Welcome to Digital Security Frontier Vision: The Voice of the Core Builders from Global Digital Security Industry # 19.
We are pleased to welcome Oscar Jofre for our weekly Interview on Security Tokens.
Oscar A Jofre, Co-Founder&CEO of KoreConX, is one of the top 10 global thought leaders in Equity Crowdfunding, a Top 10 Fintech & Blockchain Influencer and a Top 50 InsureTech Influencer. He was awarded the Vision 2012 Businessman of the Year by the Toronto Hispanic Chamber of Commerce and is a globally sought after speaker on the topics including equity crowdfunding, blockchain, FinTech, compliance, shareholder management, alternative finance, and RegTech.
A couple months ago，PCF Capital Group, a leading capital advisory firm in the mining sector launching a $250 million dollar Digital Securities Offering has chosen the KoreConX multi-jurisdictional protocol, KoreProtocol, for their Offering. And today Oscar will share his experience with us.
Enjoy the Interview.
1. As a world-renowned digital security issuance platform, what is the biggest advantage of KoreConX different from others?
KoreConX’s platform has multiple capabilities that are fully integrated, giving users information in various ways based on the role they have with a company. There is a single source of truth and there are no silos. Capabilities include captable management, minute book, shareholder management, investor relations, deal room, compliance, portfolio management, transfer agent, share registry, boardroom and digital securities (including various forms of equity, debt, options, and warrants). These integrated capabilities enable the management of the entire lifecycle of digital securities, such as issuance (birth), trading, transfers, corporate actions, M&A, and exit.
Unlike other issuance platforms, KoreConX’s platform is the result of core competency and many years of experience in compliance and transfer agent services. KoreConX is a founding member of the worldwide Digital Securities Consortium that includes, at present count, 275 KorePartners from a dozen countries. This Consortium also plays a key role in governance, unlike other chains where there is no accountability.
From a technology perspective, the KoreChain is based on an industrial-strength platform, Hyperledger Fabric, which is adopted by several hundred banks and financial institutions. This is a permissioned chain with no mining, gas fees, or forking. This prevents unverified parties from viewing securities transactions and attempting to perform validations for which they are not qualified. KoreChain and Fabric do not have e-wallets, thus preventing one of the biggest sources of loss of private keys. KoreChain instead depends on the well-known, robust, and user-friendly multi-factor authentication. The KoreChain also ensures recovery and recourse to securities in case of loss, theft, or fraud. KoreChain and Fabric also do not have native cryptocurrency, thus reducing the attack surface.
Finally, KoreConX is deeply committed to compliance with the regulation in all jurisdictions. The KoreChain is designed from the ground up to ensure fully compliant securities transactions throughout the entire lifecycle of securities.
2. The cooperation between KoreConX and PCF Capital Group is good news for all this industry. How is that going? Is there any difficulty in issuing such a large amount of digital securities?
PCF has been great for the resource sector to see another path to access capital that does not force them to become public listed companies prematurely. The PCF Digital Securities offering is perfect for the KoreConX all in one platform. They are issuing their Digital Securities in multiple countries around the world (Australia, USA, Canada, UK, UAE, Singapore, Hong Kong, Cayman Islands).
From a technology perspective, there is absolutely no difficulty in issuing any amount of digital securities. The KoreChain is very robust and can handle up to 10,000 transactions per second at the present time. The KoreChain is also extremely scalable and robust.
3. What do you think the case of PCF Capital Group has to do with publishers around the world? How Can Issuers be inspired or learn by the PCF Capital Group?
There is a lot that companies around the world can learn and be inspired by PCF Capital Digital Securities Offering.
PCF understood that raising capital is something you do with everyone in your team involved and having the right partners. PCF did two (2) additional things that most companies failed to do.
- The company hired a professional to lead their offering, who then was tasked to bring together all the broker-dealers from around the world to find the appropriate investors for their Digital Securities Offering.
- PCF, also had properly budgeted for the capital raise, they understood that legal, accounting, due diligence fees, and marketing are as important as the opportunity they are offering investors.
4. What role does KoreConX play in the secondary market? What licenses have you got?
KoreConX handles beneficial and person-to-person transfers within the platform, but does not take on the role of a matching engine or provide a marketplace for trading. KoreConX is not a secondary market operator and has no plans to become one. Instead, KoreConX empowers other secondary market operators through their technology and integration. Trade orders seamlessly flow from KoreConX’s platform (where investors and shareholders login and initiate trades) to the secondary market where the securities are listed by arrangement between the issuer and the secondary market operator.
