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Why Traditional Companies
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Expert Interview


 
Oscar Jofre of KoreConX

Oscar Jofre

Oscar is currently one of the Top 10 Global Thought Leaders in Equity Crowdfunding, a Top 5 Fintech Influencer, Top 10 Blockchain and a Top 50 InsureTech. He has published an eBook that has been downloaded in over 20 countries, and been distributed by partners worldwide.

Oscar is a featured speaker on Fintech, regulated, equity crowdfunding, compliance, shareholder management, investor relations, and transparency in the USA, Australia, UK, Germany, France, Netherlands, Canada, Singapore, Indonesia and China. He speaks to audiences covering alternative finance, security token offerings, equity crowdfunding, STO, TAO, ICO/ITO, RegTech, insurance, banking, legal, and crowdfunding. Oscar also advises the world’s leading research, accounting, law firms and insurance companies on the impact Blockchain, STO, TAO, ICO, Fintech, RegTech, LegalTech, InsurTech and OrgTech is having in their business.

He is a member of the Crowdfunding Intermediary Regulatory Advocates (CFIRA) in the USA, and a contributing author to The Fintech Book, the world’s first crowdsourced book on Fintech globally. He writes for Sharewise, Locavesting, Equities.com, Business.com, Crowdfund Insider, Crowdfund Beat, Bankless Times, and Agoracom.

Oscar has been recognized as one of the 10 most influential Hispanic Leaders in Canada. In May 2010, Oscar A. Jofre Jr. was recognized by the Rt. Hon. Stephen Harper for his accomplishments.

Oscar was awarded the Vision 2012 Business Man of the Year by the Toronto Hispanic Chamber of Commerce on September 2012.

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KoreKonX: Creating the world's first highly-secure permissioned blockchain ecosystem for fully-compliant issuance, trading, clearing, settlement, management, reporting, and corporate actions for tokenized securities worldwide. KoreConX is the all-in-one, AI-based, global blockchain platform that manages the full lifecycle of tokenized securities to ensure compliance with securities regulation and corporate law. Connecting companies to the capital markets and secondary markets to facilitate access to capital and liquidity for private investors.

Transcript


 

Adam Chapnick:

Hi there, I’m Adam Chapnick with the Security Token Academy. Today, we’re pleased to bring you a corporate member interview with KoreConX. The company is a gold corporate member of the Security Token Academy. KoreConX is the world’s first highly secure permissioned blockchain ecosystem for fully compliant tokenized securities worldwide. In this corporate member interview, we will be speaking with Oscar Jofre , the co-founder, president, and CEO of KoreConX. Oscar joins me now from Toronto, Canada. Hey, Oscar. It’s great to have you here today.

Oscar Jofre:

Likewise Adam. Sorry I can’t be there personally.

Adam Chapnick:

So for everyone who doesn’t know about KoreConX, can you kind of bring everybody up to speed and explain what is it? Why was it created?

Oscar Jofre:

Thank you. KoreConX, its roots were really looking at the private capital markets and seeing how fragmented it really is. Spending the last 30, 40 years of my career as an entrepreneur, I noticed that nothing had really changed, that certain service provider still exist. We keep bringing in new regulations to allow stimulate investments into company. But ultimately, we still have a problem in the ecosystem is that we have all these array of service providers globally, not just in the United States but globally, and they’re not connected.

Oscar Jofre:

So the publicly listed market has a connectivity, has an underground infrastructure that brings it in, and that’s where Kore connects in. We are the world’s first infrastructure to bring all the stakeholders together in this ecosystem, the lawyers, the accountants, the companies, their shareholders, their board of directors, their legal advisors, the broker-dealers, the secondary ATSs, everybody under one infrastructure to remove the friction that currently exist in the private capital markets.

Adam Chapnick:

Yeah, it’s a lot of friction, isn’t it? So I know you had some involvement way back in the JOBS Act. Can you tell us how you were involved, how that happened, how it transformed the financial industry from your point of view?

