Webinar: Not For Toddlers (NFT)

Non-Fungible Tokens (NFTs) are revolutionizing how we own, verify, and value things in the digital age.

This webinar will be your guide, exploring how NFTs work with blockchain technology and their impact across industries – from art and music to even private investments.

NFTs: One-of-a-kind digital assets

Unlike regular cryptocurrencies, NFTs are unique. Think of them as irreplaceable digital certificates that can represent anything – artwork, music, even real-world items.

This opens up a whole new world of possibilities, with verifiable ownership and a clear history for each digital asset.

NFTs and the Law: Navigating the exciting, yet complex, landscape

We’ll also explore the legal implications of NFTs, particularly when it comes to securities regulations.

It’s a balancing act – capitalizing on the opportunities NFTs present while staying compliant. This session will highlight the importance of understanding these legal frameworks for creators and sellers to avoid any potential roadblocks.

Oscar Jofre and Dr. Kiran Garimella will lead us in this insightful session. Click play and join us!

 

Invest on the go: mobile apps & capital formation

This article dives into the transformative role of mobile apps in capital formation, particularly for startups and entrepreneurs. It underscores how these cutting-edge tools are opening up investment opportunities and driving the growth of businesses.

Let’s discover how mobile apps and capital formation are closely linked. It’s a relationship that changes the game when it comes to getting funds to expand or improve companies in different areas.

First insights

Small businesses are strong contributors to a country’s economy. This fact was recognized by President Joe Biden in his State of the Union address in February 2023, where he emphasized the importance of domestic growth and assured their continuing work on providing new startups with the capital they need. Small businesses contribute to almost half of the world’s GDP.

Getting easy access to investors will help small businesses and startups who apply for business funding in the current market. With the support of the government and changes like increased taxes on capital gains and a boost in infrastructure spending, the domestic market is on the uprise.

This growth can be increased further with the integration of technology in the capital formation process. Online capital formation is a smart and efficient way of raising funds via digital platforms. Creating mobile apps for this purpose takes capital raising to the next level in terms of advancement and accessibility. It helps new entrepreneurs utilize the full benefits of online capital formation at their fingertips.

Benefits of capital formation online 

Online capital formation is the process of raising funds from investors through JOBS Act regulations through a digital platform. Companies can use exemptions from SEC registration, such as Reg A+ and Reg CF, to access a larger investor pool that goes beyond private equity firms and venture capitalists. 

The USP (Unique Selling Proposition) of online capital formation is its accessibility for anyone, independent of their net worth or accreditation status. In 2022 alone, companies benefited from over  half a million investments through this medium. 

 

Online capital formation has many benefits for entrepreneurs and investors.

  • It provides access to a larger pool for investors.
  • It is transparent and allows investors to reduce risks by providing detailed information about a company.
  • Online capital platforms offer a lower cost of capital by charging lower fees than traditional private equity firms.

Online capital formation has proven to be a very successful method of raising capital. However,  the introduction of mobile apps can lead to a new revolution in the private markets.

Mobile Apps for Capital Raising

Everything has gone mobile nowadays. From shopping to banking, mobile apps make all tasks easier, quicker, and more accessible. With the arrival of mobile apps for online capital formation, the economy and private markets are bound to see significant changes.

 

For instance, the KoreID Mobile App, launched by KoreConX, works as an online passport for investments. It is free and available on Android and iOS. Simply by creating an account on the KoreConX All-In-One Platform, a user can access their personal dashboard, personal and company portfolio, and reports on pending investments.

 

With such a mobile app, you can:

  • Manage current and pending investments
  • Re-invest in companies when an offering is open
  • Stay updated on company news releases, reports, meetings, etc.
  • Manage your personal information

 

All this is done in a secure and compliant way. It , forges strong shareholder-company relationships and allows both parties to communicate in a transparent way. 

A mobile app for online capital formation makes it more convenient for users to browse investment opportunities. 

Conclusion

The private markets are much larger than their public counterparts. A mobile app will make navigating this market easier for retail investors who are eager to participate in private markets and willing to take greater risks for greater returns.

