KoreTalkX #18: Passport for online investing
Entrepreneurial business development executive who brings ideas and people together for the delivery of new products and services to market. The start-ups that I helped found have produced a variety of innovative applications and new businesses with measurable results. They range from downloadable marketing and educational tools to custom digital signage to on-demand apparel manufacturing. Founding partner of Whimsy Rose, a print on demand apparel brand; which has produced and sold over $20 million worth of apparel through its in-house developed production system. - https://www.whimsyrose.com/ Founded AppWare’s, creators of Deskplayer, - a marketing application design company that produced apps generating over a million downloads for brands ranging from Sony Music to Budweiser, to Marvel. Developed, and delivered customized video delivery and educational communications tools for corporations such as Deloitte Worldwide, to the Pharmaceutical industry for the on-demand delivery of accredited professional development educational courses to Physicians. New Initiatives: A co-branded community-based photo-apparel label and an On-Demand consumer profiling/persona services company. (ProfileNINJA) by http://statanalytics.ca & http://www.didanalytics.com Specialties: • Strategy for Business Development • Maximizing Sales • Analysis & Forecasting • Enterprise Sales to Senior Executives • Program Planning & Implementation • Product & Market Identification • Communication & Negotiation
Marketing and Communications
Marketing and Communications
Rafael Gonçalves 00:51
Hello, everybody. Good afternoon. Good morning, or good evening, depending on where you’re listening and watching, this is Rafael Gonçalves, communications coordinator for KoreConX. And this is the 18th edition of KoretalkX. This is actually the first show in 2023. And just address right now we have reached 9,500 on LinkedIn. So hopefully, you’re going to send today I’m with Peter Danyeko. Our CRO.
Peter Daneyko 01:24
Hey, thanks, and welcome everybody to the show today. It is 2023. I’m Peter Danyeko, CRO over at KoreConX. And for the next 40 minutes or the next 45 minutes to an hour. So we want to talk a little bit about or I guess a lot about is what’s new for 2023 What’s going on in the markets and most importantly, with KoreConX is doing. And I’m going to pass it over to you Rafael. And you can give us some insights as to or give me give me the overview. Throw the questions at me. And let’s let’s have a get together and have a chat here.
Rafael Gonçalves 02:03
Sure, sure. And since a reasonable start, has already started before us today’s Friday the 13th. Some people believe in bad luck, I have no problem as of Friday the 13th. I actually liked the 13th. To like this number when I played soccer I used to like 13. My number was 13. But we have a lot of news, a lot of new things, a lot to talk about. We’re going to talk about only investment today and our passports growing investment. For ideas bringing, we’re bringing a new product, KoreID which will help remove a lot of friction and will make the online experience for investments way better for everyone right resource for investors for any participant at all. So we’d like to start, we found this private securities 22-23 survey that was conducted by the World Digital foundation in association with digital insiders. And we have very interesting date on the private capital markets that are broadly are seen to contextualize what we’re talking about 70,500 people were surveyed, an 86% of the respondents said they were confident or extremely confident of all the private securities markets pretension. So it’s a huge number, a huge number and a very positive landscape. So can I say that the capital market there is being largely democratized already?
