, there will be funds that outperform and ones that underperform our index and/or fund.  But for clients to take a pure market beta, similar to an equity ETF, our product provides the exposure at a low cost, and is an effective tool for achieving that for the investors.

 

Wave Financial is clearly bullish with the future of digital securities having invested in both Securitize and Vertalo. What is it about this industry that has you most excited?

I believe the existing infrastructure for equity, fixed income, and various asset classes have all been building and improving on older systems which were silo-ed.  As investments themselves become more flexible, the traditional infrastructure is no longer efficiently supporting the new way of asset management.  For example, there use to be just bond investors and equity investors, then we had 60/40 target allocations, then the endowment model which included alternative investments of hedge funds, real estate, commodities, and more exotics assets, and so forth.  For the next generation of investors, access to these asset classes and being able to get int and out of these assets should become more simple and more available to a wider audience.  I believe digital assets can do that.

For example, we are currently working on a kentucky whiskey fund.  This fund will give accredited investors access to investing in whiskey, with the opportunity to trade the ownership on the blockchain in a private exchange.  This type of flexibility at a reasonable cost was simply not available before the advent of digital securities.

 

What are some of the issues that security tokens need to overcome to reach mainstream adoption?

I believe that the education and infrastructure are two things that are missing in the industry before we can have mainstream adoption.  On the education side, we need to get investors comfortable about tokenization as a technology applied to existing financial instruments that improves the efficiency of it.  The legacy ICO marketing issues and poorly thought out projects (along with frauds) certainly has given the concept a negative bias.  But education will overcome that with time.

The second part is infrastructure; we need to have well accepted stable infrastructure for doing security tokens.  This means issuance platforms (like Securitize and Vertalo) that have transfer agent license which allow them to track/change the ownership of the securities, qualified custodians (like Coinbase and Kingdom Trust) that can help clients hold the security tokens with peace of mind, and security token exchanges (like OpenFinance Network and tZero) that can provide a place for the tokens to be traded.

As an addendum to the infrastructure, we also need better user interface so clients can focus on the investment aspects of security tokens instead of worrying about what chain it’s on and other technical challenges that are not really relevant to their core investment thesis.  When I log into Schwab to trade, I don’t think about what OS I am running and what language the interface is programmed in to complete my trade.  Once done correctly, it would be very transparent and irrelevant for the users.

 

Out of all the different types of assets which can be tokenized such as real estate or art, what industry do you personally believe is best suited to tokenization?

Is this a trick question or a softball?  I think whiskey barrels are the best thing to focus on!

Seriously though, I think any asset that gives off a cashflow would be interesting.  We have looked at real estate, race horses, solar panels, and other ideas that can be done.  Whiskey was good not because the portfolio gives off cashflow, but because we can sell a few barrels to generate cash and also provide a mark-to-market for the investors.  This is hard to do with a single Picasso; it would be impossible for me to sell a fraction of it.

The real estate space is an interesting one.  I am personally a real estate investor in Southern California, so I keep a close eye on this.  In the US, deals have not generally been very successful due to the fact that the buyers of real estate are not really interested in the tokenization, and there are plenty of buyers to support the business without it.  I believe that the development in Asia will be different, as more people are looking at both real estate and blockchain technology.  The two combined should be attractive enough for Asian investors, and it should catch on better than here in the US.  I have spoken to a number of top tier financial institutions in Japan, and real estate is an area of focus for them as they look at tokenization.

 

Circling back to the Wave Kentucky Whiskey (WKW20) that you mentioned earlier. For investors who are not familiar with this, could you explain what this is and the benefits of investing in this asset class?

Although we started the discussion with tokenization of hard assets, Wave Financial are a California Registered Investment Advisor (most of us are FINRA registered) so we have fiduciary duty to our investors to provide good products.  We reviewed a number of different assets and decided to focus on whiskey because the return profile is very attractive.

We are able to source a barrel of Kentucky whiskey and store/insure it over 5 years for roughly $1000.  In 5 years, that barrel of whiskey is estimated to be worth $3000 to $5000 on a conservative estimate.  This is a 3x-5x return over 5 years, and the variability is very low.  Also, as this is a commodity, we are able to get insurance for our inventory, which covers the value of the losses if we dropped a barrel or if the warehouse burns to the ground.  (This has happened before, as the whiskey is over 50% alcohol!)  The downside risk is limited.  One last point I would bring up is that we have found whiskey to be very resilient in down markets.  From industry research, through the financial crisis, American whiskey had only 1 down year in 2009, and the drop was 1.4% by dollar and 0.7% by volume sales.  (This is not an anomaly, Scottish whiskey went up in value in 2009.)  All of this means that the whiskey is a very attractive investment asset class in general and especially in this market.

