Category Archives: Fundraising and Investing

Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace

NCFA Canada | Craig Asano | Aug 20, 2019

ExpoG logo final600 - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace

TORONTO, ON Aug 20, 2019  The National Crowdfunding & Fintech Association of Canada (NCFA) is pleased to announce that the Exponential Group (Exponential Ventures, Exponential Capital and Exponential Markets) has joined NCFA as an industry partner.

NCFA's industry partners are builders, investors and innovators who have provided a significant level of service and/or contribution towards the sustainability and growth of NCFA and related fintech sectors globally.  We encourage the fintech ecosystem to support and collaborate with NCFA's global network of industry partners by engaging directly with their ventures of mutual interest.

"Since founding NCFA in the summer of 2012, one of it's core missions has been working with communities of change that are passionate about enabling inclusive opportunities for 'big vision' companies seeking to change the world but need access to capital and resources to innovate competitive products and services that otherwise may not exist.  These companies often focus on new economies of scale that look beyond 'for profit' models alone.  Supporting and leading this change by developing new infrastructure and partnerships while leveraging new technologies can be a beacon of light resulting in massive transformation and change." - Craig Asano, Founder and CEO, NCFA

 

Meet James Wallace, Co-Founder of the Exponential Group

Exponential Group is the world's first fully integrated early-stage seed capital, business advisory, later stage capital raising, digital issuance and trading.

 

Q1. How did you get to where you are today?

James:  A whole lot of failures that led to a massive amount of learning.

 

 

Q2. What can you attribute your achievements to date to?

James:  Empathy for the excluded, plus grit and determination.

 

 

Q3. What’s the story behind founding Exponential Group and specifically what problems are you interested in solving as a Founder?

James:  An unwavering intention to migrate society to a free, inclusive and abundant paradigm by resolving government and financial exclusion.  Alleviate suffering and expand human potential to enable meaningful living.

 

 

Q4. Can you tell us more about the Digital Asset Impact Fund?

James:  The exchange-traded diversified digital asset impact fund will allow anyone access to a fund that holds a board basket of digital assets. These assets include tokenized real estate, currencies, precious metals, art, and venture capital. This is the easiest way to participate in migrating the economy to the digital asset world.

 

 

Q5. What role/impact do you think blockchain and digital securities will have on the future of financial services?

James:  Blockchain introduces trust to the Internet for the first time. Said another way, a trusted engagement is a secured value exchange, whether that’s an exchange of time reading content on a blog, giving personal data to your government, or trading any store of value such as a digital asset for fiat currency.

Different blockchains verify various aspects of user engagement online. As more and more blockchains connect to support the services of web users, non-blockchain equipped services will simply fall away, as they will not (and can never) be trusted.

Connections to web pages and native applications that are not secured and validated by blockchains will simply cease to exist over time. Bad players will slowly go extinct as blockchain-based services prevent their access to users.

The network of blockchains will eventually become the new Internet. And, because we believe absolute trust scales absolutely, ExV invests in platforms that create and grow trust with their users, in addition to adding significant value by solving a major problem.

 

Q6. What’s the greatest risks and challenges to improving mass adoption and education of blockchain and other technologies with the potential to impact great social change?

James:  Education and updating regulation. In parallel, we need to help everyday investors understand that there are only benefits to digital securities, as well as press the regulators to allow access to digital asset investments for retail investors. We believe the rest will happen naturally.

 

 

Q7. Where do you see Exponential Group in 3-5 years from today?  How can our community help out and get involved and where can we get more information?

James:  Exponential Group will continue to focus on expanding cross-border digital securities trading and as a result we believe in 3-5 years we will be one of the largest global investors, issuers and traders of digital securities.

Exponential Group is looking for dynamic founders to assist in issuing high quality digital securities and investors that wish to upgrade their investment portfolios to contain digital assets.

The best place to connect and get more information is at exgroup.ai.

 

Thanks to James and the Exponential Group for their support of the NCFA Community.  We look forward to collaborating and continuing to advance the development, adoption and growth of industry!