For companies, mobile apps such as KoreID offer easier visibility into your company,  allow regular updates on performance, returns, and holdings, ensure security and compliance, and make your investment platform device-independent.

The goal of a mobile app is to increase accessibility and ease of use, which has a direct positive impact on the engagement of investors in companies. More businesses are expected to explore private funding if the technology is feasible for them. This is one giant step towards integrating technology and finance in a way that both the capital-raising companies and their investors find each other easily and continue to build a relationship.

What are digital assets?

In the ever-evolving landscape of finance and technology, digital assets have emerged as a transformative force, reshaping how we perceive and manage ownership and value. Digital assets represent a broad category of assets that are digitized and stored on blockchain technology, providing unprecedented security, transparency, and accessibility.

Keep reading and learn more.

 

What Are Digital Assets?

Digital assets, in essence, are assets that exist in a digital form, represented and secured by cryptographic technology, often on a blockchain. These assets can represent various forms of value, including ownership, rights, or entitlements to physical or digital assets. Digital assets are versatile and can encompass a wide range of items, from financial instruments to intellectual property and more.

5 examples that you need to know

The table below categorizes and describes various types, such as Cryptocurrencies, Security Tokens, NFTs, and others, providing a clear and concise overview of this dynamic field.

Asset Description
Cryptocurrencies Cryptocurrencies like Bitcoin and Ethereum are perhaps the most well-known digital assets. They represent units of value and are used as a medium of exchange on their respective blockchains.
Security Tokens These represent ownership in traditional financial instruments, such as stocks, bonds, or real estate, and are often subject to regulatory oversight.
Non-Fungible Tokens (NFTs) NFTs are unique digital assets that represent ownership of one-of-a-kind items, such as digital art, collectibles, or even virtual real estate.
Utility Tokens Utility Tokens grant holders access to specific functions or services within a blockchain ecosystem, like accessing a platform’s features or participating in a network’s governance.
Digital Securities These are tokenized versions of traditional securities, such as stocks or bonds, that offer enhanced liquidity and automation of regulatory compliance.

 

Digital Assets and Blockchain: How Do They Work?

Blockchain technology is at the heart of this kind of asset. A blockchain is a decentralized, immutable ledger that records transactions across a network of computers. Digital assets are created and managed through smart contracts, which are self-executing agreements with predefined rules and conditions.

When a digital asset is created, it is assigned a unique identifier on the blockchain. Transactions involving the asset are recorded in blocks, which are added to the chain in chronological order. This ledger is distributed across the network, making it highly secure and resistant to tampering. All participants can verify transactions, ensuring transparency and trust in the system.

The Difference Between Crypto and Digital Assets

While the terms “crypto” and “digital assets” are sometimes used interchangeably, there is a distinction between them:

  • Cryptocurrency: Cryptocurrencies, like Bitcoin or Litecoin, are a subset of digital assets. They are primarily used as a medium of exchange or store of value, aiming to replace or complement traditional currencies. Cryptocurrencies focus on monetary use cases.
  • Digital Assets: Digital assets encompass a broader range of tokens that represent ownership, rights, or value. They include security tokens, NFTs, utility tokens, and digital securities, among others. It serves various purposes beyond being a medium of exchange.

Types of Digital Assets in the Blockchain Ecosystem

The blockchain ecosystem is teeming with diverse digital assets, each with its unique characteristics and use cases. Here are some key types:

Cryptocurrencies: As mentioned earlier, cryptocurrencies are digital assets designed for use as a digital currency. They facilitate peer-to-peer transactions, providing a decentralized and borderless means of transferring value.

Security Tokens: represent ownership in real-world assets such as stocks, bonds, or real estate. Security tokens are subject to regulatory compliance and are aimed at digitizing traditional financial instruments.

Utility Tokens: Utility tokens grant access to specific functions or services within a blockchain ecosystem. They are often used to pay for platform services, access features, or participate in governance.