Peter Daneyko 03:49
Well, without a doubt, I mean, the stat that you just looked at, and I’m looking down at the same documentation, so you’ve got 250,000, surveyed 70,000 from private companies, investors, retail accredited investors, and other 100,000 made up this survey in 80,000. industry professionals that were engaged in private securities, we’re all part of this. So when you say that, you know, 86% of the respondents said they were confident extremely confident about the private securities market for 2023. It says that there’s an awareness out there that it has, you know. Really emerged over the last 10 years, like, every day, we’re talking to private companies that are looking at alternatives to raise capital. And they’re always asking why now, you know, what’s happened in the last couple of years. So I think it’s important to give a little quick recap of this journey. As we dovetail into what KoreConX is doing for 2023. As you touched on things like you know, we’ve got KoreID, we’ve got KoreID verified, we’ve got KoreApp and, and all of these things that we’re bringing to the fore foreground is really part of a convergence. When I say a convergence, it was a 10-year journey for our founders. And that journey really brings together technology regulations and consumer adoption. And, and that’s why some of these numbers that you’re starting to see when we say 86% of respondents said they’re interested in the marketplace, but it’s still really, really early on. So let’s take a step backward for a second, say, crowdfunding, and that’s the term that’s been used for a long, long time. I think we’re merging into 2023, where it’s not just not really the term crowdfunding so much. Now. It’s really capital formation. And I like to think that the CF kind of relates to that it’s capital formation from individual participants, the public at large. You mentioned democratization of capital, we hear that word a lot. And as more and more individual participants become aware of private capital, markets, capital formation, through regulation, CF through regulation, A, it just tends to spawn more and more individuals to want to participate. You know, but it all starts with that awareness. So if we look back, go back 10 years ago, or 10 years ago, plus when the exemptions were formed to, you know, bring on quote, you know, the democratization of capital. What happened over the last eight years that it took this long to come to fruition? Well, one of the things that existed was there was a tremendous amount of friction points. So what was the friction points? technology really wasn’t there. You know, how are you going to manage 10s of 1000s, if not 100 1000s of individuals, on in private companies from a cap table perspective, too onerous a task, and we’re going to touch on a lot of those things and on how that’s evolved and change. You know, Rafael, one of the other things that okay, so you got to technology, friction, it took eight years, but you also had a market awareness, you know, from a consumer perspective, we had COVID, it occurred, and a lot more people were sitting at home, so you kind of have this perfect storm, or this evolution of companies became. You know, in the early stages, they thought, you know, crowdfunding was all about Kickstarter, you know, I’m gonna, you know, and they had their place, and they still have their place. Well, small companies, individuals, they say, Hey, if you want to invest in my company, I’m going to give you, you know, some product that I might be manufacturing as an example. But it’s come a lot further than that. But as it comes a lot further, it’s really complicated. And over here at KoreConX, we found that every day, you have to realize that there’s a, there’s a lot of intermediaries involved. So I think it’s really important for us to start and look at, you know, what’s the difference in a private capital raise than anything else is, you have a lot of, you know, intermediaries, it’s a very highly regulated environment. So you’ve got an ecosystem, and it takes a team to do a capital raise, to even share your offering to share, your information on your company to the public at large, let alone get them to invest. So when I talk about those intermediaries, what does that really mean? So what does it take to raise the capital? If we look at it that way, then we can talk about what’s new for 2023. So you know, I’m, I’m an issuer where I want to raise capital, I need to have a transfer agent, what’s the transformation to transfer agent as managing my securities? What does that even mean? There are 1000s of transfer agents out there. broker-dealers, geez, what is a broker-dealer? Do you know I need a broker-dealer. This is a regulated, you know, entity, for example. So I need escrow providers, I need banking, real providers.
There’s all these different disparate pieces that need to come together for a raise. So so many people think that I say too many or a lot of people, even myself a long time ago was a little confused. I just thought, hey, I can go online, and why can’t say buy something, and potentially invest in a company from a security perspective? And that investment is as simple as me buying a shirt. Well, that transaction isn’t really quite that simple Rafael. I mean, when it comes to the security world, and because the because of these regulations, and because of these intermediaries that exist, they all have a purpose, by the way. Because of those, though, there are times there’s friction points that occur, and it’s not as easy as you think. So over the last eight years, these friction points start to get removed, they start to continually get, you know, get mitigated and become removed. So imagine if you will, let’s make I’ll make a good analogy to say security takes complexity, right? It’s very complex. Let’s let’s take a simple overnight thing that nobody knew about 10 years ago, or our small audience did when we look at things like Bitcoin. Bitcoin comes out and all of a sudden, wow, everybody knows about Bitcoin over the last few years. The Good, the Bad and the Ugly, but it took 10-15 plus years for people to understand it, the ability to transact and the ability to engage with, let’s say, a Bitcoin. In that space, again, I’m going to, we’re going to dovetail away from that, but it was an awareness and adoption curve that took a long time, then all of a sudden, overnight, we’re seeing that and, you know, in the, from the private investor, the awareness is still really early in the game. Some people say, hey, the stadium is just being built, we’re on other people say, Hey, we’re on first base. It’s the early stages. But when you start to look at 86% of all respondents say they’re confident or extremely confident in the survey that just came out. The awareness is just starting. So if the awareness is starting, and companies are raising capital, and in this particular example, I think there were 80,000 companies that are interested in raising capital through the private marketplace, as we speak. First thing that comes in how do I do this? So when they’re looking at how do I do this, I mentioned things like the intermediaries. So if we understand the connected dots, and we compare it to, let’s say, an E-commerce transaction, and from a parallel. So in an E-commerce transaction, as I said, earlier, I put my credit card on I buy my shirt, and I, hopefully I’m gonna get my goods, but I changed my mind. Okay, I can cancel that transaction, the shirt goes back and my credit card gets refunded, when we start to talk in the securities world, it’s a whole different game, depending on the exemptions, for example, the difference between a reg CF and a reg a.