 


NCFA Jan 2018 resize - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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The Solution To The Fintech IPO Shortage

Forbes | Ron Shevlin | July 1, 2019

fintech IPO shortage - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James WallaceOBSERVATIONS FROM THE FINTECH SNARK TANK

A Seeking Alpha article titled Why Fintech May Not Be Fit For Public Consumption states:

The year 2019 seems set to be a record-setting one for venture capitalist exit value capture by means of tech IPOs. But fintech doesn't seem to be a part of this picture. VCs are certainly putting money into fintech startups. There were 170 financings in the US in the first quarter of 2019. But, as Pitchbook says, 'not one of the most valuable fintech companies in the world seems particularly close to an offering.' "

The article chalks this up to three primary causes:

1. Poor IPO performance in 2018. According to the article, "One reason nobody is in a hurry to go public is that the results of the last crop of fintech concerns that did go public have been unimpressive. Adyen and IntegraFin are prospering, but neither GreenSky nor EverQuote is "lighting up the heavens" according to Seeking Alpha.

See:  OurCrowd Double IPO Success Provides Crowdfunding Validation

2. Mega-round financing. Seeking Alpha postulates that investor interest in mega-rounds--e.g., Qatar Investment Authority's investment of $500 million in SoFi and Tiger Capital leading a round that raised $300 million for Coinbase--is another factor dampening interest in IPOs. According to Jim Marous, publisher of the Digital Banking Report:

With all of the mega-round investment in fintech firms, you would think more fintech players would cash out and go the IPO route. But why would successful fintechs, who appear to have a bottomless pit of funding at their disposal, subject themselves to the massive scrutiny that comes from going public? Fintech firms don't see a slowdown of the funding fire hose and have no desire to lose control of their vision."

3. Lack of scale. Seeking Alpha asserts that fintech "doesn't scale as easily as other sorts of tech," making fintech startups less likely to be IPO candidates. According to one veteran of the fintech startup scene (a founder and angel investor who now heads up technology innovation at a large bank, which is why he prefers to remain anonymous):

People underestimate the scale dynamics of financial services. You need a lot more maturity across all measurable KPIs before you can be successful in the long-term. In an ecosystem with these scale dynamics, if a fintech startup can use private capital at favorable costs to grow operations and monetize employee equity, and avoid the distracting microscope of quarterly filings, it's going to do so."

Pascal Bouvier, Managing Partner of Middlegame Ventures echoes this sentiment, but points out that there are startups who have achieved scale and still not gone public:

Stripe is an example of a fintech that should already be public--they've achieved scale. But for others, operational readiness at massive scale is key in order to go public. If you do not achieve repeatability in your core business you end up suffering post-IPO.”

 

The Business Model Factor

Scale is certainly a big part of the equation--but why aren't many fintech startups able to achieve scale? The answer may be their lack of a sustainable, viable business model. According to Brad Leimer, co-founder of Unconventional Ventures:

It's much easier for companies like Ayden and Klarna to go public because they have a profitable model out of the gate--they only need to achieve market share to achieve escape velocity. Fintechs have to figure out that there are alternative business models to the ones banks leverage today. The path toward more IPOs in fintech is to think differently about where the industry derives value in exchange for what they create for the consumer of business."

Interestingly, Leimer's two examples are B2B--not B2C--companies, and that might hold a clue to the dearth of fintech IPOs.

See: 

Many Fintech Startups Aren't Meeting The Criteria For Sustainable Growth

What must a fintech (or any) startup do to succeed for the long-term? To oversimplify matters, it must first either offer a new product or service to fulfill unmet needs or provide an existing product or service with innovations to marketing, distribution, service, and/or product and service features that enable it to compete with incumbents. And then second, it must either expand the market size and/or its set of offerings to sustain growth.