 

In early 2018, you Co-Founded and became the CFO of the LA Blockchain Lab. Could you share with us some details on what the LA Blockchain Lab is?

LA Blockchain Lab is a non-profit that was founded to connect academia and government in Southern California to promote the use of blockchains.  We count UCLA, USC, UC Irvine, and Caltech as founding schools and we work with the City and County of Los Angeles governments to education and disseminate information about the developments in this space.

 

What are some interesting projects that you have seen come out of the LA Blockchain Lab?

One of the roles we have taken is to provide consulting to large corporates as they explore the use of blockchain.  For example, we worked on a project for Lamborghini a while back that explored how they can use the technology.  It was fascinating as we presented to the board and had a lively discussion at Pebble Beach.  We also consulted with Panasonic and helped them host a seminar on Smart Cities, with the CTO of City of LA and USC professors presenting on technological advances to cities and what more can be done.  We plan on further seminars in entertainment, finance, healthcare, and other topics, although we are assessing the situation with the shelter-in-home order in place.

 

Is there anything else that you would like to share about Wave Financial?

We are very proud of the work we have done for the past few years in rolling out products and providing treasury management services for corporate and high net worth individuals.  We think this is the professional and the right way to do business, and we look forward to growing our business to serve more customers over time.

Thank you for this fantastic interview. For readers who wish to learn more visit Wave Financial.

Spread the love
Continue Reading

Security Tokens

FINMA Releases Annual Report – List Security Tokens and DLT

mm

Published

on

FINMA Releases Annual Report - List Security Tokens and DLT

This week, the Swiss Financial Market Supervisory Authority (FINMA) published its annual report for 2019. Interestingly, the report highlights developments surrounding security token offerings (STO) and distributed ledger technology (DLT). The news falls in line with efforts by Swiss regulators to further develop the country’s blockchain sector.

Challenging Questions

Discussing the results of the report, FINMA officials pointed out that there continues to be “challenging questions” the group encounters. Specifically, regulators face questions regarding the trade, custody, and settlement of different token types. Additionally, FINMA continues to receive questions about possible licensing requirements pertaining to the central securities depository pursuant to Art. 61 of the Financial Market Infrastructure Act (FMIA).

Importantly, FINMA regulators believe that tokenized securities need to be met with an updated regulatory framework. Specifically, regulators would like to create a new licensing category for institutions looking to trade, settle and custody securities under a single entity. These concerns are echoed by US regulators who also face tough questions regarding streamlining the securities settlement process for tokenized assets.

Stablecoins Are in the Spotlight

Also, the FINMA report gives special attention to the emerging market of stablecoins. Stablecoins are tokenized assets that are pinned to real-world assets such as gold, or in most instances, fiat currencies. Stablecoins have been in the spotlight lately as a myriad of major non-governmental concepts have come to light. Specifically,  Switzerland is home to Libra, Facebook’s stablecoin project. As such, regulators seek to control, but not stifle these efforts.

ICO Data

FINMA also included data on initial coin offerings (ICO) for the year. Importantly, there were 1185 individual ICOs that took place last year within the group’s jurisdiction. Of these ICOs, the group started investigations into approximately 60. Out of the 60 investigations, 30 resulted in enforcement actions. Surprisingly, these numbers are a decrease over 2018. In 2018, 42 investigations concluded in enforcement actions.

FINMA Releases 2019 Report

FINMA Releases 2019 Report

Specifically, FINMA identified a breach of the Anti-Money Laundering Act (AMLA) in around 10 ICOs. Another 8 cases narrowly missed prosecution but did make it to FINMA’s warning list. Ultimately, FINMA brought enforcement proceedings against three firms in 2019.

Increased Enforcement

Interestingly, this year’s report highlights a focus on the secondary-markets regarding digital assets. The group continues to explore structuring for the trading and custody of these tokens. As such, regulations continue to develop surrounding the operation of trading venues and other security token associated support activities.

FINMA

FINMA continues to play a pivotal role in security token adoption in the EU. Currently, the group oversees over 29,200 financial services firms and products. These products include a diverse range of blockchain-based applications. Additionally, FINMA has been actively collaborating with the Swiss Federal Council to develop a framework for blockchain tech through amendments to the current federal laws.

FINMA – A Step Ahead

FINMA’s forward-looking stance and flexibility in regards to the STO sector has allowed Switzerland to remain a financial hub for blockchain activity within the EU. Given the overall tone of Swiss regulators, it’s apparent that this group seeks to increase blockchain integration to new levels. As such, you can expect to see Switzerland retain its title as a global financial powerhouse for years to come.

Spread the love
Continue Reading