Peter Daneyko 11:54
It’s not just a case of me, investing with my credit card or investing with my wire transfer, or wire transfer, or doing an ACH transaction. When I make that purchase, it doesn’t operate the same way, I have to go through a series of intermediaries. So let’s say, for example, the intermediaries I, I go online, I press a button, I’m making an investment. And I’m going to fill out this form. And that form is going to ask me a series of questions, it’s going to ask me a lot more questions than I might have to do when I’m making that purchase for my shirt, for example. And those questions might be things like, jeez, I’m asking you my social security number, why your asking for my social security number. You know, that’s it. That’s a sensitive bit of information. But that’s also a friction point to that investor. Whoa, wait a sec, you’re asking my social security number, you’re asking my birthdate? Well, this is a regulated environment, you know, Rafael. So when that information is being asked from that investor, it’s for a purpose for the various intermediaries that are there to protect the investor and protect the issuer in a compliant manner. So who is asking for that information? Well, the broker-dealer has a really big role in this part. So I give my credit card, I put my money in, and those funds have to go somewhere. Well, they’re not going to the issuer, or the company that’s raising funds right now. And they’re fundraising. Those funds have to go somewhere. First, they’re gonna go into escrow. So what happens when you go to escrow, they’re gonna sit there, and that’s historically the big black bag. And one of the challenges, when transactions are occurring, is okay, I’ve got investors investing in my company using a credit card, Ach, wire transfer, various amounts, and they’re all going into escrow. But most companies today might think that escrow and even the financial institutions is you know, the thing that escrow is escrow for, it’s the same across the board. But if I’m dealing with small regional bank, for example, and they say we facilitate escrow, how come I can’t let me do escrow for your securities offering. That transaction is dramatically different in the infrastructure that those companies have that let’s say the bank in this case, isn’t really necessarily set up to handle securities, okay? There may be used to more like a real estate transaction, real estate transaction, I’ve got my I’ve got my broker, I’ve got my lawyer, I’ve got $50,000 going from A to B, we’re manually doing a bunch of paperwork. That paperwork was back and forth, we sign off, we approve it, we close it, those funds get released and go from party A to B. Okay, sounds pretty simple. It’s something that we’re familiar with. But when we start to look at the complexities of a securities transaction, just for this one piece, let alone the other areas. Let’s take a look what happens. So now you have 10,000 investors 50,000 investors 100,000 investors. And that’s what we experienced today Rafael. Like, we’ve got hundreds of accounts, they have 10s of 1000s of investors in a private company. Those investors made their commitments through a variety of different payment instruments such as credit card, ACH wire transfer, they’re all going into escrow. And we’ve learned the hard way. I mean, we’ve learned over 10 years that you know, KoreConX learned that wow, escrow is escrow is escrow is that the same thing? So, and part of that is, let’s suppose I make a transaction. And I’m using my credit card. Well, the regulations say that it’s gonna go to escrow, but I’m not even going to take it from you yet. So I’m an investor, I’ve made a commitment. I think I’ve made an investment. But it’s kind of sitting in a little bit of limbo here for a minute. Because there’s something else, there’s another participant here, another intermediary. What’s that intermediary? That’s the broker-dealer, the broker-dealer is that regulated body, that regulated body, and that broker dealer now has to do their job, their job is to do KYC Know Your Customer ID verification, anti-money laundering.