Oscar Jofre:

For me as an entrepreneur meeting David Wield, Chris Tyrrell, Sara Hanks, and many others who were really the, I mean, the creators of the JOBS Act, David Weild of course being the father of the JOBS Act. It stimulated me to hear how this new transformation was going to change how companies could access capital. So obviously, we saw that. We saw everybody jumping in to building platforms. We needed to build an entire ecosystem that didn’t exist. How would investors come through?

Oscar Jofre:

So obviously, it didn’t get the big bang we were all looking for right off the bat. But now looking back, we’re almost 10 years into it, I know time flies, it’s actually coming to full fruition. The JOBS Act really is the spark plug that actually revolutionized the entire world private capital markets. People don’t realize the impact the JOBS Act not only had in the United States, but Canada, the U.K., Singapore, Thailand, Chile, Argentina, all the countries around the world who started initiating these new rules to allow the investor to invest in companies online. And of course, the maturity of that market is just finally coming to fruition today, and we’re very glad we’ve been there since the beginning.

Adam Chapnick:

So let’s dig in a little bit to KoreConX. You guys help private companies manage their company records, the capital market activity, their fundraising, their investment. It’s sort of centralization really. We talk about decentralization in the blockchain world, but why is your centralization, why is that so important?

Oscar Jofre:

Well, it comes down to this, I mean, as entrepreneurs we get an idea to build a company, and the first thing we do, we start separating how are we going to run it. Operationally, we’re going to get our accounting software. Then we’re going to get a CRM, and we’ve got to make sure it’s interconnected. Everything we do for the operation of our business, we make sure it’s seamless, no more duplication of effort and all that. Well, guess what? What happened to the rest of the business, the C-level, the board of directors, the shareholders, the other stakeholders, the lawyers, the auditors, broker-dealers? And that was the missing link. That part of the business is still operating like it’s 1800s. And the reason companies are not able to access capital is not because there’s not enough capital out there. There’s tons of it. It’s just companies need to be ready. So yes, KoreConX is an all-in-one, one platform to manage your cap table, your documents in your company, and all the people associated with your company from that point of view.

Adam Chapnick:

So obviously, compliance has to be a big part of the KoreConX business, and I know it is. How is that handled?

Oscar Jofre:

Well, the one good thing about compliance or being compliant is regulators set out rules. And those rules have been there for a while. I mean, it’s not like they change overnight. So it’s like accounting. You embed them into code, and you ensure that people become aware of them. The one thing private companies have it as a disadvantage, it’s not that we don’t have the expertise. It’s just we don’t have the resources. So with the KoreConX platform, you’re able to manage all these corporate activities, and along the way, it’s guiding you based on that activity, what you need to get done. You no longer have to go through check balances or trying to remember what’s on top of your head.

Oscar Jofre:

Personally for me, that experience I felt it as an entrepreneur. You rely on your lawyers, which we need to, but every once in a while, they’re human beings. They’re going to forget little things. Well, those little things end up costing us money and time. So what KoreConX is doing is implementing all those rules. And as rules change, we have an entire infrastructure within KoreConX, right from our director of compliance and registrations to even our advisory team, to make sure that we’re up to date with all the ongoing changes in the regulation framework.

Adam Chapnick:

I know you have some features that are specifically designed to help your clients grow. Can you talk about what those are?

Oscar Jofre:

Well, there’s obviously there are many different ways a company can look at itself from growth, but obviously, the big carrot that every company wants to do is access capital. And capital is a very painstaking process. With the thousands of companies every year that are looking for capital, a very small percentage is venture capital. But the rest of us are looking at it, finding that right investor.