KoreConX registered transfer agents in the USA, Canada, UK, Singapore, Australia, New Zealand, and Hong Kong rely on KoreConX to be the premier provider of technology infrastructure to broker-dealers, secondary market operators, compliance companies, and other transfer agents.
5. According to our observation, there are a lot of projects cooperating with KoreConX, they come from all over the world. What characteristics does KoreConX tend to cooperate with?
The reason we are attracting clients, partners, etc is we bring TRUST. This is not just a word used to say something but it is at the Kore of what KoreConX delivers.
We are earning that TRUST every day with clients by showing them a more cost-effective, efficient, compliant way of doing a Digital Securities Offering.
We need to help companies streamline and make it easier for them to access capital, without standing in the way. Our vision is to bring everyone to work together.
6. What are the biggest difficulties in the issuance of assets from different regions? Are there any legal risks?
The biggest challenge is not technology, securities regulators it’s the companies themselves. Companies are eager to sell their securities globally but do not understand they still need to have legal representation in each country they are entering to make sure they understand the regulatory requirements. By not taking the time to seek advice it can be detrimental to their company.
From a technology point of view and in particular when a company uses our KoreProtocol, all the legal securities law requirements are taken care off. Where the issues are is with companies not understanding that they still need legal advise guidance, et
7. What kind of problem does KoreProtocol solve?
The fundamental problem that KoreConX solves is the highly fragmented nature of private capital markets where there are numerous silos of tools and data. This causes enormous inefficiencies, delays, and costly transactions.
KoreConX’s goal is to make corporate functions such as securities management, compliance, investor relations, etc. as efficient and cost-effective as possible. KoreConX’s goal is to take this burden away from private companies so the companies can focus on revenue-generating operations.
In creating the solution, KoreConX is also able to enable the capital raising activities through the broker-dealer network (without fees or commissions) and facilitate secondary market liquidity through digital securities on its blockchain, the KoreChain.
8. What does KoreConX think of the Chinese market? Will you want to cooperate with Chinese issuers?
We see China as one of the biggest private capital markets in the world. ( For me personally, it’s very important to establish in China, my family is from China.)
Over the years I have been invited by the Chinese securities regulators and China Crowdfunding during the early discussion in 2015 establishing crowdfunding rules in China.
We will be seeking to work with the Chinese securities regulators and broker-dealers in China to bring the same format we use in other countries to bring a transparent, compliant infrastructure for companies to raise capital in China and abroad.
And What do you think needs to be paid attention to in the cooperation with Chinese issuers?
Chinese companies will need to pay extra care to a couple of things if they want to be successful in raising capital outside of China.
1. They will need to be ready for Due Diligence, and be fully transparent.
2. They will need to have a basic understanding of how to govern their companies, in the new age of capital raising, you will have an external board of directors, you will be held accountable for what you are doing, saying since you are now raising capital from the crowd.
The key for the Chinese market like any other country: Education on how the private capital markets work, when done right you can also become the next Alibaba or Tencent.
9. How many ways does KoreConX help the project fundraising?
We help companies by providing them an all-in-one platform to manage all their document to be able to share with their board directors, senior management, lawyers, auditors.
A platform for them to manage their cap table so they can manage all the securities they have issued, shares, options, warrants, etc and invite their shareholders so they can view their information.
One platform to help them communicate, report and set meetings with shareholders.
One platform to help the company prepare for the next capital raise
One platform to help the company connect them to a global ecosystem of 275 KorePartners to assist them with the capital raise
One platform that helps shareholders manage all their investment in the company, view reports, view news releases, able to communicate with the management of the company, able to vote online for shareholder meetings and to transfer and trade their digital securities.
One platform for the company to manage all their corporate record and maintain good governance.
10. In your opinion, what changes are taking place in the traditional way of fundraising?
We finally have the technology of absolute trust that is changing the private capital markets to make them more fluid and to allow companies to access capital faster and globally.
Since the inception of crowdfunding 9 years ago, the vision was to allow this. Today this is now becoming a reality. Blockchain is the technology to TRUST.
We will now see the biggest change in history in the private capital markets. KoreConX is bringing the technology for:
Share Registry Providers
11. What are the plans for KoreConX next?
KoreConX goal is to become the global infrastructure to the private capital markets. To do that we need to be a global company. Today we have operations 5 countries, we want to expand that to 10 in the next 12–18 months. We see ASIA as a great growth opportunity and we will be focusing on expanding in China, Korea, Japan, Indonesia, Thailand.
- Check Chinese version of this interview here
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