Kyle Sonlin is an entrepreneur, advisor, and investor.
Through working with startups as a consultant and investor, he has a keen eye for business development and specializes in management and fundraising through personal accounts and his network. With a finance and economics background, he provides technical experience to further evaluate business proposals and has made successful investments in companies, as well as the stock and crypto-asset markets.
Kyle currently works primarily in the blockchain industry. He has a breadth of knowledge and understanding in the space, spending time as an investor, miner, advisor, and executive in many businesses in the space. He has developed a unique perspective through working on both sides of the industry, both consulting in investment/merchant banking specializing in security token offerings, as well as with his own companies and other established blockchain startups.
It’s me, Adam Chapnick, with the Security Token Academy. I am joined today by the CEO of Security Token Market, the one and only Mr. Doctor Professor, Kyle Sonlin.
How are you?
How are you? Good to have you.
Thanks for having me on. I appreciate it.
All right, so for everybody who hasn’t heard about your company, tell us what it is and why you decided to start it.
Security Token Market is a platform to connect investors and issuers. So, what we found in our network of investors and high-net-worth individuals is that they’re having trouble finding due diligence on a lot of these investment opportunities. And so we’re trying to bridge that information gap by providing issuers with the opportunity to provide, in a clear and concise manner, what their offering is, who their team is, what their mission statement is, and any relevant financial information for investors to be able to make that proper due-diligence call to then make an investment.
Love it. Yeah, that’s clear. Those are all absolute needs. Security Token Academy does its part a little bit with that. So how did you decide that was the thing that you wanted to dive into and be a part of?
Well, we decided that it was an important need in the market just based off of connecting with many of the investors as well as issuers in our circles. And the problem with raising capital right now is that it’s tough to solicit this information to the investors and to connect the investors into these new investing vehicles, because if you look at any other traditional investment vehicle that an investor may participate in, there’s plenty of this information available.
And so even for me to find an investment opportunity, it was tough for me, as somebody that’s very educated in this space, to fully find the information that I would require to make my own investment. So we were realizing that if you were an investor that was outside of the security token or blockchain space, that that bar to entry would be even higher, so we wanted to try to close that gap.
How great. Now, do you need to have some kind of license to do that? Are you giving advice? Is that ... How does that work? Where do you ... There’s so many regulations in all of this.
How do you fit in?
So we’re not a broker-dealer at this time. We don’t actually sell any of these offerings. We provide these issuers the opportunity to link back to their brokerage platform or to their issuance platform or however they are raising capital to facilitate on their own.
And you don’t recommend, so you’re not an RIA.
We don’t recommend. We try to have the largest breadth and depth of investment opportunities, and so that means that we’re ... We don’t segregate at all. We just want to have every opportunity, every investment opportunity that we can find that is a security-token offering, and then provide that information to investors to then discern which investments they would like to make based off that information.
Got it. Do you do any kind of curation, or is it literally anybody can upload as long as they have the assets?
At this time, we’re doing manual reviews.
So me and my team will look over the investment opportunity, reach out to the issuers, and discuss the opportunity briefly. But at this time, we’re trying to offer as much as we can because the space is so small at this time that we would just like to provide as many opportunities as we can. And then we’re working right now on developing tools that we can help provide credit or figure out which opportunities are legitimate, versus maybe some that are working their way to that.
Oh, well put. Working their way to legitimacy. I feel like I’m working my way to legitimacy right now. So when it comes to the security token market or industry or space, it’s so young. I mean, do you guys have other investment opportunities as well, or is it just ... is this entirely for ... It’s called Security Token Market, but there’s so few things that are available. Are they pending? Are they coming soon? Are they available in April, or how does that work?
Well, it’s important to remember that security tokens actually just refers to the act of digitizing a security.
And so there’s many different investment opportunities that can potentially be formed from that.
So right now, our platform has 30 live offerings ...
... which we believe is the largest that we can find.
That’s huge. Yeah. That’s huge.
And we have 50 or 60 in our pipeline that we’re currently working to get on the site hopefully by the end of November. And so we’re looking to have over 100 by the end of the year ...
... which is starting to ... That’s a reasonable size. That’s plenty of investments.
And then on top of that, we have a tag system, so you can sort by real estate or late-stage companies or funds, and so you’re able to then figure out exactly what investment opportunities you’d be interested in yourself or as an investor.