Oscar Jofre:

So what we’ve done, we have built a global ecosystem of partners. And we, along the way as well, recognized that there was another problem within that ecosystem. Everybody’s got a hand in everybody else’s pockets. So KoreConX created a charter where we are not going to be that kind of company. Today, we have over 300 plus KorePartners worldwide that are there to help companies access capital, broker-dealers, secondary ATS operators, venture capital firm, family offices. We need to remove the friction, and the friction at times is caused by human beings and companies that are actually taking fees where they shouldn’t be. So this is part of what we bring into our ecosystem in our platform where companies can use in order to gain access to capital in the marketplace.

Adam Chapnick:

Yeah, that’s definitely the Holy Grail for most early stage companies for sure. And then so once they, God willing, they do secure some of that capital, they have cap table management that they have to deal with. How important is that, and how does that get handled at KoreConX with the cap table and also with traditional and digital assets?

Oscar Jofre:

Great question. I mean, this is the lifeblood of how KoreConX has been known for the last number of years. And cap table, people go, “Well, I can manage a cap table, of course, Excel spreadsheet.” The problem with a cap table, what people don’t realize, it’s an interconnected piece of your business. It’s connected to all the documents in your minute book. It’s connected to your holders, individuals, and entities. So what KoreConX has done is built a platform that not only manages the cap table, it brings together all the documents associated with that transaction. And all the different stakeholders, your shareholders, they’re given a portfolio management for them to log in, view how much of that equity they own in your company or debt or digital security or options, warrants, debentures, SAFE, crowd SAFE, and be able to communicate with a company, be able to receive reports, news releases, and give them the ability to offer them online e-voting.

Oscar Jofre:

For the company, you have one place where you manage everything. You’re able to see everything real time. If there’s something happening within your shareholders communication, you have it. You have the ability to give them the opportunity to be able to trade their securities on a secondary market. And if they do, you have the pleasure of knowing that your cap table is being updated automatically. Whether traditional assets or digital assets, it doesn’t make any difference to KoreConX.

Adam Chapnick:

We love to go deep nerd here, which is what we’re doing, and I love it. And I’ll just say, founders who have not been through this don’t realize what a nightmare it is. I’ve dug into KoreConX, as you know, and the idea that you’re able to connect all of those different elements that have to do with cap tables and the options and the vesting and that where you recorded in the minutes, it’s a huge pain point that can really torpedo a ton of stuff in a business. Kudos to you guys.

Oscar Jofre:

We have some clients today that we’ve been so fortunate to grow with them. They started with 100 shareholders, 100. Today, they’re sitting at almost 250,000 and counting. We have one client right now, their goal is to have 1 million shareholders. And that’s only possible today with our platform at KoreConX. Because in order to manage people like that, you need to communicate with them. You need to have a strategy, but more importantly, you need a platform to manage all of that. Otherwise, your life will be, it will be transformed.

Adam Chapnick:

Now speaking of deep nerd, tell me about the transfer agent and the share registry services. These are also things that people don’t understand always how valuable that is until you don’t have it.

Oscar Jofre:

Exactly. And we all know, you say the word transfer agent or share registry provider and people, they feel like they’re getting a root canal sometimes because that business has been so old and antiquated the way it operates. And when people come to KoreConX, they go, “So where do I go for my transfer agent?” I go, “We deliver it within the platform.” We are even disrupting the way that business is being done because the data belongs to our clients. The data is theirs. They shouldn’t have to pay for it to see it and view it real time. So we’re delivering that service within our platform in multiple jurisdictions.

Oscar Jofre:

But most importantly, we are not removing the existing transfer agents that already there in place. What they don’t have is technology, and that’s where the infrastructure part comes in with KoreConX. We’re able to bring that to a small base transfer agent in Australia, New Zealand, Hong Kong, U.S., Canada, doesn’t matter, and give them the power of the KoreConX platform to service not only our clients but also theirs in one platform. That’s the key.

Adam Chapnick:

So you guys don’t have a wallet per se, but you’re offering companies and their shareholders portfolio management. Can you explain that?

