Connectivity

We live in an age of connectivity.  Technology has enabled us to stay in constant contact with the world, in real time.  This connectivity has transcended communication, however, and changed the way we view our connectedness with others.

One company, by the name of Genobank, provides its clients with the ability to discover their origins, and connection with others.  This is done through the examination of DNA.

What sets Genobank apart from the competition is their approach towards data ownership/privacy.

DNA

Deoxyribonucleic Acid (DNA) refers to the molecules held by all humans, which contain their unique genetic coding.  By examining this code, we can learn about an individual’s ancestry, predispositions to mental and physical ailments, and more.

DNA first became popularized, and a household term, when it began being used as a means of identification – particularly in crime scenes.

The Details

In an effort to continue developing their product/services, and carve out their place in the industry, Genobank is currently hosting a crowdfunding campaign through equity investing platform, Republic.

This event, which has seen Genobank bring in roughly 175% of their minimum target, at the time of writing, is scheduled to remain live until March 14, 2020.

Investors partaking in the event will be compensated with a ‘Crowd Simple Agreement for Future Equity (Crowd SAFE)’.  This is a form of agreement created by Republic, better structured towards use in crowdfunding campaigns than a traditional SAFE.

Essentially, those that hold a SAFE do not immediately acquire equity in the company.  Transfer of equity only occurs when certain pre-set parameters are met, with regards to future progress/developments.

Privacy

Our understanding of the insights, which the examination of our DNA can offer us, has led to a boom in companies such as Ancestry Health, 23andMe, and more.  The data generated from services such as these represent the most important and intimate data of all – it represents you.

Unfortunately, we have seen time after time, in recent years, that data is abused, stolen, and generally misused.  Naturally, this has resulted in large movements advocating for better privacy practices surrounding data generation and use.

Empowerment over your own data is the driving force behind Genobank.  The company notes that they specifically make use of blockchain technologies to anonymize usage of their platform – allowing for clients to discover more about themselves, while retaining power over their most intimate data.

The company states,

“We use blockchain at its full potential by registering your DNA data as a unique digital asset also known as a non-fungible-token (NFT). This grants you exclusive ownership over it.”

For Better or Worse

While a lack of privacy may justifiably scare many, there are instances where access to DNA databases have proven beyond valuable.

A perfect example of this occurred in 2018, when one of the United States most infamous serial killers was identified and captured.  Known as the ‘Golden State Killer’, Joseph DeAngelo was identified when a relative of his used a DNA service.  This data was then able to be cross examined with DNA found at his crime scenes – providing authorities with enough information to deduce who their killer was.

While this particular instance had a positive outcome, it raises questions surrounding access to such data.  If individuals who have never even used such a service can now be identified and tracked down, are any of us truly safe?

While you may not be able to control the actions of others, you can control your own data.  Genobank plays to this, stating,

“Since there is only one private DNA Wallet per user, third parties will never have access to your DNA data without your explicit consent (digital signature). Only you can grant/revoke access and modify/delete biodata & records. YOU are in control!”

ATM

While Genobank has various plans for the usage of funds raised through their crowdfunding campaign, one of their more interesting plans is the launch of DNA kit ATMs.

These kiosks would deliver exactly what their name implies – a kit allowing for the analyzing of one’s DNA.  The goal of which is to provide these services to everyone, as no personal information is required.

Genobank indicates that these ATMs represent one of their two projected revenue streams.  The other will be a ‘white-label’ version of their kits, which is sold to health clinics, hospitals, etc.

Genobank

Founded in 2014, Genobank maintains headquarters in Palo Alto, California.  The company specializes in developing solutions which allow for analyzing ones DNA in a privacy centric manner.

CEO, Daniel Uribe, currently oversees company operations.

Since roughly 2009, crowdfunding in North America has grown steadily.  The continent, however, is a large place, with clear discrepancies in regulatory approaches between Canada and the United States.  The result is that these variances have led to U.S. crowdfunding becoming a runaway market, relative to Canada.

What is it?

As the name implies, crowdfunding is a means of raising capital from a large pool of investors/donators, rather than select venture capitalists.

Crowdfunding started off simple enough – give a wider audience the chance to help young companies out of the gate.  However, when first capturing the attention of many, securities laws prohibited issuers from compensating non-accredited investors/participants with equity in their companies; Meaning that participants weren’t really investors at all, but simply contributing to the growth of a company with the promise of potentially getting a product one day.

Fast forward to 2012, and a group of companies surrounding the industry successfully worked with regulatory bodies in the U.S. to amend existing laws.  These efforts eventually resulted in the formation of, what is known as, the ‘Jumpstart Our Businesses Act’ (JOBs Act).

JOBs Act

What the JOBs Act did was open the gates for the general public to gain exposure to true investment opportunities.  Until it was enacted, securities were only able to be sold and distributed to accredited investors.

The goal of this was primarily to help young companies, as one of the largest obstacles a start-up will face is attaining funding (regardless of potential) for the development of their products and services.

Previously, to attain said funding, regulators required that a detailed prospectus be filed and approved for the sale of any asset deemed a security.  This is a cost prohibitive, and time consuming, undertaking – meaning it is most likely not feasible for a small start-up.  While this undertaking may be inconsequential for a company raising millions upon millions of dollars, start-ups looking for modest amounts may find it a steeper hill to climb.

