Through this investment, SPiCE token holders will now gain exposure to the growing InvestaCrowd. A digital securities platform that operates under a licence given by the Monetary Authority of Singapore. The goal of InvestaCrowd is to not only provide services as an issuance platform for digital securities, but to develop a trading exchange. The development of an exchange is key to achieving the oft touted liquidity that digital securities stand to offer investors.
With this news, the SPiCE VC portfolio now totals 11 promising companies. The following is a list of these projects.
As made obvious by this list, SPiCE VC is comprised of both promising start-ups and heavy hitters within the burgeoning digital securities sector.
The following was a statement made in the press release, regarding the inclusion of InvestaCrowd into the SPiCE VC portfolio.
Tal Elyashiv, Co-Founder of SPiCE VC, stated,
“We are excited about this investment and the partnership with InvestaCrowd. As one of the leading investment banking platforms, and in light of the strong expected growth in tokenizing assets through Digital Securities, InvestaCrowd is set to be one of the fastest growing platforms in the region.”
InvestaCrowd is a Singaporean company, which was founded in 2015. They market themselves as the leading digital securities platform within Asia. They have accomplished this by offering not only the issuance of digital securities, but promise of eventual secondary market trading as well.
SPiCE VC is a venture capital fund tailored towards companies in the blockchain industry. Led by Carlos Domingo, Tal Elyashiv, and Ami Ben-David, SPiCE was one of the first in the world to successfully complete their own digital security offering.
The aforementioned DSO took place in the tail end of 2017.
In Other News
Here are a few articles detailing recent events in the world of digital securities. Of note, is a recent article detailing the very same SPiCE VC discussed here today.
Coinbase Extends Its Influence in India with CoinDCX Investment
India has been notorious in the digital asset space for its central bank’s restrictive view of cryptocurrencies as a whole. Marred by a ban on cryptocurrencies from the Reserve Bank of India, the digital asset scene seemed to slowly die down in the country with companies in the industry having to shut down or scale down operations.
CoinCDX Gets Second Funding Round in Two Months
Nonetheless, the ban was lifted in March, making way for the rebirth of cryptocurrency companies in India. And it didn’t take too long for investments to start flooding into the country.
CoinDCX, one of India’s leading crypto exchanges, has announced a subsequent $2.5 million investment on Monday, only two months after its Series A $3 million funding round.
In this renewed strategic investment round participated Polychain Capital and Coinbase Ventures, the investment arm of US-based cryptocurrency platform Coinbase.
The additional funding is earmarked for CoinDCX’s efforts to spur adoption of cryptocurrencies in India, with the major #TryCrypto campaign aiming to attract as many as 50 million users in the country.
The new funding round was announced on the back of impressive growth figures and the exchange reaching record levels for their daily trading volumes. With the increasing interest in cryptocurrency during this global economic uncertainty, CoinDCXX sees an opportunity to expand the #TryCrypto campaign with educational initiatives, meetup events, consumer and community campaigns.
Some of the initiatives will include the launch of an Academy, a full-fledged blockchain, and cryptocurrency learning program for beginner crypto traders.
A Highly Coveted Region for Investors
The participating investors seem to have confidence in the potential of digital assets in India. Polychain Capital is a repeat investor after taking part in Series A seeding round as well.
CEO and Co-founder of CoinDCX, Sumit Gupta, shared his positive outlook for the scene in the country, appreciating the extensive interest from outside investors:
“The recent months have shown that the cryptocurrency industry in India is finally getting the recognition it deserves from global corporations and investors. Our relationship with Polychain Capital goes from strength to strength, reflecting our great partnership with the Polychain team.”
Gupta also highlighted the trust investors are lending to their company, sharing the vision of a world with digital assets underpinning transactions across the globe:
“We are also excited to add Coinbase Ventures as an investor; Coinbase’s vision and successful efforts for global cryptocurrency adoption have been admirable and mirror CoinDCX’s dream for a DeFi future.”
The Series A round attracted interest from high profile investors in the scene, with Bain Capital Ventures and Operator of BitMEX, HDR Group participating.
While Coinbase had started serving Indian customers back in 2019, this investment is the first foray for the US platform into the Indian crypto scene. Head of Coinbase Ventures, Shan Aggarwal, also stated his firm belief in the company’s leadership to build a robust platform and become a leader in the local crypto industry:
“As India continues to close the gap between the cryptoeconomy and the mainstream market, CoinDCX is strongly positioned to become the leading platform that consumers in the country interact with crypto through.”