Oscar Jofre:

Glad to do so. I mean, the one thing about the wallet is that it’s got so many different issues out in the market, and a wallet is where you put your money in. And that’s as simple as that, and I’ll leave it there. Your portfolio, your investment portfolio, which includes securities, are not held in a wallet. And keeping in mind that since we are offering register transfer agent services or share registry services, the transfer agents have a regulatory obligation to maintaining the corporate records. Therefore, instead of giving investors a wallet, which could be hacked or anything like that, here, the investors can log in to view their portfolio 24/7 through their mobile device or online on the web, be able to view exactly what they own, be able to do transfers, and be able to be connected to a registered ATS, provided the company has met the requirements, of course, and receive all the other information. And all of this, they don’t have to remember any long string codes. They don’t have to worry about being hacked. They don’t need to be worrying about gas fees. They don’t need to worry about any of those elements. This is purely a digital securities for them.

Adam Chapnick:

So you sort of alluded to it a minute ago of some ways that it can be good, and I’m speaking about your minute book. I think a lot of people are like, “I guess that’s cool,” but there’s so many key ways that you need access to that. Can you speak a little bit about why that helps the client to have the minute book that you guys offer?

Oscar Jofre:

The minute book is like your birth certificate. It started with 300 pages, and as you get older, you keep adding and adding. And each of those pages, you keep adding to it, they have a connectivity to something. The minute book is your connection to all your transactions which are connected to your shareholders or your board of directors. So it’s telling somebody how your company’s growing, how you’re capitalizing it, how are you making decisions.

Oscar Jofre:

And if that information isn’t available to the right people at the right time, wrong decisions can be made. We already saw that in 2003 when the collapse of Enron and many others. And that’s where the introduction of good governance, the big headlines were, where were the directors? Well, we certainly don’t want that now with private companies. There’s no excuse for it. The technology’s here today. Directors can have full access to the minute book, which they’re entitled to. They should be able to in order to help guide the company forward to make sure they understand their obligations and to make sure they understand what they can and cannot do.

Oscar Jofre:

And most young entrepreneurs, I get it, you go online, you incorporate a company for $175, but what you didn’t get is you didn’t get all the documents that you’re needed in order to understand how you formulate your company. And yes, you should go to your lawyers, your attorneys, to get that guidance. And now, you need to manage it, and you need to maintain it. KoreConX brings all that together for you.

Oscar Jofre:

And again, keep it in mind that the minute book has connected to the cap table. The cap table’s connected to your shareholders, to the portfolio. Do you see how the connectivity occurs, and why is this going to be important? Because when you’re raising capital, you’re going to go through a process in stage two where either the investor, broker-dealer, VC, family office, is going to say, “We’re ready for due diligence.” The question is, are you ready? If your documents are not up to date and in order in a way to give it to people, then you fell off.

Adam Chapnick:

Yeah, I mean, I think we both know how often we hear from founders when some sort of large scale corporate event needs to happen, and they realize their minutes aren’t up to date, and all of the nightmare that they have to go through that way. I mean, this is very, very much a pain point. So shifting gears to sort of the big picture, obviously, our security token industry here has evolved over especially this past year. Where do you think this industry is headed?

Oscar Jofre:

For us, we’re seeing the traditional business, when we first launched our digital security protocol in October, 2018 with you, Adam, in New York, it was great. People were trying to figure out... We’re offering a very different protocol, a permission-based one. And at the beginning, we were targeting the early stage companies like everybody else, trying to get that one that was looking for the big win. But interesting for us, something different has... At least for us, we’re seeing the traditional companies coming out. We’re seeing companies that have been around for 10, 20 years. We’re seeing companies that really see the value of tokenization but without the sacrifice or negligence of compliance. These are people that have raised capital before. And what happens here is that they know the right questions to ask. They’ve done it before. So when something is not there, they get scared, or they get spooked. And we’ve been very fortunate that we’re attracting that kind of clients.

