What if you could simply navigate a digital repository of private investment opportunities, complete your due diligence, substantiate your conviction, and transact, all on a single platform?
The private securities market is one of the last bastions in financial services to reach the digital frontier. This lag in innovation has caused investors, their intermediaries, and entrepreneurs to accept the probability of missing opportunities due to inaccessible silos, high transaction costs, and operational challenges. Now, it is time to eliminate barriers, shift perspectives to demand transparency and efficiency.
In 2017, we committed to bringing transactional and operational efficiencies to the private securities market with an evolutionary digital platform for institutional investors and the 16 million accredited investors in the United States. That meant we had to build a scalable structure to enable operational efficiencies and eliminate the points of friction between market participants. That requires the iownit team to:
- Open a pathway to efficiency, transparency, and inclusivity in private securities.
- Design a platform that enables the creation of digital private securities to accelerate origination, distribution, and the transaction process.
Barriers to Capital Access
The ability to allocate capital efficiently helps to fuel the global economy. And, if the distribution is inadequate or uneven, it can choke off growth or introduce investment biases. In turn, potential innovation does not happen or it takes a lot longer to get to market. Alternatively, a small but growing company has to reduce its growth due to the economics of a loan.
Frankly, the private securities market relies more on personal relationships because it is operationally inefficient. This inefficiency leads to an echo chamber of opinions, relationship bias, and asymmetric decision-making. Hence, all the comments in our industry regarding the lack of diversity and geographical biases.
When Full Distribution is Profound
Permit me to share an example of a distribution failure that is painfully unnecessary.
Hunger and Food Scarcity.
Based on world hunger statistics, nine million people die of hunger or hunger-related diseases each year. But, there is no shortage of available food in this world, the challenge is getting the excess food to the people who need it most. Experts estimate the food and restaurant industry discards $25 billion a year in food waste. Unfortunately, food waste can’t be solved by digitization, but the dichotomy of availability and distribution is clear when it comes to food shortages.
This failure parallels the same closed mentality that dominates capital access and distribution in private securities today.
Pockets of entrepreneurial talent exist everywhere. There’s no shortage of capital available for investment opportunities. Investors and entrepreneurs are in need of a more pragmatic and logical distribution mechanism for capital allocation.
Efficient Distribution Drives Deal Flow
From an investor’s perspective, finding those opportunities that fit their investment strategy at a lower cost, with robust comparative metrics and analytics, increases the trust factor and propensity to deploy capital that funds growth and innovation.
Robust Distribution Creates More Capital Availability
From the viewpoint of an entrepreneur, he or she must set out to ensure their company is well-capitalized. And, of course, finding the best form and source of capital for their unique situation sits atop their priority list.
By providing entrepreneurs with a cost-effective way to reach out to relevant investors, iownit eliminates the need to send stacks of unsolicited proposals, which investors may put on a dusty cabinet or simply send to the trash box. This allows these private investments to be bought by the investors, instead of being sold the next big idea.
Let’s address deal flow management in our closing moment. Are you still using spreadsheets or other software that patches up the lack of digitization in the private markets?
Do you have limited time or staff to manage the information flow and performance reporting?
Deal Flow Management
There is no ‘go with the flow’ in deal flow management. It’s complicated and time-sensitive. It’s shocking then, how many investors still rely on spreadsheets to monitor deal opportunities.
A Robust deal-flow requires meticulous management. On a digitized platform, investors can save time and get access to relevant information. We hope to prove it to you.
Before we meet again, ask yourself: Do I see the most relevant opportunities that are on the market? Do I spend my limited time and capital resources efficiently to gain access, discover the price, and execute my investments? Do I manage my private investment portfolio in the most efficient way given the existing technology?
If you hesitated to answer, we’d like to help you prepare for and efficiently engage in the coming digital transition.
Securities and brokerage services are provided by IOI Capital and Markets, LLC (“IOICM”), member FINRA and SIPC. IOICM does not provide investment advice, endorse, analyze or recommend any securities. Investments in private placements, and start-up investments in particular, are speculative and involve a high degree of risk. Those investors who cannot afford to lose their entire investment should not invest in start-ups. Companies seeking startup investments through private equity issuance tend to be in earlier stages of development and their business model, products and services may not yet be fully developed, operational or tested in the public marketplace. There is no guarantee that the stated valuation and other terms is accurate or in agreement with the market or industry valuations. Additionally, investors will receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. In the most sensible investment strategy for start-up investing, start-ups should only be part of your overall investment portfolio.
There will be limited transferability of security ownership interests and lack of a trading market. Prospective investors in private securities must be aware of the potential long-term nature of their investment and be able to bear the economic risks of their investment for an indefinite period of time. No material trading market currently exists for any securities on the platform. Ownership interests of private securities on the platform have not been registered under the Securities Act of 1933, as amended, or the securities laws of any state. The right of any prospective investor to sell or otherwise dispose of any of such securities is restricted by federal securities regulation and possibly by the specific terms of an issuer. Any transfers are also subject to compliance with the Securities Act of 1933, as amended, as well as state securities laws and the regulations promulgated pursuant thereto.