Too many B2C-focused fintech startups have come to market with existing products or services whose "innovation" is digital distribution and service. That's not enough of an innovation to thrive. The world of B2C fintech in the US is characterized by:

  • Digital tunnel vision. Too many fintech startups suffer from Bank Displacement Syndrome--the belief that traditional banks can be displaced with nothing more than a digital product offering. Consumers who opened accounts with digital banks have done so because they want rewards, better interest rates, and/or better PFM tools--not because they want a "branchless" bank.
  • Featurization. A number of fintech startups have hung their point of differentiation on capabilities like providing a "safe to spend" feature or getting one's paycheck a day early. Savings tools like Digit and Qapital do a great job of helping people save, but the service is tied to some larger solution (i.e., checking account) that they don't provide. This "featurization" of fintech is creating firms with business models that won't provide sustainable growth--and the market is not ready to believe that these firms can expand product-wise.
  • High-risk lending strategies. After hitting a high of $25 per share in December 2014, Lending Club's stock price has been trading for less than $10 since the beginning of 2016. It shouldn't be a surprise. According to Pascal Bouvier, "Lending Club is an example of a fintech that should not have gone public--its credit portfolio wasn't mature enough." That's being generous. The firm's portfolio has been heavily weighted to credit card consolidation from sub-prime borrowers, and it hasn't successfully expanded market size or its offerings to create and sustain growth. The same can be said for some digital-only small business lenders.

Is there hope for the fintech IPO shortage?

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NCFA Jan 2018 resize - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities

CNBC | Kate Rooney | Aug 12, 2019

  • unicorn - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace
  • Money spent in venture capital and other alternative investments is surging as investors look for riskier, but higher-yielding investments.
  • The trend coincides with relatively low returns from more conventional Wall Street investments such as stocks and bonds, and a drop in the number of publicly traded companies.
  • “In a world where big institutional investors find themselves starved for returns, it’s not surprising that they have steadily increased allocations to private markets and you’ve seen capital continuing to flow into the asset class,” says McKinsey Partner Bryce Klempner.

Many global investors are turning toward Silicon Valley instead of Wall Street in search of returns.

The total invested in private markets hit all-time highs last year and continues to break multi-decade records this year. In the first half of the year, total investments in venture capital hit a 19-year high of $53.3 billion, according to data from Refinitiv published last week. That marked a 21% increase by total dollar amount compared to the first half of 2018.

The steady stream of funding comes alongside a drop in the number of publicly listed companies, rock-bottom global bond yields, and historically weak small-cap performance.

“The incentives for early exposure to rapidly growing, mature companies are still intact,”

PitchbBook senior manager Garrett James Black said in the firm’s 2019 “Unicorn Report” published Monday. “With those imperatives in place and current market conditions — despite concern about a supposed imminent recession— looking to persist, unicorns aren’t going away anytime soon.”

Analysts say the trend is largely the result of relatively lower expectations for Wall Street investments such as stocks or bonds. As the trade war between the U.S. and China escalates and economic indicators weaken, investors have fled to safer assets such as Treasurys. The 10-year Treasury note fell below 1.7% Monday.

‘Starved for returns’

Money managers for pensions and endowments are turning to alternative investments — private equity, venture capital or hedge funds – to “keep up with expectations that they set years ago with their stakeholders,” according to McKinsey Partner Bryce Klempner.

“In a world where big institutional investors find themselves starved for returns, it’s not surprising that they have steadily increased allocations to private markets and you’ve seen capital continuing to flow into the asset class,” Klempner told CNBC in a phone interview. “Private equity has, on average, managed to outperform public markets over the last couple of decades.”

Growth in smaller public companies has been significantly slower than their private-market counterparts. PitchBook looked at the valuations of late-stage, Series D funded companies compared to the small-cap benchmark Russell 2000. That index is in correction territory, trading nearly 14% below its 52-week intraday high in August of 2018. The S&P 500 is off by 4% from its high.series D growth - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace

See:  Blockchain’s potential will continue to spur public and private investment

Meanwhile, there has also been a contraction in the total number of public companies. Part of that is due to mergers and consolidation, but Klempner said managers — not just investors — tend to prefer private ownership, too. They’re able to operate “outside of the quarterly spotlight or the glare of public markets,” and often take a longer-term view, he said.