Amazing. So what are you seeing are the ... Now that you’re maybe, let’s say, a leading aggregator of these things, if not the leading aggregator, are you seeing any trends in what kinds of companies are choosing to secure ties via token?
Yeah. Well, certainly, there’s a lot of interest in some of the hard asset use cases that have really been floating around the industry, such as real estate funds and real estate properties, in general, as well as a lot of companies looking to raise capital. So I think those are the two that they’re the largest representation on our platform so far, both of which can be very effective use cases. And so we’re hoping to push those and see if they can actually raise the capital that they’re requesting and see if we can actually get those listed on the secondary exchanges to provide liquidity, which then, we believe, will bring that avalanche of every other opportunity once we can get a few use cases trading on markets, making people money, and showcasing this technology as it really works as well as we plan it to.
Right, right. Yeah, the secondary liquidity is the big thing everybody’s waiting on, for sure.
There’s definitely a lot of ... There’s a lot of regulation that’s not super clear yet, and I think that while the SEC and FINRA may be trying to figure out what they’re looking for, they may potentially be putting some of these exchanges on hold as well until they can get some clarity. I don’t have any inside sources, but it certainly seems like they’re on their way. These teams are working incredibly hard. We’ve been in touch with a lot of them, and so whenever it happens, it happens. Until then, we’re just trying to build the infrastructure so that when it does happen, we’re ready to hit the ground running, and I really believe this is going to take off the minute that we can really sort some of those things out along the line.
Yeah, I don’t disagree. So how do you go about sourcing both sides? Where do you find all these investors, and how do you find all these issuers?
So the issuers, it started with me and my team just putting the information we could find online and putting it on our platform from their websites, from white papers, and things like that ...
Got it. Oh, interesting.
... and then reaching out to that team and saying, “Hey, here’s what we were able to find. If you’d like to add more or change it, please, feel free. We’d love your participation.” And so that’s how we started because the idea was that we needed to provide some use cases. And as we found ... Since our launch, a lot of issuers have directly reached out to us and have filled out our forms to provide their information live.
Oh, that’s great.
It’s totally free for any issuer, so it doesn’t make a lot of sense if you just stay away from our platform. We don’t take any fees from your listing. It’s just a way for you to get more exposure for investors. So we’ve found that we haven’t had much issuer pushback, and we have not had much issuing platform pushback. We actually are in discussions with some platforms that want to just list, mass list all of their deals on our platform.
Yeah, why wouldn’t they?
Because again, yeah, why wouldn’t you, right?
And so we have some marketing and promotional services that can be purchased to provide more of that branding space on home pages and things like that, but it’s totally free as the initial package to just ... to list your offering. And then for investors, they’re interested in finding out this information as well. And so we’ve started by reaching out to our own network through the blockchain space, who are people that either are interested in security tokens or people who have participated in utility tokens who want to learn more about security tokens, but don’t really know where to go. This is a great spot to direct them. And so we’ve started to direct them that way as well as working with SEO and other algorithms to work with that as well.
That’s terrific. So you mentioned you’re free. What’s your business model?
Our business model is, first and primarily, to build a security token community. So we’re trying to generate the largest and most active investor base that we can find and direct it towards these great issuer deals, because there’s a lot of awesome security token applications even on our platform already.
And so the goal is to get some of those funded and then really put this stuff to work and show why the security token has a ton of value. And so that’s ... Originally, our business model is to provide that great community. Additionally, we do sell promotion and advertising services that, as our platform expands with 100, 150, 200 listings on our site, an issuer may want to stand out. And so there’s ways that you can do sponsored advertising as well as home page listing and newsletter opportunities as well if an issuer is interested.
Great. Okay. Well, so since you now have a very wide view of the industry, where do you think we’re going to be next year at this time?
It’s a really interesting question. I think that it all depends on whether we found that one use case. What we’ve seen in a lot of emerging technologies over the last century is that we find that one use case that really seems to blow the door wide open. And so if we found that use case, if security tokens and regulation clarity happens in the next month or two or six months and it just opens the door to all these new investment opportunities, I think we could be in a tremendous situation with really high market caps and really successful companies in a year. And if we haven’t found that use case yet, then let’s still work towards it, and hopefully, by next year, we’ll have figured it out because a year in this space is quite a lot of time.
That’s a long time. Cool. Well, Kyle, thanks so much for sharing your thoughts with us. Come back and keep us posted because you have a unique insight on the breadth of the whole industry. We’ll have to check in with you again soon.
Thank you very much. It was a pleasure.
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