Investor and issuer protection are top of mind for PrefLogic. This will be proven out through features intrinsic to the core technology as well as through educational content and PrefLogic’s business model. Educational and product navigation content will be stored in a central repository, but also woven into the Securities Matrix and visible on demand when questions arise.

I have a friend who runs a venture capital firm. In his opinion, the Securities Matrix is like an ultra-powerful race car, and allowing someone to sit in the seat without extensive knowledge of securities law, the capital markets and other business facets is simply too dangerous for both the issuer and the investor. What you can infer from this is a gatekeeper’s mindset that access to capital for the small and middle markets of the growth economy should be overseen by venture capital fund managers. With the extinction of small regional broker dealers and the hurdle for a SME to participate in venture capital ($5M-$10M) or IPO ($1B) being far out of reach, this is simply a no-start. The rich get richer. …


Image for post
Image for post

February 6, 2018: Jay Clayton, Chairman of the SEC, made a profound statement during a senate hearing this day, “I believe every ICO I’ve seen is a security”. This was the moment that the concept for PrefLogic was born, and not a moment has been wasted since. While watching that senate hearing live, PrefLogic founder, Todd Wier, realized that through the benefits of the JOBS Act, the internet and blockchain technology, the power of raising capital could be properly harnessed if regulation and custody solutions were to develop and mature.

The $20B raised through ICO’s in 2017–2018 came with numerous lessons. The power of the internet and network effects when raising capital from a global audience was clearly demonstrated. Another lesson learned was the importance of qualified custody, and the fact that most traditional investors are simply not going to take the time and the risk to be involved in taking custody of digital coins. …


Image for post
Image for post

There are several ways to characterize what PrefLogic will be bringing to market in the first quarter of 2020. Other than in the recently released White Paper, this is the first time that PrefLogic’s product offerings have been explained in detail. With that said, apologies in advance, as this writing will be longer than most.

Whether you say:

PrefLogic has built an engine with the power to change capital markets anywhere along the spectrum from $100K to $1B, from the individual entrepreneur to the mature private company. The Securities Matrix is a SaaS platform that brings order, ease and competitive pricing to an otherwise complex and costly process. This is achieved with an intuitive user interface that is simple on the surface, but behind the curtain sit the ground-breaking abilities of blockchain technology, half a million lines of code and the strength of services provided by Prime Trust (Banking and Custody) and Assurely (Insurance). …


Image for post
Image for post

When looking back at world changing technology, it’s hard to imagine life without certain inventions. Beyond the invention of the automobile and the airplane, major modern era advancements have included:

I took a low-budget trip to Europe from my home in the US during medical school. This was done before the cell phone was commercialized. I can’t imagine parents allowing a cross-ocean trip today leaving the connectivity of the cell phone at home. For those old enough to remember the advent of some (or each) of these revolutions, many people were in the dark about the power and inevitability of what was coming, and often until the latest stages of development. …


Image for post
Image for post

So, if you believe in the potential of the three main forces that will drive digital securitization (Capital formation, Liquidity, Efficiencies) mentioned in my last blog PrefLogic: The Future of Raising Capital, there is a huge need for issuance platforms. Several will eventually emerge to meet the demand. PrefLogic is here for the start of the show with a robust product expected to launch in the 1st quarter of 2020. Their SaaS solution, the Securities Matrix, has a 3-pronged base of support, with strategic partners providing fully integrated solutions for:

Image for post
Image for post

Hidden behind a sleek and intuitive user interface (UI) is a complex maze of programming, partner support and optionality.


Image for post

The benefits that will attract issuers to digital securitization (“tokenization”) will vary with the interests of the issuer, whether it looks on tokenization from the perspective of market cap, industry sector, ownership structure or maturity of the business. The three primary forces that will drive digitization of securities are:

1. Capital formation: Project funding, Seed capital, Growth capital

2. Liquidity: VC funded companies, Mature private companies, Illiquid assets (real estate, art, other), Estate management

3. Efficiencies: Current public companies

Capital Formation:

The number of start-ups has severely declined in the last 10 to 15 years. The IPO hurdle is now $1B, meaning that an IPO rarely occurs at less than this threshold. There are very few VCs and Private Equity bankers doing smaller deals in the $1M to $10M range. The small and middle market of the growth economy is underserved and underbanked, yet it is well-established that this is where the greatest number of jobs are created. David Weild, IV, former Vice-Chair of NASDAQ and “Father” of the JOBS Act (Jumpstart Our Business Startups Act), has…


Image for post
Image for post

To understand the power and the magnitude of the coming capital transformation, a quick look at history is needed. The concept of ownership and selling equity in a venture goes back several centuries. Ownership represented as a Paper Security lasted until the mid-1970s. At that time transfer of securities was done manually and often by bike messenger. Electronic Securities came next, and have had a productive 50-year run. The inefficiencies and shortcomings, however, include lack of peer-to-peer trading, settlement times of 2 to 3 days, cap table inefficiencies, lack of direct personal ownership and numerous friction points and tolls along the ownership and trading lifecycle. Blockchain-related technologies have allowed the creation of Security Tokens or Digital Securities. …


Image for post
Image for post

Why Investors Are Interested In Digital Securities

Blockchain technologies and cryptocurrencies made quite a splash in 2017. The ICO proved the power of a blockchain as a distribution platform; companies raised billions of dollars and had millions of people investing all around the world. And there’s a good chance that those events were foreshadowing the future of blockchain technologies.

Although utility tokens and store of value tokens came and went, security tokens (digital securities) found their niche. Digital securities provide regulatory compliance, distribution power, and a network effect that gives investor confidence. …


Image for post
Image for post

Modernizing Banking and Finance

Since the establishment of institutional banking and finance, many investors have relied on well-known names in the industry to manage their wealth.

But the future of investments goes beyond trading floors in the confines of a city building. This is because trading is a rapidly evolving activity. As the cryptocurrency boom showed us, the digitization of assets has paved the way for an independent and decentralized banking and finance industry. An industry where individuals have sovereignty over the financial aspects of their lives. …


Image for post
Image for post

Today’s economic landscape is no longer the same as enjoyed by past generations.

However, our financial mindset and desire remains the same as the middle-class ideals from yesteryear:

If you’re a young adult thinking you will follow the same path outlined above and live a comfortable life, there is a good chance you’re mistaken.

The long-term economic situation in America can seem…

About

PrefLogic

Capital Formation Made Easy

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store