“As a consequence, you’ve seen considerable management talent migrate to private equity portfolio companies,” Klempner said.

One factor allowing companies to stay private was a change in legislation. The 2012 JOBS Act raised the limit of private shareholders in a company from 500 to 2,000 – meaning companies can stay private until they reach that limit. And in many ways, companies don’t need to go public: They can raise money with ease from private investors and don’t need the cash injection that comes with an initial public offering.

Foreign buyers

Foreign investors are also looking for early entrance into quickly growing tech companies, which in the case of Uber and WeWork, stayed off of public stock exchanges for a decade. Last year, venture capital deals that included “tourist” investors soared to more than $45 billion over 102 investments. Halfway through 2019, the deal total was at 53.

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NCFA Jan 2018 resize - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Crowdfunding for a Startup: How it Builds a Business’ Credibility

Guest Post | Aug 14, 2019

Funding meeting - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James WallaceYou see a need. You know that your new business can fill that need.

The problem is that it takes an incredible amount of capital to start a business. Besides purchasing equipment, raw materials, and computer systems, you also have the expenses that no one ever thinks about when opening a shop. Did you figure in the cost of hiring an accountant, a lawyer, and paying for workers compensation insurance?

Instead of heading to the bank with your business plan in hand, you may consider whether working with a crowdfunding site might be another feasible way to raise cash for your business expenses.

Here’s how crowdfunding sites work.

Cash in Exchange for Equity

Have you seen Shark Tank? On this TV show, investors decide whether or not they would like to provide capital for startups in exchange for a piece of the company. Sometimes the hosts compete against each other for the opportunity to invest. Sometimes they pool resources and form investment partnerships for a portion of ownership in the company. Occasionally budding entrepreneurs are sent away empty-handed.

See:  Regulation Crowdfunding Surpasses $250,000,000 in Commitments The Model is Working but its Potential is Much Greater

Equity crowdfunding works in the same way. Using a crowdfunding website such as FrontFundr, your investors provide you with funding to move your business forward for a portion of the future profits.

Donations

Perhaps your business may provide a needed service or product for a blighted area. Maybe you are interested in starting a nonprofit group to serve the greater good. If this describes your scenario, you could seek donations from crowdfunding sites. The gifts can be used to get your idea up and running, and of course, there is nothing to repay.  Interested?  Check out FundRazr, Canada's leading donation-based platform, that has helped raise north of $130 million dollars for individuals and organizations.

Donations - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace

Borrowing from Individuals

Instead of borrowing money from a traditional bank, you could borrow money from individuals leveraging the compliance and match making services of a platform like Lending Loop. You will still pay a set annual percentage rate like you would when taking out a conventional loan.

Rewards

Some investors are inspired to fund new businesses by an offer of a product, service, or gift they will receive in exchange for the cash donation. For example, if you are opening a car wash, perhaps investors will give you a set amount of money for you to purchase equipment with the idea that they will receive free car washes for six months after the business is up and running.

See:  OurCrowd Double IPO Success Provides Crowdfunding Validation

If you had told someone twenty years ago that they would be able to collect cash from strangers over the internet to open a business or pursue a creative endeavor, they would have thought you were crazy. You could have found investors for your business, but only among your friends or family. Otherwise, entrepreneurs were forced to work with traditional banks who may not have been open to offering cash for products they couldn’t understand.

Rewards - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace

But when you receive money for your idea through crowdfunding, that means that you not only won the backing of a single loan officer at a lending institution. It means that dozens, hundreds, or even thousands of people think that your idea is good enough to support.

Crowdfunding sites have different specialties. Kickstarter connects creative people with resources they can use to bring their ideas to life. Kickstarter has helped artists, musicians, filmmakers, and designers. You no longer have to be a millionaire to be considered a patron of the arts.