Oscar Jofre:

So when we first launched, we were looking at companies that were doing... They were early stage. They had formulated in less than a year. Now, we’re looking at companies doing $250 million races, 850 million, and so on. But all of them have been well-established. Well-established companies and entrepreneurs, so the uptake for them, it’s not really about the digital securities, it’s about the offering. The fact that the offering itself is being tokenized is just a bonus. It’s not the primary reason why the investor is investing in that company. And I think that’s the biggest takeaway that I’ve gotten. And I see at least for the next two years, investors are investing in companies for what they are, not because of the digital asset of it. That’s just a bonus component to it. It’s not the primary.

Adam Chapnick:

And I mean, you’re speaking also to how a lot of these sort of, let’s call them mid-size, mid-large size companies are recognizing sort of the infrastructure benefits of having a digital sort of ecosystem that you really can empower, and I guess you can sort of infinitely scale. And that’s what they really need, and that’s I’m sure what they love. What about trends in terms of things that are being tokenized? You have a unique insight into this. Are you seeing any tokenization trends in the industry?

Oscar Jofre:

Well, because KoreConX is agnostic with all our clients, and we’re not being broker-dealers, we take on all commerce, right? So we’re seeing quite a bit of different ones, but the top three that I would say right now are a surprise to me. Real estate is not. We all know real estate is the big hot topic. The second one is film. Film has one that’s catching us by a little bit of surprise, and the third one, cannabis, and the other one, mining. And I’m talking traditional mining, not mining for Bitcoin. I’m talking about resources, gold, silver. So again, we’re seeing traditional companies, that normally would go in a different route, come to tokenization as an alternative way of providing a security to the investor rather than, “Hey, I’m tokenizing it, and this thing is just going to go…No, it’s about the business first and then tokenization.

Adam Chapnick:

I guess building on that, are there any sectors or industries that maybe we haven’t seen yet but that you see could benefit from tokenization, that maybe we’ll expect to see in the coming year or two?

Oscar Jofre:

Well, I think no different than what we foresaw in crowdfunding. I mean, we were all rah-rah that it was going to be technology companies, and I think we did see that at the beginning. In October, 2018 I think we had two, 300 companies all based in technology. The problem with technology companies is that again, no track record, just getting started, hadn’t built anything. They needed to get some traction. Obviously, they were late in the game. Obviously, they wished they’d launched in 2016 when you had an idea on a napkin, and you can raise millions of dollars.

Oscar Jofre:

So I think technology companies are going to re-emerge again, but I think we’re going to see more traditional. We’re going to see very interesting companies. At least in our world right now what we’re seeing is resources, manufacturing. We’re seeing telecommunications, cannabis, mining. So these are traditionally based, and technology I would say is not even 1% of what we see right now. And that could easily all change, but that’s where we are right now.

Adam Chapnick:

So what about the regulatory environment? Do you think it’s proceeding in a positive way? Are the regulations, specifically the SEC, are they too harsh? Is it not enough? Where do you see that?

Oscar Jofre:

This is a tough question because we all have different views on... But I’ll say this, as an entrepreneur, and I’ve said it globally to everybody, I think our regulators have done a lot for us. They’ve given us a lot. The question is, are we taking it to the point? Are we abusing it? Are we not adapting it properly? And I would say right now, what we demonstrated from 2016, 2018, is that we abused it. So therefore, I think what regulators are doing right now globally, not just in the United States, globally, is they’re taking it back. And what they need to do is they need to bring it back because so much money has been swindled, stolen from investors. And unfortunately, yes, it’s only a small few, but that small few is hurting everybody. It’s hurting legitimate companies who are trying to raise capital legitimately and are not able to do so.

Oscar Jofre:

So why is this important? Because right now, the only types of companies that are able to raise capital and tokenize are companies that have been well-established. Investors need to know this company’s real. So if you got an early, say, startup that you know has a great idea, isn’t getting off the bandwagon, it’s not even able to get started because there’s this mistrust. So as far as regulators are concerned, for me personally, I think there are some areas, yes, they could move faster to make things a little bit more smoother. But right now, given the regulations that are currently in place, I think they’re great.