Non-Fungible Tokens (NFTs): NFTs are unique and indivisible, representing ownership of a specific item or piece of content. They have gained popularity in the art, entertainment, and gaming industries.

Digital Securities: Digital securities are tokenized versions of traditional securities like stocks and bonds. They offer increased liquidity, automation of regulatory compliance, and the potential to streamline capital markets.

Impact on Private Capital Markets

Now that we have a better understanding of the area, we can delve deeper into their landscape. It is revolutionizing the private capital markets in significant ways.

Let’s check more details:

Enhanced Transparency: Blockchain technology ensures transparent and immutable records of ownership and transactions. This transparency builds trust among investors and stakeholders.

Liquidity and Accessibility: The tokenization of private assets through digital securities enables fractional ownership, reducing investment barriers and increasing liquidity.

Automated Compliance: Smart contracts embedded in digital securities can automate compliance with SEC regulations, reducing administrative burden and ensuring adherence to legal requirements.

Reduced Intermediaries: By eliminating intermediaries and streamlining processes, they lower transaction costs and reduce friction in private capital markets.

Global Reach: These kinds of assets are accessible to a global audience, expanding opportunities for fundraising and investment beyond traditional geographic boundaries.

Fractional Ownership: Investors can purchase fractions of high-value assets, enabling diversified portfolios and increased participation.

Final insights

Digital assets, powered by blockchain technology, are poised to disrupt and revitalize private capital markets. They offer transparency, accessibility, and compliance, making it easier for companies to engage in fundraising and investors to access previously illiquid assets.

Also, they represent a transformative force that will reshape how we perceive, trade, and invest in assets.

Although, to fully reap these benefits, is important to partner with trustworthy platforms. Ensuring that operations adhere to regulations, along with transparent policies on data management, usage, and privacy, is key to protecting your business and investments.

As the financial landscape continues to evolve, understanding the potential of digital assets is paramount for businesses and investors alike.

It’s definitely a new era in private capital markets, but trust remains a highly valuable asset.

What are securities in blockchain?

What are securities in Blockchain?

Securities, in the traditional sense, represent various financial instruments such as stocks, bonds, and derivatives that signify ownership, equity, or rights in an underlying asset or entity. In the context of blockchain, securities are digital tokens or smart contracts that represent ownership, equity, or other financial interests in a real-world asset or company. These tokens are securely recorded on a blockchain, providing immutable records of ownership and enabling efficient and transparent trading.

Transparency: A Game-Changer

One of the primary benefits of using blockchain technology for securities lies in its transparency. Unlike traditional financial systems, where transactions are often opaque and intermediaries are numerous, blockchain offers a transparent ledger where every transaction is recorded and visible to authorized parties.

This transparency fosters trust among stakeholders, reduces the risk of fraud, and enhances the overall integrity of the private capital markets.

Democratizing Finance with Blockchain

In the world of finance, private capital markets play a pivotal role in shaping investment opportunities, fostering economic growth, and providing innovative financing solutions. However, the complex nature of private capital markets has often led to inefficiencies, lack of transparency, and limited access for investors.

Enter blockchain technology, which has the potential to revolutionize these markets by offering transparency, trust, and enhanced efficiency. In this blog, we will explore the concept of securities in the blockchain, the differences between private and public chains, and why private blockchains are particularly well-suited for the private capital markets, catering specifically to CEOs, CFOs, and board directors without delving into technical jargon.

Differences Between Private and Public Chains

When we talk about securities in blockhain is interesting to deep the knowledge about the technology, keep reading and learn about these important topics.

Blockchain networks can be categorized into two main types: public and private chains. Each has its own set of characteristics and use cases.

➨ Public Blockchains: Public blockchains, like Bitcoin and Ethereum, are open and permissionless networks. They are maintained by a decentralized community of participants, and anyone can join, validate transactions, and access the ledger. While they offer a high degree of security and decentralization, public blockchains may not be suitable for private capital markets due to their lack of privacy and scalability. Transactions on public chains are visible to anyone, making them unsuitable for sensitive financial information.

