How to Invest Anytime, Anywhere!
This week we are welcoming Bilal El Alamy from Equisafe, on a mission to:
“make accessible investment opportunities at scale. Invest Anytime, Anywhere.”
Which problem is Equisafe trying to solve?
Equisafe is an investment platform which aims to make financial assets accessible to as many people as possible. Nowadays, traditional investments offered (index funds, life insurance funds, etc) can be confusing for individuals, they do not visualize where the money go, the process is heavy, high fees are taken, returns can be low and so on. At Equisafe, we want to leverage blockchain to bridge the gap between direct investments and individual investors.
Equisafe first use case was real estate. 68% of French people prioritize real estate when they want to invest. Problem is, prices are reaching records: in Paris, the average price per square meter is now €10,000 ($11,000). As if this cost-prohibitive factor was not enough, 25% of the French active population (nearly 7 million people) doesn’t holds a permanent employment contract, and as such is not considered as a good candidate for loan allocation by the banks. Equisafe wants to make it easier for French people to invest in real estate and get exposed to the highest yields!
The use of blockchain technology in the real estate sector will lower entry barriers. Tokenization mechanism makes ownership shares highly fluid because for the first time, the whole transaction value chain is made digital, enabling small amounts to be invested and market accessibility.
Finally, there’s also the “trust” factor: Equisafe new blockchain-based solution will give individuals access to an entire register of stocks from companies owning buildings whether it is residential or commercial. The registration will also contain immutable and verified KYC status of all the investors wishing to access the offers, automatically checking if they meet the necessary criteria to buy the tokens. It will be possible for investors who have never met to co-invest in a real estate piece thanks to blockchain and track in real time their investment!
How many STOs did you already facilitate? What are your plans for 2020? (also in terms of numbers)
Equisafe was launched only a year ago but we have already completed two STOs: AnnA, the first sale of building through blockchain In Europe for €6.5 million and the RENT Operation where 41% of an apartment ownership was transferred via blockchain from one individual to another. A usual 6 months process that only took 6min. So far, the cumulated value of our “Asset Under Smart Contract” is €7 million.
We are looking forward to our next STOs in 2020 with a dozen real estate deals already planned ranging from Asset trophies such as AnnA and High yield rental investment (expected ROI of 8–12%). We have 3 exotic tokenization that we are planning. You’ll know more very shortly.
Otherwise, we’re also working with asset management companies that are looking to plug to our infrastructure to modernize their middle and back office. STO is a very reductive word, what we do is mostly about digitizing sharesledger and shareholders agreements (ie. Rights & Governance), we’re not waiting for offerings to do it.
Why exactly is a STO cheaper compared to traditional means of raising funds? (Can you give an example? E.g. with Real Estate)
STOs are said to be cheaper than IPOs, mainly because they are usually carried out digitally and because the smart contracts involved allow a greater deal of automation, saving multiple costs (time & human mistakes), especially in terms of administrative paperwork (usually inefficient processes linked to KYC/AML/Compliance in securities laws). However, it is not necessarily cheaper, at least the first time you do it (ie. all the regulatory guidance that you need to seek for, the difficulty with opening a bank account, preparation).
“Issuers do not launch STOs for the cost benefits, they do it for the operational efficiencies that comes with tokenizing.”
The cost benefits lie in the automation of some middle and back office functions that handle the lifecycle of the securities (ie. Identity checks, escrow, dividends, transaction compliance).
It is difficult to compare STOs and IPOs in terms of money, but I can give you 1 striking example: with the RENT operation that we orchestrated in October with our partner Masteos, we have allowed an individual to buy 41% of his real estate asset in 6 minutes instead of six months. Imagine the cost savings it represents! Imagine, once the process is scaled!
Why should I invest via an STO? What are my advantages and potential disadvantages as an investor?
The decision to invest in an STO should be based on the same criteria than an equity investment, because it is an equity investment. Is the project solid enough? is the business model credible? do you trust the shares issuers to complete the project? What are the financials? etc.
As an investor, the advantages are numerous: lower entry barriers, more diversification, direct investments, higher liquidity, real time portfolio management.
My advices for STO investors would be to be extra-careful about the kind of blockchain that is used for the offering, making sure it is stable.
Equisafe will launch in 2020 the NyX standard, a set of smart contracts on Tezos blockhain, audited by institutions and open sourced on an MIT license. The standard will be a new reference to exchange financial instruments on blockchain and replicate multiple predefined business rules, adaptable to any country of origination. It’s gonna be like playing Lego !
In your opinion, what are the biggest challenges for the whole Security Token ecosystem in order to thrive and what is the most exciting happening you are waiting to see in the Security Token Ecosystem in 2020?
I have got the same answer for both questions: I would love for 2020 to be the year when Europe creates a new uniform framework on “Digital Custodians” and creates a “EuroToken” which the European Institutions will launch a request for proposal that we’ll answer. This would encourage institutional investors and organizations to invest in and/or launch STOs.
What is the one thing you believe in regard to Security Tokens most other experts within the industry would disagree with?
Digital securities are a new investment paradigm ! In terms of infrastructure both technical and regulatory. They will be used for more granular securitisation than doing the same old funds that have a long list of intermediaries that capture 90% of the value creation, It’s called “un-bundling”. I do believe that there are industries where innovations and new companies can be funded faster using the Digital Securities offering mechanism. Since the mésopotamien era, the shares ledger evolved for rock to paper. Now, with the better resilience, audibility, programatic features of blockchain will definitely set a new era of investment. I do believe in choice; I do believe in financial inclusion that will come with it.
What makes Equisafe unique if compared to other infrastructure providers?
Equisafe offers the traditional services of an investment platform but with deep involvement in the projects we list. To that extent, we work more like an investment bank than a platform. We carefully select all the partners we work with and choose them for their expertise and vision. Users and operators will be the back-bone of our infrastructure otherwise we will not scale. As an example, the “Swap It” corner with Masteos, a consulting and rental property management company, that will guarantee the solvency of assets and ensure their rental management through the companies holding the apartments. This new service will be a real added value for our investors.
We have also given a lot of attention to the user experience in order to provide an amazing customer journey for all the users like investors, issuers and third parties such as notaries, lawyers, accountants…
Technically speaking, Equisafe’s ambition is to become the first company to launch an STO on the Tezos blockchain with the NyX Standard, we believe it will be the most sophisticated set of smart contracts ever created. Which will make our infrastructure running on 3 blockchains (Ethereum, Ownera Network (Hyperledger Fabric) and Tezos), maximizing interoperability and unicity rules.
What advice would you have given your company 1 year ago?
I would not change a thing! We already achieved so much within one year. We are now focused on the future and on improving Equisafe for the next few years to stay at the cutting edge of financial innovation.
Stick to your Vision, because this is what keeps you awake!
Which person do you follow to improve your learning curve?
All the journalists talking about blockchain and crypto-economy! Pomp’, Caitlin Long, Laura Shin, Jeff Kauflin, Marc Hochstein,… It is always a good way to find out about exciting new blockchain projects. For the French people reading this, I also follow Gregory Raymond and Raphael Bloch.
Thank you for the Interview!
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