Oscar Jofre:

I mean, what we really need is a global one, but we’re not there yet. I mean, right now, there’s only one country in the world today that has a global exemption to allow a private company to access and raise capital from the non-accredit investors, and that’s the United States. So how much more could you ask for really?

Adam Chapnick:

So KoreConX, any news or product announcements that you’d like to share with the viewers about what you’re up to?

Oscar Jofre:

Well, obviously, we’re excited. We’re now in a number of countries. We started our roots basically in Canada, and we’re now well-established in the United States. We’ve recently opened up in Australia. We have six colleagues there. We’re in Singapore, UAE. We’re now in Dubai and Abu Dhabi. So our team is growing but most important, the message that I bring to everybody is, we all have to start working together. This is a global ecosystem. It’s not a competitive landscape. This is not about right or wrong. This is about bringing everybody coming together. This is one commitment we have to the market is that we will work with everybody. We need to. Because at the end of the day, the only way we become large enough to make a difference is when we start coming together.

Oscar Jofre:

And we’re starting to do a lot of different things with our platform and our product to make it easier. One of the things that we’ve done this year, I think we haven’t yet announced it, but I’ll let you know today, is that we’re offering in our platform, private label. This is a really big breakthrough for us. So what does that mean? It means that we can work with a competitor. We can give them our platform, completely branded with their look and feel. They can offer all the great features of our platform and be able to deliver that.

Oscar Jofre:

And why is that important? Because at the end of the day, if we don’t connect all these islands together to become one massive planet, we will be talking about this five years from now as I did 30 years ago. Now’s the time to change. And that’s one of the biggest feature we have coming up that I think will be revolutionary in the private capital markets because we’re offering it to our clients, our partners, our ecosystem, anybody who sees the benefit of our platform and would like to adopt it and not having to invest in developing one.

Adam Chapnick:

Yeah, that’s big. And thanks for sharing that with our viewers today. Going into the private label, that should enable your mission of connectivity to grow. We’d love it. Also, I mean, I would also point out I love that you have the free layer option, so everybody can kind of dip in and understand exactly what you guys do for a company without needing to take any kind of expensive test or anything. I thought that was a great approach as well.

Adam Chapnick:

You’d mentioned that you guys are in a ton of new countries. Can you share what the current climate is like in these countries, or is there any specific difference among them when it comes to security tokens? What are you finding?

Oscar Jofre:

You’re going laugh at this. I hope you do because it’s really interesting. So obviously, one of the advantages we have having people in those cities, we’re hearing firsthand what customers are saying. We’re on the call with them. So everybody wants to go to the U.S. So make no mistake, what anybody says they’re going east, or they’re going to other part, uh-uh (negative), investors and opportunities want to come here to the United States to raise their capital, work with broker-dealers. So that’s one interesting thing that I can tell you with all the clients we have that we see.

Oscar Jofre:

Two, the other perception everybody has, “Oh, I’ll go to Gibraltar or Malta. The rules are very relaxed there.” Again, that is not the case. If you talk to any regulator, they’ll tell you, “No, all we did was signed an MOU. We’ll put them in a sandbox. They’re not live.” And so, in other words, people have taken certain things and blown it out of proportion and thinking that those countries is a free for all. They are not. And in some cases, they’re making arrest. In Dubai, they’re arresting people at ATM machines. In Singapore, they’re fining and arresting people for postings on LinkedIn.

Oscar Jofre:

So what does that tell you? It tells you that at the end of the day, United States is still leading the world’s economy when it comes to capital markets. Why? Because it’s got an infrastructure in place, a well-respected one. Two, it works. And because of that, it’s showing the rest of the world how they can open up the same way. Yes, the technology, the shiny light, blockchain is the ultimate technology we’ve all been waiting for. It is the technology of trust, but it’s not the Holy Grail. It’s still people’s money that we need to be responsible for. So we need to understand the technology, how it works to solve the problem, not to create new problems.