Naturally, this new act came with restrictions.  In an effort to maintain appropriate levels of investor protection, safeguards were put into place.  The following are only a few examples of these:

• Capital generation events must be moderated by registered broker/dealers
• Net-worth based investment limits
• Generation caps on crowdfunding hosts

While this may sound restrictive, what this did was open the doors, ushering in a time where investment opportunities were no longer restricted to those that were already wealthy.

Lagging Behind

That brings us to the United States’ northern counterpart – Canada.  While crowdfunding exists in Canada, the flexibility and freedom for issuers/investors is simply not the same as it is in the U.S – despite being years removed from the advent of modern crowdfunding.

The main issue is the fact that there is no nationwide ‘rulebook’, similar to the JOBs Act, in Canada.  Each of the various provinces and territories may vary slightly in the structuring of their regulations, making it difficult to comply with all at once.

This segregation among Canadian regulators, means that issuers are often limited in their investor pool, as they are not necessarily eligible to host their offering in all regions – somewhat defeating the purpose of crowdfunding to begin with.

However, with the moves taken by the U.S. government over the past decade widely viewed as a success, the Canadian government has indeed taken notice.  It was announced in early 2019 that they would be reviewing their policies; the goal of which is to eliminate the current segregation among regulators, by creating their own variant of the JOBs Act.

With the Supreme Court of Canada opening the door to the potential national securities regulator in 2018, and plans to develop a national crowdfunding rulebook announced in 2019, the great white north looks primed to play catch-up.

Popular Platforms

With all of this talk about crowdfunding, many in the U.S. may be wondering where access to such investment opportunities are offered.  In an effort to answer these questions, securities.io’s very own, Antoine Tardif, recently penned an opinion article discussing his favourite portals offering equity based opportunities.

Top 5 Equity Crowdfunding Websites

For those in Canada interested in equity crowdfunding, the following are a few of the more notable portals active today.

• FrontFundr
• Vested

In Other News

Always striving to adapt and improve with the times, the Securities and Exchange Commission (SEC) has recently announced a proposal which would see access to more traditional investment opportunities become even easier for investors.

This proposal is based upon the restructuring of what defines an accredited investor.  With the vast majority of investment opportunities restricted to those fitting the bill, broadening the definition, to reflect the modern world, will ideally democratize investing to an extent.

SEC Proposes Amendment to Criteria Surrounding ‘Accredited Investors’

The popular security token exchange, Openfinance filed a Form D with the SEC this week. The company seeks to raise $50 million to further development of its secondary trading platform and security token ecosystem. The news demonstrates growing interests in the security token sector, specifically, exchanges that add liquidity to the market.

According to the SEC filing, Openfinance seeks to secure around $50 million to accomplish its new strategy. Interestingly, the company already raised $8.6 million successfully according to executives. Notably, this initial funding came from a variety of international investors. In total, 19 different investors participated in the first stage of the crowdfunding event so far.

Openfinance

The Openfinance exchange is no stranger to headlines. The platform became one of the first regulated security token exchanges in operation back in August 2018. Since that time, the platform continued to develop its tokenization capabilities. Recently, the company saw heavy coverage for its tokenization of the media firm, Current Media.

Openfinance via Twitter

Openfinance is the dba of Decentralized Securities Depository, LLC. The firm provides a regulated secondary trading market for digital securities. As such, the platform has an alternative trading system (ATS) license. This license allows the platform to service both individual and institutional investors.

Openfinance Partnerships

As part of Openfinance’s strategy, the firm partnered with some of the largest tokenization platforms in the market. According to executives, the company has strategic agreements in place with Securitize, Harbor, and Polymath.

Sageworks Capital

In addition to its valuable partnerships, Openfinance opens and operates a licensed broker-dealer named Sageworks. The company also provides enterprise-level financial analysis and risk management software.

Liquidity is King

While the advantages of security tokens are immediately visible, there are still some concerns that the market lacks liquidity. Platforms such as Openfinance provide the additional liquidity needed to further the development of the sector. Both traditional and non-traditional markets benefit from this newfound liquidity.

For example, Openfinance provides investors with 24-hour trading. Comparingly, traditional securities investors must trade between the regular market hours of 9:30 am and 4:00 pm. While these investors can still match with buyers in the after-hours markets, the entire process is cluttered and leaves investors without many options. Tokenized securities are able to transfer and process at any time, including holidays.

Market Opportunities

Additionally, the platform’s tokenization capabilities allow for the creation of new market opportunities. For example, tokenization allows firms to add liquidity to traditionally nonliquidable assets such as debt-equity. Also, tokenization allows for more streamlined crowdfunding campaigns.

Available Globally

On top of the added features, the platform is available to both US and EU investors. Developers seek to expand the platform’s reach in the coming months. This strategy makes sense when you consider how the EU market continues to show strong security token development.

Openfinance – Moving Forward

It’s easy to see a scenario in which Openfinance becomes one of the most dominate exchanges globally. The firm provides smooth integration between brokers, custodians, transfer agents, and investors. As such, Openfinance plays a critical role in security token adoption.