Rafael Gonçalves 16:19
So even online, online investment or investing is, is very, it’s very common, it’s very easy to hide yourself behind an online investment, right? That’s why you have these security issues with KYC and AML.
Peter Daneyko 16:37
Exactly. I mean, I’m just so I’m doing this transaction. So all of a sudden, I thought that, okay, as an investor, and this was friction points we’re going to talk about, I just thought I put some information, but you’re asking me a lot of personal information, so any trust and confidence in that, and hence, 2023 will be this year of, you know, trust and compliance. So let’s backtrack for a second. So I know that these funds are going somewhere. And intermediaries, such as the broker dealer, they have to do their job. Historically, there’s no way that they’re going to do KYC ID and anti money laundering verification and 10,000 investors that are all investing $1,000. So hence, technology, fast forward, technology is taking away the friction point to make it easier for the broker-dealer. But the broker-dealer still becomes an insurance policy for the issuer, to say we want to protect the investors. So we’re going to take advantage of these exemptions. I’ve got 10s of 1000s of investors, hundreds of 1000s of investors, but I’m going to do my job as the broker-dealer, I need to do it quickly, fast, and easily. Okay. So the broker-dealer however, they’re going okay, I can I’m going to do these my compliance I’m going to do small, large volumes of small transaction technologies exist to help me do that. And what is that technology look like? So we’re going to talk a little bit today about things like permission blockchain, what is a permission blockchain? Well, I think in our past sessions, you know, we’ve had Dr. Kiran Garimella, we’ve had Oscar Jofre, we had these folks all talking about, you know, the nuances of what a blockchain. And we had a great session last week with permission blockchain versus public blockchain. So in this particular case, blockchains are simply taking a lot of friction out, it’s going to make things really, really efficient.
Rafael Gonçalves 18:37
Blockchainis about making things efficient, right?
Peter Daneyko 18:41
It is, but if I’ve got these efficiencies, and I’ve got these rules, and in these disparate intermediaries, how do I connect them all together? That’s been the challenge. Okay. The reason I brought up, you know, escrow, for example, if we tried to connect to every bank that was out there and say, Hey, you provide escrow, let’s get into the securities world, it doesn’t work. The reason is, they’ve got a lot of legacy systems, they have the infrastructure, and they don’t understand the regulations to be quite frank with you,. Because you’re used to doing transactions for what they know, like any of us. We live in the world what we know, and we transact accordingly. So now these funds have come in, they’re sitting there in limbo, the KYC has been authorized, I can access those funds, but I still haven’t bought the security. Those funds are now going to go to escrow. So they’re going to send it into escrow. So how do I reconcile that transaction when it comes to escrow? So I was actually aghast when I got into this industry. I just thought, man, everything’s connected. I’m a Canadian, we got five big banks and it was easy. I just transfer money in my email and I move money around here and there doesn’t quite happen because You have lots of intermediaries. It’s not that simple. Funds are going into escrow, but they have to come out of escrow. So let me let me paint a picture here for you. And the reason I’m showing that I wanted to go over the complexities is so that all of our audience and all of our participants started to think. Wait a sec, here, there’s a lot of dots to connect here between these parties. And these parties all have an absolutely valuable role. Okay? Now, the investor doesn’t need to know what’s going on behind the scenes, they just want to know that I made my transaction. But we sure as heck better be able to communicate with those investors along their investment journey.