Inventors often use Indiegogo, a crowdfunding website that has allowed entrepreneurs to raise over 1 billion dollars. Investors can receive equity in the company or receive a share in the revenue.

All you techies out there will appreciate Crowdsupply, a crowdfunding website for hardware designers and innovators. The hardware must be original, useful, and respectful.

Perhaps you already have a following, and you know you could increase your cash flow by offering exclusive content or behind-the-scenes experiences for your fan base. You may want to check out Patreon.

See:  What You Should Know About Crowdfunding Your Start-up

Designing a campaign - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace

There are several websites you can visit to help raise money for a nonprofit entity. Go Fund Me was started by Indiegogo. You could also visit StartSomeGood, which allows you to submit your project for free as long as you agree to pay a service fee of 5% of your project is fully funded.

If you are seeking funds to open a business, take a look at WeFunder. This website has more than 150,000 who are interested in keeping the American Dream alive. The site is quick to tell investors that they may undoubtedly lose their money on the investments since so many small businesses fail.

Do you have a dream, but you need to raise some capital to see it to fruition? Consider seeking the help of family, friends, and strangers through a crowdfunding website.

 


NCFA Jan 2018 resize - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Bold Vision, Bright Future

Canadian Securities Exchange | Richard Carleton | Aug 6, 2019

bold vision bright future - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James WallaceIn the financial space, “uncertainty” is traditionally associated with a four letter word: risk. When given the option, most investors and financiers prefer to avoid uncertainty, not wade directly into it. However, when it comes to innovation and pursuing new industries, the Canadian Securities Exchange is proving that boldness in the face of “uncertainty” can result in transformative growth and add new dimensions to the Canadian financial landscape.

Take the commercial cannabis industry, for example. When the Canadian Securities Exchange (CSE) began listing cannabis companies in 2014, there had not yet been an actual target date set for recreational cannabis legalization, and the potential legislative framework was nebulous at best. The potential for success was high, but the risk factor was also elevated.

See:  Architecting a New World: Investment Crowdfunding and Digital Assets

Today, over 150 Canadian and US cannabis companies are listed on the CSE, making them the undisputed leader of listings in this space. By providing opportunities for cannabis companies in the public markets, the CSE has made progress in normalizing what is still considered to be a somewhat taboo business prospect. “There’s still a little bit of stigma attached to the industry,” stated Richard Carleton, CEO of the CSE, during a recent trip to Davos, Switzerland. “I think, I hope, that we can help change some minds.”

Making marijuana mainstream also has significant implications in Canadian public markets. During the Davos trip, Richard Carleton elaborated:

“We want to showcase Canada’s public market’s ability to fund startup industries. So, if you look at the cannabis space, in less than five years we’ve gone from $0 to more than $60 billion in market capitalization. And that funding was raised from cannabis public markets.”

Blockchain is another entrepreneurial space for the CSE. Last year, they announced the introduction of an innovative securities clearing and settlement platform that harnesses the unique features of blockchain technology, reducing the cost for smaller companies to trade publicly. At Extraordinary Future in 2018, Carleton discussed the benefits.

“It’s a revolution in terms of cutting out all the intermediaries that are in the way at this point, and are adding costs at each level,” Carleton remarked. “By going to real-time clearing and settlement… you free up all of that capital that’s being tied up in the legacy clearing and settlement process.”

The CSE is also interested in eSports, an industry that’s currently poised for exponential growth. A recent Toronto eSports-themed event co-hosted by the CSE explored the potential role of capital markets in the future of eSports. A similar event will take place in Vancouver later this year. By providing a forum for these conversations, the CSE is helping build foundational relationships in an industry that has the potential to add yet more opportunities in the capital markets space.

Fintech Fridays Podcast:  EP29: The Future of Securities with Richard Carleton, CEO Canadian Securities Exchange

By taking an entrepreneurial approach to growth-stage companies and industries, the Canadian Securities Exchange has helped foster a more diverse economic landscape in Canada. While there may be uncertainty ahead, something the CSE can count on is having the courage and wisdom to think and act boldly.