Oscar Jofre:

I mean, imagine if 10 years ago I gave you a share certificate that the minute you got it in your hands, it would disintegrate after you give me $100,000 of your money, or that because it was in your wallet, somebody pickpocketed your wallet and took away your share certificate and all of a sudden, you don’t have those ownership anymore, or that the minute you needed to use it, you needed to pay a shark in order to use that piece of paper to trade, these are all things that were never contemplated in securities. And nor should they be. Why should an investor have to pay for these things?

Oscar Jofre:

So another way is, look at the problem and bring the solution. That’s basically the way the world has worked. Yes, there is another model, which is, here’s the technology, and let the regulators change the rules to fix it. Okay, that’s another way. The regulators gave that market two years to show that. What did the world show? It showed that 80% of all the opportunities were fraud, not vague fraud, no, fraud. Billions of dollars of investors monies went away.

Oscar Jofre:

So how much more trust do you want this model versus a model that works? Yes, we have problems. I’m not saying that we’re perfect, we’re not. After Enron, we said that we would never have another Enron. Well, that’s not the case, right? Every stock exchange has got a problem. We’re plagued with it, but what can blockchain do for that? It can start removing some of them, but the way to remove those friction and remove those problems, we need to understand how it works. Where did the problem occur?

Oscar Jofre:

And the only way to do that is you got to work with the current ecosystem, and this is the missing piece the first version of tokenization missed out on. You got to work with the broker-dealers. You got to work with securities lawyers, not a blockchain lawyer, a securities lawyer, auditors. You got to work with the professionals that have been there, have put their entire career in learning this thing inside out. Once you do that, you will discover that there is so much room for disruption. But work with them, work with them to disrupt it. Let them become the voice when they go to the regulators and say, “I’m a regulated entity. The way this thing works, it’s not doing it properly. We can do it better and more efficiently and protect the market.” See? There’s an appreciation of that. And I think this is the biggest wake-up call that I see in the marketplace.

Adam Chapnick:

So what goals do you guys have as we finish out 2019? What’s KoreConX looking forward to in the coming year?

Oscar Jofre:

So 2019 for us is a growth year. We’re quarter of a quarter. We’re growing at two to 600% because we have so many different product lines within the platform. So not only do we have a digital securities protocol where we’re offering transfer agent services, we’re offering platforms to broker-dealers, secondary ATS technology for those who have the licenses, and of course, for transfer agents, so we’re very fortunate.

Oscar Jofre:

But our real goal today, right now, the biggest goal we have is to expand our global ecosystem. We now understand the problem. We really do. It’s not the technology. It’s not the best, next, new issuance platform. No, it’s bringing those that already there. So we are making a firm commitment to grow it from 300. Our goal by the end of the year is to have over 600 Kore partners globally around the world and in more countries. So now, we have partners in Japan, South Korea, UAE, U.K., India, and we want to grow and grow. That’s how we will fix the private capital markets.

Adam Chapnick:

Can you tell us about either some of the partner companies that you work with in our space? We’re always trying to keep an eye on what’s going on in the security token space. Are there any partners that you rely on that you’d like to share?

Oscar Jofre:

I believe that there are two very important partners in everybody’s ecosystem, not just ours. And everybody needs to make sure that they have enough of them. You can’t just have one. You need lots of them. One, lawyers, attorneys, securities lawyers, people who understand each... And you’re going to need lots because you’re going to need some that know how to do Reg CF, some that know how to do Reg D with a Reg S, Reg A+, tier 1, tier 2. You need lots of them. Why? Because you want to offer your clients as many different choices as possible to work with. You have some that are billable times, some of them fixed price.