Because otherwise, they’re not going to, they’re going to just fall off, you know, you’re going to lose the adoption, they’re going to lose trust, because of all these compliance and regulatory requirements, because they’re not informed of what that really means. So we’re doing escrow again, continuing my little narrative on escrow. So now KYC, ID, AML has been done, and those funds are going to come out of escrow. But wait a minute, here, I had a minimum, I had a minimum, I had a minimum in my offering this is if I didn’t raise, let’s say, $200,000, we wouldn’t close. So we’re gonna give all the money back to these individuals. Okay, this is a simple exercise, not quite the same as if I’m given giving back my shirt. And then my credit card gets refunded, I’ve now got 10,000 individuals, all with different types of transactions with different types of payments and escrow. What if I didn’t have an ID associated with those funds going in back to the individual? And believe it or not, that’s pretty much the norm of the technology. Up until fairly recently, there was no identification down to the individual going in to reconcile it coming out. So the reconciliation process was extremely onerous. Great, I know, I gotta give $200,000 back to 10,000 different investors and all different amounts, and they all paid differently. And then I have to subtract the various fees that are associated with that.
Rafael Gonçalves 22:05
Wow, yeah., being unidentified on the web, not very long ago was safer was considered the safe way to navigate, right?
Peter Daneyko 22:17
Yeah, I think I mean, a safer, safer way to navigate. But now I want to navigate safely, but give you information about me. So that I can transact with you, in the case we’re in the securities world. But if I have a lot of friction points along the way, and this is where blockchain comes into the picture, then I have to do a lot of manual processes in the back room. So when I talk about, I’m a, I’m a regional bank. And I’m not set up to transact this way. Remember, I might be used to just saying, Give me $10,000 $10,000 comes out, it’s a party of three and away we go. Increase that volume exponentially and deal with small micropayments, okay? It becomes really, really, really difficult. So one of the things that we’re really excited about this year on the KoreIDea not to do a commercial, I think it’s important that everybody understands that, you know, why, why these things are occurring, but how these problems are being solved. And this is the exciting part. So imagine now, if I will, I put an ID, or a tag or a token, that’s going to identify the individual, but also protect the individual. Right? You know, they make their investment funds are going into escrow funds are coming out to escrow, the broker-dealer is going to release those funds to the issuer, get some, the transfer agent on the back end, they need to know that those funds are approved. So the issuer can update the cap table specific to those individual, those individual companies, right? So now you got all these things being connected. But wait a sec, I’m an investor, I don’t want my credit card to be known by one central agency, per se, this becomes even trickier. So you need to be able to do things. And this is where the technology comes into play. I’m going to identify you as an individual. But I’m not going to keep your credit card information, because that’s not what I want to do. So a lot of people might think even companies like KoreConX, we keep all of this stuff. No, we don’t keep any of that stuff. We’re just idling and tagging information. So all the participants can do their job. And we’re only keeping the information depending on what we’re not keeping any information. The SEC-registered transfer agent will have things like I want to know how you transact it. Hey, you bought it with a credit card, not keeping your credit card information. Oh, you transacted on this date, the debt or equity instrument that you purchased? Oh, Peter, you’ve got voting rights. You’ve got there’s a hold period on the particular security All this is visible to not only the company, the investor, and the investor before. We were used to having certificates putting on going to date myself filing cabinets, but I never had any communication.
I’m going with you know, this old cert. So now we’re fast forward. So we’re fast forward going well wait a sec, I can see I see what my transaction was. It’s on a blockchain. It’s an immutable ledger that commented we made earlier we’re talking you asked about the difference between a public and a permissioned blockchain? Well, if you think about it this way, a permissioned blockchain has all these intermediaries intertwined with it. They’re all doing what they’re supposed to be doing. Except we have a ledger of that transaction. And stored data is just is not stored with one entity, one party. So it protects that individual who said, I’m going to transact here, we’re going to make this transaction over there. But everybody can do their job and the network. So So it’s certainly the blockchain permission. Blockchain helps address with multiple intermediaries and regulatory requirements. Okay. And funds are kind of moving around. But they’re, again, they have to be moving around associated with the rules. When we talk about a public chain, we’re really dealing with unverified participants, you’ve got a central point of failure potentially. And that doesn’t mean that every public chain can’t do this. However, it becomes really hard because you’re dealing with third-party intermediaries. So as we’re moving forward, and today’s talk is about what’s going new and technology, what’s going on. And you know, in, in, certainly in Kore’s world, I talked really about, okay, if these things are moving around, there’s something called we called KoreID. Okay, and KoreID is this ability to tag that individual investor, move information around to the various participants.
