Do you know how to invest in private capital markets? Not many people like to do so. Because it is very complicated, it requires a lot of paperwork, the transaction volume is small, accompanied by risks and fluctuations, and the liquidity is not strong.
Can distributed account book technology (DLT) be used to reduce back-end management costs and expand the market for this asset class?
I interviewed Oscar Jofre, CEO and co-founder of KoreConX, who he considers his own This platform and infrastructure can help.
KoreConX is a company dedicated to changing the way companies finance their businesses. Jofre advocates the use of DLT to bring transparency to the fracture process. Jofre mentioned: “On our platform, more than 90,000 companies from around the world have raised more than $6.6 billion. Companies using the KoreConX platform are raising money by working with broker-dealers or direct issuance. We are only providing technology. To ensure that they are fully compatible and manage the entire process. "
What is a private capital market? What is the problem? The
private capital market represents companies that are not publicly traded on the stock exchange. Private fund owners and venture capital investors are usually the main buyers. The investment target can be a newly established enterprise, a mature enterprise, or some enterprises that are struggling. Such assets are often considered to be highly risky.
KoreConX's team explained that a key issue is the lack of market access for small companies. Dr. Kiran Garimella, Chief Operating Officer and Chief Technology Officer of KoreConX, said: “Most of the participants in the private capital market are small entities that are closely related to local companies and investors. They can't afford the huge cost of integrated systems. KoreConX focuses on Connecting companies of all sizes, not just those mature companies.
Jason Futko, chief financial officer and co-founder, said: “Companies in the private capital market are often difficult to find investors to showcase their opportunities. . The decentralization of this market will make it difficult for you to find investors or other professionals to help you grow your business. ”
On June 26, 2019, Broadridge acquired a similar blockchain platform from Northern Trust. There are many competitors in this field. Mr. Jofre said: "Companies like Carta, Capshares, ComputerShare, AST and Link Group offer some of the features that KoreConX offers on our all-in-one platform. We have different views on the market. In order to really transform it, we need Make sure all participants have all the tools they need. If they don't, then we will never see any major changes in the private capital market.”
KoreConX launched a new block on October 11, 2019 . The chain ecosystem provides a fully compatible digital currency on a global scale. Their mission is to ensure compliance with monetary regulations and company law. The KoreConX platform provides services such as token distribution, trading, clearing, settlement, management, and reporting.
As the management team explained to me, the lack of data integrity and regional judicial compliance knowledge may limit investment opportunities available to the public. Futko continues: "Obviously, part of the solution under KoreConX must be to connect document fragmentation, provide access to professionals, and build trust through our blockchain to ensure business and regulatory logic."
Why
blockchain technology can help? The KoreConX team says the private capital market currently serves more than 450 million private companies worldwide. They lack document transparency and the fees are high. In contrast, public capital markets have established listing standards and rules. In addition, the open market is used every day and can handle many transactions. Dr. Garimella said: "The technology provided by the blockchain provides a solid mechanism for trust through invariance and consensus among all parties."
I specifically asked Mr. Jofre to explain why his company's work is different from that of big companies like Broadridge. He replied: "KoreConX is entering a market where there are many providers that offer only a single function or application. The private capital market wants to be as efficient as the public market, requiring an infrastructure layer and an application layer. We don't exclude anyone because of size or location.