➨ Private Blockchains: On the other hand, private blockchains are closed and permissioned networks. They are typically used by organizations, consortia, or groups of trusted parties who have control over access and participation. Private blockchains offer higher privacy, scalability, and customization options, making them ideal for private capital markets. Transactions and data are kept confidential among participants, ensuring the security of sensitive financial information.

Why private blockchains are better for private capital markets

Now we know what are securities in blockchain, let’s take a closer look at other aspects.

Private capital markets are characterized by complex transactions, stringent regulatory requirements, and the need for confidentiality.  Here’s why private blockchains are particularly well-suited for these markets:

Enhanced Privacy: Private blockchains offer a controlled environment where sensitive financial data can be securely shared among authorized parties while remaining hidden from the public. This level of privacy is crucial for protecting the interests of both issuers and investors.

Customized Governance: Private blockchains allow organizations to tailor the governance structure according to their specific needs and regulatory requirements. This flexibility enables efficient compliance management and regulatory reporting.

Scalability: As private capital markets involve a relatively lower number of participants compared to public markets, private blockchains can offer greater scalability without compromising performance.

Reduced Costs: By streamlining processes and reducing the need for intermediaries, private blockchains can lower transaction costs, making private capital markets more accessible to a wider range of investors.

Faster Settlements: Blockchain technology enables real-time settlement and automated execution of smart contracts, reducing settlement times and the risk of errors.

Securities in blockchain: highlights about trust

The adoption of private blockchains in private capital markets brings a level of trust and transparency that has been sorely lacking in traditional systems. Here’s how private blockchains instill trust among investors and stakeholders:

Benefit Description
Immutable Records Transactions recorded on a private blockchain are tamper-proof, ensuring that once a transaction is confirmed, it cannot be altered. This immutability provides confidence in the accuracy of ownership records.
Transparency for Authorized Parties While private blockchains maintain confidentiality, they provide transparency to authorized participants, allowing them to verify ownership, track transactions, and ensure compliance with regulations.
Reduced Counterparty Risk Blockchain technology eliminates counterparty risk by enabling automated smart contracts that execute predefined terms when conditions are met. This reduces the risk of disputes and defaults.
Improved Due Diligence Investors can conduct more efficient due diligence processes by accessing real-time, transparent information on assets and transactions, reducing uncertainty and enhancing trust.

Trustworthiness in blockchain solutions

As we know, blockchain technology has the potential to revolutionize many industries, offering benefits such as security, transparency, and efficiency. However, it is important to choose a company that offers reliable and secure solutions.

Trust is a valuable asset in any relationship, especially when operations involve your business, investors, and private capital markets. When choosing a blockchain company, it is important to consider factors like:

  • Clarity and transparency: The company should be clear and transparent in its actions, from the first contact to the signing of the contract. It should provide complete information about its services, pricing, and terms of use.
  • Reputation: It is important to check the company’s reputation before doing business with it. Do some online research, read customer reviews, and consult with experts.
  • Compliance: The company should be in compliance with applicable laws and regulations. This is important to ensure the security and reliability of its solutions.

3 tips that can save your life when working with securities in blockchain

As you see in the past section, verifying the trustworthiness of a blockchain company is an essential topic for those who work with securities in blockchain and private capital markets. Now let’s check 3 practical tips that can help a lot when you’re looking for a blockchain company.

1. Read the contract carefully: The contract should be clear and concise, and should specify the rights and obligations of both parties.

2. Request references: Ask for references from the company’s previous customers.

3. Ask questions: Do not hesitate to ask the company questions about its services and processes.

Examples of questions you can ask:

📣 How does the company ensure the security of its solutions?

📣 How does the company handle security incidents?

📣 How does the company comply with applicable laws and regulations?

 

By asking these questions, you can gain a better understanding of the company’s resources and processes, and make a more informed decision about whether it is the right one for you.

