Hey, everybody. It’s me again, Adam Chapnick, from the Security Token Academy, and I’m excited to be here today with Alex Tkachenko from VNX. Thanks so much for joining us.
Thank you very much.
So tell us about VNX. How did it come to be?
I was running a venture capital fund in Luxembourg. We were looking at Blockchain quite early on. Two of our companies did ICOs early last year, and I thought that Blockchain could offer an opportunity for limited partners to trade their interest in our fund. We started to explore this opportunity, actually build the platform. Then, speaking to the market participants, we understood that’s the problem affecting the whole industry. So we wanted to expand and now building a platform for the whole venture capital and accelerate the industry. That’s it.
So the platform, the problem that you’re talking about is the liquidity of the LP shares, right?
Yes…to some extent.
Other things to?
Yes. We started from LP shares, but in essence we understood that venture capital works accelerators is a good asset class, however, there is an issue that it provides a good return, buy it’s a liquid for many years.
So if there was an opportunity to trade or to make that liquid, bringing velocity to it, it would A) ultimately, increase the number of investors willing to invest into venture capital
B) it will increase the funding to the start-ups. Increasing the amount of people willing to become entrepreneurs, spur economic growth. So in turn, it could be very interesting.
I love it. Yeah, that holistic sort of, you introduce the wolves into Yellowstone Park and the whole park comes to life. You’re like the wolves in Yellowstone Park. That’s a very American analogy. That’s fantastic.
How did you decide to include that, accelerators are very different from venture capital firms, traditionally. How did those two get married together?
We started to look into the different segments of this early stage funding because early stage is actually where the most of the creative process is done. Most of the jobs are created and where the issue of liquidity is the most acute.
Understood there are two types of players early stage funds and the accelerators. And we both face the same issue, liquidity before you have an exit or before you have big return on investment, investors are not very likely to provide you with more liquidity. And therefore, but the accelerators have probably less issue with LP agreements, which could be that thick for the funds. There for, we try to address both because the end goal is actually increasing the funding to the entrepreneurs and then we thought that we would provide the platform for both.
Isn’t that great. How did you decide that Crypto was a thing that you weren’t scared of? You said that you were in real early. That’s hard to get into Crypto early unless you have really strong stomach.
Yes and no. It’s very interesting. We discussed once this with Jerome Wittamer, he’s a head of the Luxembourg Private Equity and Venture Capital Association and he was one of the early backers of video Skype. So quite prominent investor. In his view, Blockchain is the third revolution technology revolution he sees and named internet, mobile and now blockchain. I share his view. Therefore, for us, crypto was not necessarily as crypto market or a script of currency for us, it was more of the technology.
We saw cryptocurrencies as just one of the segments. Therefore, we went ahead to the whole Blockchain ecosystem and crypto is just one segment.
Are the portfolio companies are they largely in Blockchain?
From the fund side?
Not necessarily. No, we have different portfolios in our fund, but when you have next revolution going on, we decided to really focus on the blockchain because we do believe that it offers great opportunities and we want to focus on, we want to be part of that revolution.
Yeah, absolutely. I think we all are figuring out where can we plug in and support this. It’s so exciting. I totally agree with the gentleman you mentioned. When you say you want to focus on the Blockchain, are you going to shift, is there a thesis in the, but I guess it’s not your fund, is it? You’re facilitating funds. Or do you have a fund?
Yes. The idea came from me running a fund.
But now I’m foolish enough to develop VNX. We are located in Luxembourg. We are trying to be the first regulated DAX, Digital Asset Exchange. We aim to be fully compliant with all the laws and actually will try to attract very traditional investors, such as family officers, hedge funds, real liquidity, where the real money is to this industry. Figuring out that once have liquidity, once they see how this asset class can be unlocked, they will provide real big money.
No doubt. When you talk about compliant, how are you viewing this sort of bifurcation between, there’s U.S. regulatory law and then there’s everybody else law. Are you guys equally participating in the U.S. and global or are you staying E.U. or where are you, how’s that working?
We for now are very focused on E.U. Within E.U. there’s obviously different countries, but Luxembourg is one of the major financial centers and for sure is the fund center for Europe. You may laugh, but this country 500,000 in terms of the assets under management of international funds is competing with the U.S.
Therefore, we are really focusing, we think we have enough customers and enough pipeline just working through it. But we do know that there’s a lot going on in the U.S., it’s just for now, we are focusing Europe.
Do you foresee, for now, do you foresee some sort of move into a U.S. position in the future?
We’re exploring it.
Excellent. Exploration is good. What do you think about the future in terms of this, we’re here, the security token conference in here, in New York. How do you think that’s going to shake out this year in terms of some of the guidelines from the SEC and things like that. Do you have, have you been following that? Do you have thoughts on that?
SEC not so much. But by speaking to the major guys in the Crypto industry, the major Crypto exchanges, we understand that everyone is looking at the space. Everyone thinks that this is the next big thing. It’s just that we started exploring it in the middle of the last year, so we’re probably a little bit ahead then some of the guys trying to address it now. But no doubt, this is the next big thing for the Blockchain and Crypto.
Great. So where are you guys going to be a year from now, do you think?
A year from now, hopefully, we will be regulated. We will be trading the first funds and the first accelerators will be issuing their digital asset tokens on our exchange and we will be discussing corporation with U.S. and Asian competitors friends on how to make the digital tokens issued on one platform. Be compatible with others [crosstalk 00:08:08] interoperability between different exchanges would be, I think the thing of the next security.
Yeah. That will be key.
Well, thanks so much for sharing your thoughts and telling us about your company and we look forward to keeping tabs on you. Come back and tell us how it’s going.
Thank you very much. Great pleasure. Thank you.
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