 

Richard Carleton - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James WallaceRichard Carleton, CEO, Canadian Securities Exchange

Richard has been CEO of the Canadian Securities Exchange for seven years. Prior to this appointment, Richard served as Vice-President Corporate Development with responsibility for the CSE’s technology, operations, market data and trading sales teams. Before joining the exchange, Richard worked as a business development consultant in Toronto and New York in the risk management and index product fields after spending twelve years with the Toronto Stock Exchange, serving most recently as a member of the exchange’s senior management team.

 


NCFA Jan 2018 resize - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Here’s The Case For A $100,000 Bitcoin Price By The End Of 2021

Forbes | Kyle Torpey | Aug 4, 2019

Julia chatterly interview with anthony pompliano - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James WallaceThe Bitcoin price has been on a tremendous run in 2019, roughly tripling its price in U.S. dollars since the start of the year. That said, Morgan Creek Digital co-founder Anthony Pompliano thinks the party is just getting started.

Pompliano has predicted that the Bitcoin price will reach $100,000 by the end of 2021, and he was recently asked to explain his point of view during an interview with CNN’s Julia Chatterley.

Digital Gold and Loose Monetary Policy

In the past, Pompliano has described the trend towards loose monetary policy combined with Bitcoin’s upcoming halving event as the “perfect storm” for the rise of the digital asset. Pompliano explained this theory during his CNN interview.

See:  Check out the interview here on CNN with Julia Chatterly and Anthony Pompliano

“Whenever we get to a recessive period or kind of slowing growth, central banks have kind of two tools: They can cut interest rates, which they did yesterday, and they can print money (quantitative easing). And so, when they do both of those things, it usually takes anywhere between 6 to 18 months to feel the effect of those tools, and what it’s going to do is it’s going to coincide with the Bitcoin halving,” said Pompliano.

A halving event in Bitcoin is when the amount of Bitcoin that are generated by miners every ten minutes is cut in half. Bitcoin’s monetary policy was “set in stone” when the network went live back in 2009, and the scheduled issuance of new Bitcoin is halved roughly every four years.

Originally, 50 Bitcoin were created every ten minutes. Next year, the number of new Bitcoin created in each new block will drop from 12.5 to 6.25.

See:  Blockchain Technology and the UN: The Sustainable Development Goals

While gold has historically been viewed as a safe haven asset in times of monetary easing, Pompliano covered a couple of the benefits of Bitcoin over gold during his CNN interview.

“The difference is, between Bitcoin and gold, with Bitcoin, we know exactly how many is getting created, so 1,800 Bitcoin are going to be created today. The second thing is we know the total supply available, which is 21 million. So, it’s not: Hey I wonder how much is in the ground. We know exactly how much it is, and we can actually go and audit or verify the software code of the system,” said Pompliano.

Pompliano is Not Alone

It should be noted that, back in 2017, Pompliano also predicted a $100,000 Bitcoin price by 2019. However, he’s not exactly alone with his latest forecast for 2021.

Pantera CEO Dan Morehead has said there’s a “good shot” the Bitcoin price will hit $42,000 by the end of 2019, and the data used as the basis for his prediction is even more bullish than Pompliano’s $100,000 price point.

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NCFA Jan 2018 resize - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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The era of security tokens has begun

Venture Beat | Nabyl Charania and Carlos Naupari | Aug 4, 2019

digital coin - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James WallaceThe excitement that initial coin offerings (ICOs) have created in the past few years has been marred by an onslaught of scams, hacks, and critical mistakes committed by careless investors. As it turns out, one of crypto’s biggest appeals — limited oversight and regulation — has proven to be its greatest vulnerability.

But cryptoassets are already coming of age. With the arrival of the security token offering (STO), the crypto space is beginning to reach an uncharted level of legitimacy in the financial community. We are about to witness perhaps even more disruption in markets and society than we’ve been promised.

What exactly is an STO?

