Dennis O'Neill has over 25 year’s experience as an Investment Banker. He helped start two of the largest regional Investments banks in Chicago, Madison Securities and Advanced Equities. He was the Managing Director for Softbank Investments/ E2Capital office in Chicago for two years and raised over 2 billion dollars in capital for early-stage companies to date. Mr. O'Neill has a significant amount of experience and success in Sales, Marketing, Financial Media, Business Development and Institutional Capital Raises. He has spoken at over 50 Private Equity, Venture Capital and Small Cap conferences. He is a sought-after speaker for Blockchain, ICO and Crypto conferences.
Hey everybody! It's me again, Adam Chapnick, with the Security Token Academy. We are here at the Crypto Invest Summit in Los Angeles, in 2018, and I'm joined by a very special guest, Mr. Dennis O'Neill from O'Neill Capital Advisors. Thanks so much for being with us.
I'm happy to be here. Thank you for the interview.
Sure. We love talking about all things security tokens. Can you tell us a little bit about how O'Neill Capital Advisors came to be interested in that space?
Sure. My background is 25 years of investment banking. I started two of the largest regional investment banks in Chicago, Madison Securities and Advanced Equities. Then, I ran the SoftBanking/e2capital Office.
I've raised a little over two billion dollars for early stage companies. What I started seeing in the market was that, there was ... These early stage companies were getting attacked on these exchanges by illegal naked shorts ... They were slandering them ... and doing all types of horrible things to them.
Then, I started to see that there was another way to be able to raise capital. Utilizing blockchain, where it's completely transparent, and there's an immutable ledger. So that, it seemed like it was a safer way to be able to raise capital for companies and scale them up.
Fantastic. So, how did you decide to get involved? And, how are you either involved, or planning to be involved?
We're heavily involved. Basically, what I decided to do was that to focus my attention on raising capital for these early stage companies. We're a financial marketing platform. I've been speaking all over the globe. I just spoke in Barcelona. I spoke in Macaw and Hong Kong, in Singapore. In Malta, I met the Prime Minister, Joseph Musca of Malta. I met all the top people at the Multi-Exchange. I'll be heading over there for their big function on November 1st, 2nd, and 3rd.
The idea was that, this was just a better avenue. I think it's ... This is the new way forward for companies to be able to raise capital. I raise capital from institutions. The Institutions that I speak to will only do STO's, now. They won't do ICO's anymore. They believe that there's too much regulatory risk in the market. Especially in the US, you might end up with subpoenas, or all kinds of other legal issues that early stage companies really can't afford to spend the time or money fighting.
What do you think are the major advantages, other than what you just named, the regulatory risk? What are the major advantages, specifically, for funds? You run a fund, is that correct?
Basically, what ... We have 30,000 investors. The majority of them are institutional investors. Institutions that manage anywhere from 50 million to a couple of billion dollars. Like family offices, hedge funds, fund managers, money managers, crypto funds, things of that sort.
The advantage with an STO, opposed to an ICO, is that you get all the disclosure. You get all the transparency. You get all the traditional things that you would see from a private placement. One of the biggest things it takes off the table, it takes off the regulatory risk, at least to a significant level.
For a lot ... The biggest resistance for institutional money stepping into this market, has been regulatory risk.
Interesting. Is there a technology fear? Because, this is all so new, and how does it work? Can the chain ... is it really immutable? Can it get hacked? Are people worried about all that?
Yeah. I think for the bigger companies, it's very, very, scary. You have all ... When you're talking about integrating very, very complex large legacy systems, integration issues are, just, overwhelming.
I can imagine.
You hear a lot of people talk about it, but very few people are doing it. I mean, on the large scale. For the smaller scale guys, it's a dream come true. Because, now you have a system that is faster, cheaper, safer, more transparent. You have a digital ledger, so nobody can go and cook the books as you go backwards. It gives the smaller guy, that deploy blockchain, it gives them a significant, competitive, advantage in the market. Opposed to the traditional legacy systems, which are going to have a lot of trouble integrating or converging.
Are you finding ... When you talking ...Your scales large and small can still be large. So, when you say small are meaning like a 50 million family office? Is that small?