 

Future of blockchain and its impact on investments

The adoption of blockchain technology in private capital markets has the potential to revolutionize the way securities are managed, traded, and accessed. Private blockchains, with their emphasis on privacy, scalability, and customized governance, provide a robust solution for enhancing transparency and trust in these markets.

As CEOs, CFOs, and board directors, embracing this technology can empower your organizations to operate more efficiently, comply with regulations, and attract a wider pool of investors, all while instilling trust in the private capital markets of the future.

By understanding the power of securities in blockchain and the advantages of private chains, you can position your organization for success in this evolving landscape.

What are the private capital markets in business

Beyond the familiar world of financial headlines, a vast network of private companies fuels global growth. In this context, many people are researching the subject to understand What are the private capital markets in business.

Firstly, the private capital markets, operates under different rules and holds potential for investors and businesses alike. In today’s post, we’ll explore practical aspects regarding the inner workings of this hidden ecosystem, its challenges, and its future.

What are private capital markets in business

If you’re looking about What are private capital markets in business, there’s a simple way to explain it. Basically,  the private capital markets are a field of the financial system where investors provide funding to privately held companies, i.e. those not listed on public stock exchanges.

These companies can vary from start-ups to more established companies seeking to expand or restructure.

With its particularities and own regulations, the private capital markets are and dynamic ecosystem that plays an important role in the world economy. In the next section, we’ll talk more about this, contextualizing with public markets.

Public vs private markets

The financial world is broadly divided into two segments. Both segments contribute approximately 50% of the world’s GDP. That’s where the similarities end. These two segments are the public and private financial markets, and they are vastly different.

The public markets generate 95% of the noise and the news. They are generally very efficient, fluid, and well-served by technology. These are the financial institutions and companies that we read about and see daily on TV.  As of May, 2022, there are approximately 58,500 publicly listed companies on the planet. In all, these companies have a market capitalization of about $90 trillion. 

Public companies have been increasingly going private for over a decade, fueled by the costs of keeping a public profile and the requirements of Dodd-Frank and Basel III. A larger proportion of public capital is in the form of debt, with many companies implementing aggressive share buyback programs. This has also decreased the secondary market liquidity, while the illusion of liquidity is maintained by the approximately 70% of trades generated by algorithmic trading. The retail investor is increasingly underserverd in the public markets.

Compare all this with the approximately 285 million private companies, of which private equity invests barely $9 trillion. However, the trend is rapidly changing. Since 2009, more capital raising has been done by private companies than by public companies, sometimes by a factor of 2.

Insights on private capital markets

What is especially interesting about the rise of private markets is that the trend is changing despite the private markets not having any unifying central authority or even a regulatory consortium. Private markets are significantly underserved by technology. For many participants in the private markets, technology means moving from a physical Rolodex to an electronic one (mostly, a spreadsheet).

Traditional banks have evolved into institutions that make it easy to collect retail savings and funnel them into institutional investment firms or lending back to retail or SME customers. There has been no infrastructure for retail private investments or private capital raising over the last couple of hundred years. For this reason, the private markets remain fractured and fragmented. The participants include broker-dealers, CPAs, law firms, funding platforms, auditors, transfer agents, and various auxiliary service providers (such as for KYC screening, custody, escrow, payment processing, etc.). All of these participants exist to connect private companies seeking to raise capital with private retail investors.

Attitudinally, private market participants want to remain private. They want to retain their individual branding and serve their communities and niche markets. However, they see the potential for tapping into the wider retail market, even internationally. The challenge remains how to do it efficiently.

On the public side of the market, it is easy to conduct trades after the accounts have been set up with brokerages. Anyone with a smartphone can place a trade for a publicly listed company and get a trade confirmation within seconds (assuming high liquidity and that the markets are open). A similar trade with private shares takes several weeks.

Final thoughts

From all this, we can see that the private markets are on the rise and, with supportive forward-thinking legislation such as the JOBS Act, opening up participation by the retail investors in a much more direct way. Private markets are not only here to stay but increasingly becoming more democratized.

 

What is missing is an efficient infrastructure of trust. That is a topic for another blog.