The STO is the safe, secure, and sensible answer to the ICO. The word “security” in the name says a lot: Security tokens have to be backed by a tangible asset, like a company’s profits or shares. On the other hand, ICOs involve “utility coins,” which have the potential to amount to little more than a promise or a souvenir.

STOs also require licensing approved by the SEC and other regulatory bodies. In other words, security coins have the features and protections of traditional assets, such as a share of company stock, while also leveraging the benefits of being a digital asset. And virtually any kind of physical asset — real estate, equity, etc. — can be “tokenized,” or used to back a security coin.

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Here’s why STOs will matter for crypto investment:

Security tokens accelerate the democratization of venture capital

For decades, the world of private equity was reserved exclusively for venture capital firms and accredited investors — individuals with a net worth of at least a million dollars or with an annual salary of at least $100,000. But when Title III of the JOBS Act went into effect in May 2016, suddenly anyone could invest in private companies. It was a major win for everyday investors, and several equity crowdfunding portals opened up, showcasing many compelling opportunities in private equity.

Then 2017 happened. The advent of cryptocurrencies, blockchain technology, and smart contracts opened up an even more efficient way for entrepreneurs to raise capital without the use of a middleman, as well as the promise of a more equitable and democratized private equity landscape. While its ICO was accessible to the public, not just accredited investors, messenger app Telegram raised $850 million, marking one of the largest fundraising events in the history of tech.

Companies like Securitize, Polymath, and Harbor have become leaders in the movement to tokenize all kinds of traditional assets into security tokens. As a fundraising vehicle, security tokens allow companies to raise capital without having to lean on investment banks and stock exchanges as intermediaries. Spice VC, for example, is a tokenized fund, as is Blockchain Capital.

Given the oversight from the SEC and other regulatory bodies that security tokens are subject to, investors are able to invest in an opportunity without worrying about being scammed. Their only concern is the financial success of the company, as is the case with stock ownership. The financial regulatory framework in the U.S. creates a favorable landscape for STOs to thrive. The already corporation-friendly state of Delaware stands out in particular, as it now allows companies to write shares on a blockchain.

See:  UK Financial Conduct Authority Provides Final Guidance on Cryptoassets: Better Defines Utility Tokens

Above all, security tokens give companies an efficient way to raise capital from a broader investment pool than has ever been possible. This means innovation is accelerated and more people stand to benefit from a company’s success. Of course, easier access to capital creates a more competitive landscape, so companies that are doomed to fail will realize this inevitability sooner.

Traditionally illiquid investments are made liquid

As the old adage goes, it takes money to make money. But the advent of blockchain may do away with that notion. Before, several investment classes — including those with the highest and most bankable returns — had a prohibitively high barrier to entry.

Thanks to the technological breakthroughs of security tokens, this is no longer the case. Distributed ledgers enable the tokenization of otherwise illiquid assets, such as real estate and fine art. Security tokens allow fractional ownership, and the issuer determines how fractional that ownership is. This means virtually anyone who wants to own real estate in a place like Manhattan, for example, is able to. Even the most expensive piece of real estate, once it’s tokenized into a security token, can be divided into portions that anyone can afford. The same goes for fine art and other asset classes previously reserved for the super wealthy.

One might think this is comparable this to owning shares of a real estate investment trust (REIT), but becoming an owner of tokenized real estate offers far more flexibility, as you have more autonomy over the properties you own.

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But everyday investors are not the only ones who win in this case. If you’re the owner of a multimillion dollar piece of property or a rare Cézanne and you want to turn it into cash, it can be difficult to find an individual with both the net worth and the interest to take it off your hands. By tokenizing whatever expensive piece of property it may be, the ownership can be divested to dozens or even hundreds of investors who may want to lay claim to it. That way, a valuable and expensive piece of property is no longer destined to sit around and collect dust.

The first known prominent example of this is the iconic Andy Warhol painting “14 Small Electric Chair” (1980), which was tokenized and offered for fractional ownership by the decentralized art gallery Maecenas. It certainly won’t be the last.

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NCFA Jan 2018 resize - Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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