Our Wired World

Financial Technology Leaders to Participate in Digital Securities Summit to Aid Economic Recovery Post-COVID-19

To discuss ways to digitize private markets to help the economy out of the crisis

May 6, 2020: Draper Goren Holm, Los Angeles based Blockchain Venture Firm today announced the launch of the virtual Global Digital Securities Summit in partnership with the Security Token Summit, to take place May 27, 2020. The summit will encompass two-hours of actionable insights from some of the world’s top financial executives and digital securities experts to discuss the state of the digital securities industry.

In a private workgroup May 5, 2020, representatives from some of the top financial institutions and fintech companies in the digital securities space came together to have a candid discussion about how digital securities can play a role in accelerating economic recovery post-COVID-19 crisis.

The workgroup was initiated following a post by Ami Ben-David, the founder of Ownera (a portfolio company of Draper Goren Hold) titled What can WE, the financial industry, do to help the economy out of the crisis and brought together executives from Citi, Fidelity Investments, Goldman Sachs, Blackrock, State Street, Morgan Stanley, Nomura, Ownera, IBM, R3, Societe Generale, ING, BNY Mellon, UBS, LSE, Santander, Archax, and others. The public event on May 27th will feature a number of those executives who will publicly share the summary of the workgroup’s findings.

Excerpts From Ben-David’s Post:

The first priority of governments going into the Corona crisis was (rightly) the preservation of life, at the expense of the economy. Going out of the crisis will be about the economy. Tens of thousands of private companies, from mid-size to pre-IPO, the backbone of the economy, will need capital all at once. The current processes of private capital raises (equity or debt) are slow, manual, legal-heavy, extremely inefficient, and non-scalable.

So the only question is — will the financial community step up to the challenge and implement digital tech to allow it to scale up. This will be the “ventilators” challenge of the financial industry.

The Pain

The current process for raising capital for private companies (either for working capital or growth) is not scalable. Each company chases a small (often random and un-optimized) set of investors, the process relies on face-to-face meetings (remember those?), it is legal-heavy, and ends with cap tables on excel sheets and tons of legal docs.

The first priority of governments going into the Corona crisis was (rightly) the preservation of life, at the expense of the economy. Going out of the crisis will be about the economy...

Coming out of the crisis, this is a massive financial bottleneck, especially when companies don’t know which investors have dry powder and investment strategies are changing dramatically. On the positive side, pricing is now much more reasonable, and there IS significant capital available for investments, but matching available capital to suitable companies is almost random.

Following the workshop, Anthony Wooley, Head of BizDev for Ownera and former CIO for Societe Generale will be leading an industry steering group and will be sharing some of the findings of the workgroup during the Global Digital Securities Summit.

The Cure

This is not a theoretical post, we live in a time of unprecedented change and we must adapt. The purpose here is to paint a practical picture:

We can work TOGETHER to deploy a shared digital network for private securities as an infrastructure for a scalable market. It must be institutional-grade so institutional/accredited investors can invest, and it must be open to financial institutions to enable the scale we need.

The tech to achieve these goals is both transformative and ready, including instant private transaction full settlement (including compliance and DvP). Every financial institution and tech provider in the ecosystem will get access to such data/functionality via simple APIs, so they can connect it to their own client apps, services and dashboards — increasing the market’s financing capacity even further.

Investors Are Out There

“We talked to the industry today, and it is clear that digital securities have the potential to help our economies emerge from the current crisis. Tens of thousands of private companies will find themselves needing to raise capital through no fault of their own,” said Wooley. “The investors who can help them are out there, but the network to bring them together is not. Following the session yesterday, I will be leading a steering group that has the vision and potential to make such a marketplace a reality.”

“It is clear that the digitization of all securities is inevitable for many obvious reasons,” said Alon Goren, Founding Partner of Draper Goren Holm. “We are strong believers in the space and its potential to help finance private companies more effectively, so it is important for us to meet with and understand the needs of the largest financial institutions on the globe and share our findings with the world. We can’t wait.”