Coinbase’s investment in CoinDCX is also a long-term strategic play, especially when arguably its biggest rival in the space – Binance – already has a partnership with another local crypto exchange WazirX.
Ambitious Plans to Lead the Crypto Market in India
CoinDCX seems to experience an accelerated rise in new users and trading volume, following the ban lift. The exchange is also the first in India to integrate bank account transfers, gaining a lot of traction on the local market.
CoinDCX also provides instant fiat to crypto transactions with zero fees, and the team behind the platform are striving to bring their users access to a wide spectrum of financial products and services that are backed by industry-leading security processes and insurance protection.
The company’s product roadmap is much more extensive and ambitious than being a local gateway to cryptocurrencies. CoinDCX already offers its customers a decentralised lending service DCXlend, and DCXmargin, with up to 6x leverage trades across more than 250 markets, and DCXfutures, with up to 20x leverage trades on leading digital assets futures.
Coinbase with an already established presence across the globe, has taken a decisive step in being part of the quickly expanding crypto market in India. After the regulatory hurdle was taken down, the country has the potential to be one of the biggest emerging markets for digital assets, especially when its population is quickly transitioning to a full mobile and online experience.
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.
‘The Runway Fund’ Looks to Provide Relief for Start-ups Impacted by COVID-19
Help is On the Way
COVID-19 has had its way with the global economy over the past few weeks, resulting in unprecedented levels of hardship for most of the world.
A select group of start-ups have just been provided a potential lifeline, though. A new fund was recently established with the specific goal of providing promising start-ups with the runway needed to outlast the pandemic.
This is known as ‘The Runway Fund’, and is comprised of a current $10 million – with more on tap if required.
While COVID-19 may be the cause of the world’s current disarray, another reason The Runway Fund was established is due to the nature of stimulus packages announced, thus far. When speaking with Forbes, Hasson elaborated by stating,
“There is a lot of talk of big stimulus and even helicopter-style money drops…But it’s evident that neither the banks nor the government will be stepping in to assist entrepreneurs as their focus is on big corporations. We’re also hearing that VCs are re-negotiating terms and of delays in providing capital.”
At the Helm
The Runway Fund is the brainchild of the cofounders behind OnChain Capital – a blockchain investment firm. The Runway Fund is, however, its own endeavour, and separate from OnChain Capital.
Both Neuner and Hasson are fully enveloped in the world of blockchain and capital generation. This can be seen through their current work at Onchain Capital, and through past works. For example, Neuner is the host of CNBC Africa segment, ‘Crypto Trader’, while Hasson is the previous MD of Techstars.
While OnChain Capital maintains a focus on blockchain based endeavours, The Runway Fund is not restricted solely to those within the sector. It is open to start-ups of any kind, providing they meet pre-set requirements
Decrypt reports that within the first hours of The Runway Fund going live, 5 deals were already under discussing – of these, 3 are blockchain focused outfits.
Terms of the Deal
For those interested in potentially making use of the Runway Fund, don’t get TOO excited. There are parameters surrounding eligibility. They are, however, reasonable and expected.
- In operation with fixed run costs
- Previous capital generation round
- Up to date pitch deck
Providing the company is directly affected by COVID-19, and these three boxes are checked, SMEs in need of help may now have access to a new lifeline.
For those that do qualify, The Runway Fund is flexible in how it can help. Perks go beyond financials, with both Neuner and Hasson intending to take on mentorship roles for fund participants.
From a financial standpoint, The Runway Fund can take shape in the following ways, allowing for participants to choose the option best suited for them.
- Equity Funding
- Convertible Loans
The duo behind this newly established fund took the time to elaborate on their motives. The following is what they had to say on the matter.
“Having lived through the 2008 financial crisis ourselves, we saw firsthand how it impacted our companies.
Whether you were about to close a funding round, or sign your first revenue deal, we know that COVID-19 has caused unanticipated disruptions and delays that may force you to take some tough decisions and maybe even to shut down.
Our goal is to help you through this tough time and to maximize your chances of survival.”
In Other News
Over the time that COVID-19 has been running through the global population, it has managed to disrupt, both, the economy and development of tech. We recently took a look at a few ways COVID-19 has influenced the blockchain sector as a whole. Make sure to peruse the following article to learn more.