Yeah, yeah, yeah, that's about as small as we'll go. 50 million dollar family office, or a 50 million dollar crypto fund-
Got it. Are you finding that they have ... they're comfortable sliding into this new technology? They're not hesitant? Or-
No, no. The major pushback right now, is that it's a flight to quality. Which means, they're betting on ... It's the criteria is ... First is management, management, management. They want to see a quality management team. Preferably, somebody that has a track record of success, specifically in that market. They'll like to see that somebody in the team that has actually scaled a business. Not the guy that was selling insurance yesterday, and now he's the CEO today.
The second part is, that they like to see that there's some skin in the game. At least like a half million, or a million dollars, either from the insiders, or friends and families vested. They want to see, for sure, that there is a real case for a blockchain. If it can be replaced with a data management system, it's not blockchain.
The last issue is evaluation. Basically, those are the boxes that we have to check before ... That we can actually take it to an institution to see if there would be interest in deploying capital.
Got it. That's very clear. Now, do you guys only deal with early stage companies that are in blockchain? Or are you guys dabbling into some of the tokenization of assets? Are ... that your thing, too?
We'll do, pretty much, anything in the space that's not a startup.
That's not a pure startup? Okay.
Yeah, yeah. We don't do startups. We don't do seed rounds. We do very, very few A rounds. Basically, what we are, is, we're a financial marketing platform that does the due diligence, does the introductions. But, we're not licensed broker dealers-
You're not BD's?
We can't take a percentage of the fee, we can only take a marketing fee for doing the deal.
Right now ... Obviously, for some institutions, they like to see liquidity. Others, three to five years is ... that's a short time frame for them to look at. They're like, we'll put some cash in now, if you need more later, give us a call.
Wow! That's interesting. Where do you think the future is for this, sort of, global tokenization of assets, like real estate or even art, things like that?
It seems to be the easiest space to raise money. Because, it's backed by real assets. Opposed to an idea that you hope that will, someday, grow into some great big company. Real estate's easy. Art's a little tricky, because, you know, valuations could be all over the place.
Diamonds, and things of that sort, that could be tricky. Some of the people that operate in the minerals are not, you know, the highest quality of citizens. So, they become issues to be able to fund.
I think what's really interesting, in this market today, is the fact that the United States is the biggest laggards in the world for cryptocurrencies. We've got no policy. We've got no guidance from the SCC. We've got these little countries that are doing a land grab on billions of dollars, and thousands of jobs. Malta, Liechtenstein, Caymans, Switzerland's moving aggressively into it. France-
This is the biggest, fastest, growing new market, in the world today. I believe that, everything in the world will be, every transaction will be recorded on blockchain, and all content will end up on blockchain. That will allow AI to optimize all these transactions even further.
Oh, I love it. That was a good prediction. Do you feel that that... When's that convergence going to happen? When we go full blockchain meets AI? Is that 2020? Do we got ... When is that?
You know something? That is tricky, because right now, we're at the beginning of the beginning, of the beginning of the beginning. It's been years of, you know, packed conferences. And, we have less than 1% penetration of the financial industry.
People that invest less than 1%, actually own crypto.
As you can see, we can barely scratch the surface. We've heard about blockchain, and everybody deploying blockchain. The small companies are doing it. But, they're small companies. They have yet to scale. The big companies are spending billions of dollars preparing. But, there seems to be ... They seem to be very, very gun shy on-
Pullin' the trigger.
Pulling the trigger and integrating over from a legacy system into blockchain. Not only that, but ... There's some issues with that, too. Because, they have legacy systems sitting on their books, valued at billions of dollars. And then, when you abandon them, and you go to blockchain, I don't know what kind of write down you're going to see on that.
Yeah, that's an interesting point.
I would say that ... What's going to happen is that, in each market ... Once we actually have a significant player convert to blockchain and end up with a significant competitive advantage over the competitors, then you're going to see a gold rush.
That'll do it.
As they say, during a gold rush, it's good to be in the pick and shovel business.
All the people that are going to be providing, you know, the plumbing and the technology for the blockchain, I think that they're going to do very, very well.
All right. Well, you heard it here first. Thank you so much for being with us.
Okay. Thank you very much. It was great.
Giving us your thoughts, and come back soon.
All right. I could be wrong.
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