Oscar Jofre:

And then of course the next big one is broker-dealers. Let’s not forget, we do need the broker-dealers. They fulfill a very important role here. They bring trust to the investors that the company’s real. Due diligence has been done. And for the company, what you get is that when that investor has been vetted in, they’ve done it for you, and there are broker-dealers worldwide. But today, we’re very excited that when we started the process, we got lots of great broker-dealers all over the world, one man shops, 10 man shops. But now, we are moving ourselves into a different arena.

Oscar Jofre:

Recently, we’ve just signed up one of the top 20 broker-dealers in North America, Canaccord Genuity, with offices in the United States, Canada, U.K., France, Singapore, UAE, Australia, Hong Kong, and China. This is our biggest broker-dealer today. What is that telling us? It’s telling us that even the biggest players are seeing the emergence of the private capital markets, and they need to be part of the ecosystem. So there’ll be clients that need that, and there are clients who need the Sutter Securities of the world or the CRITOs of the world, or the Entoros. Whatever size the broker-dealer, KoreConX is agnostic. We are not driven by getting a fee on the front or the back end. We have no fees with any of our partners. We are frictionless. All we ask our partners to do is provide the best service to our clients, so they can get from A to Z as quickly as possible. And that I believe is going to be the biggest differentiator in the marketplace for us.

Adam Chapnick:

I love it. So we love the crystal ball here at Security Token Academy, and we are going to ask you, Oscar, to peer into yours. What do you see for the security token industry looking ahead into 2020? What does your crystal ball tell you?

Oscar Jofre:

I’ve been asked this just a week ago, and they asked, “So what do you think it’s going to happen, Oscar?” And I go, “Well, I’m going to go back to 2014, 2013 when crowdfunding was first getting started. There were thousands of players emerging, people building platforms. And there were some that were very quiet. You never heard from them, and you were wondering, ‘What’s going on? Oh, they’re not important. They’re never going to make it.’ And lots of them spending money. So what happened at the end, by the time the emergence of the launch, 70% of them fell off, the 30% remain. And what’s really interesting, it was the 30% that were really quietly building their business one customer at a time. And they’re emerging today.”

Oscar Jofre:

So I think we’re going to see the same thing. I think those companies that went all out with one protocol, just the protocol, didn’t really understand that in securities law, it’s not about the protocol. The protocol is not the business. The protocol, in fact, should be free. At the end of the day, it should not a be an expense. Since when did a share certificate become an expense? So I mean, those are the kind of elements that I think people need to understand. It’s about managing it. Not just managing that, but it’s managing the entire asset class.

Oscar Jofre:

So therefore, I think there’ll be a lot of mergers. Some of them will become broker-dealers, which I think that’s a good move for them because that’s a way to generate revenue. For those who want to be technology players, you’re going to need to choose your gateway. Are you going to be the framework? Are you going to be a layer, or are you going to be the infrastructure? And the nice thing about the private capital markets, we need an infrastructure. One doesn’t exist. There is no incumbent. So it’s not like the capital markets for public companies where you got Broadridge. Broadridge is the infrastructure, and everybody else sits on top. You got Computershare, AST. You got the broker-dealers. You got the stock exchanges. The private capital markets, we’re like little islands all over the place.

Oscar Jofre:

So once you understand what you’re trying to build and what you’re trying to evolve and emerge, you will then find your place. So for the thousand or so players that are out there today, I figure 700 will merge or fall apart, and 300 will emerge stronger, bigger, larger product line, but more importantly, better sustainable companies for the future.

Adam Chapnick:

There you have it. So Oscar Jofre, co-founder, president, and CEO of KoreConX. It was great speaking with you today and learning more about KoreConX. We wish you and your team the best of luck.

Oscar Jofre:

Thanks, Adam. Appreciate it.

Adam Chapnick:

KoreConX is a gold corporate member of the Security Token Academy. To learn more, go to our website securitytokenacademy.com and click on the directory tab and select corporate member. For everyone here at the Security Token Academy, I’m Adam Chapnick. Thanks for watching.