Rafael Gonçalves 27:09
Yeah, that’s a brand new launch.
Peter Daneyko 27:12
It’s brand new, I mean, it’s just KoreID. We’re so excited to where it’s going. We, the team had built this out. And suddenly you realize, you know, what’s actually transpired, because you realize that the escrow provider, the broker, dealer, the payment real providers, they’re all disconnected intermediaries. But you can’t have a centralized hub that controls all the data. Because then you have a single point of security risk. Wow, I’m gonna, I’m gonna get your credit card, and we’re gonna get your information, your social security number, all this data doesn’t happen that way. I need each party be able to connect the dots, and only have information that they need to do their job and protect those individual investors. So KoreID, you know, in part, really, really assist with that. KoreID is that one little element that actually is as a transaction occurs, it kind of leaves behind little breadcrumbs if I want to use it, simplistically. Okay. Okay. But do I kind of work with that? But they’re all connected, they’re all connected. So if I’ve got these intermediaries, and I think I’ve got a house of cards, and KoreID, like the glue that’s going to keep them together. So that one little piece that breaks, they’re still connected, my house of cards is still going to remain standing. But at the same time, that house of cards is not a central place for all the data capture for all the individuals, if that’s what I’m trying to say they’re all got their own piece, but we’re connected. We’re connected.
Rafael Gonçalves 28:51
Yeah, the glue to hold the cards doesn’t know which number is on the cards, right?
Peter Daneyko 28:57
Yeah, pretty much. And each card has its own numbers. And there are all these things going on. So it’s complicated. So so how so So we’ve seen that we’ve seen all the friction points as a platform provider as a technology provider, we see when escrow was too slow. We see when Escrow is too manual, we see when managing digital securities on a cap table, or an Excel spreadsheet or multiple people in a back room creates friction. Friction creates costs. If we can lower the costs to all of the insured through to all the intermediaries, we can lower the cost for the issuer. Smaller companies can raise capital, so there are not layers and layers of funds being spent, where it’s just too costly to do this. Okay. So, when I’m kind of looking at this, it’s we can maybe dovetail into some examples. If the investor has friction points and broker-dealer has friction points and bank providers have friction points. How does KoreID solve some of those?
Rafael Gonçalves 30:13
That’s tricky. And we’re talking about as they talk about a KoreID, we have to remember that we’re talking about helping individuals as a whole. We have we help investors, issuers, broker-dealers, right we can be the glue that keeps the house of cards together, right?
Peter Daneyko 30:31
Yeah, so so so pretty much so let me give you one of the things that’s come to fruition is when you’re solving any problem like so. Okay, so we have a marketplace. A technology infrastructure. KoreChain was developed, the KoreChain was the was developed as a blockchain the first permission blockchain with qualified Reg A offerings by the SEC. So it said, Okay, you’re following the regulations. It was built around the regulation, it wasn’t built outside here and said, Oh, by the way, I got to connect the dots for these regulations. Really, really hard to do. So. Let me share some stories here. And I guess, and they’re not really stories. These are companies raising capital rafts. So yeah, that’s, that’s important. So people go, first off, I’m a new issuer, I’m going to raise capital. And why do we care about all this stuff, I just thought it was that it was ways to really care about it from a compliance perspective. But the need to solve a problem. So we talk about solving the problem through the intermediaries or make taking out some of the friction. And don’t get me wrong, there’s lots of friction, you know, you need redundancy, you need to build it out. But it’s getting better and better and better, using KoreChain. So now I have the investor themselves. So that investor is making an investment. And they go through and they’re filling in all this information. And originally, I’ve done I’ve made my investment, and I’m the issuer. And I’ll give you an example of let’s say I’m a company that goes I’m going to raise $75 million on a Reg A offering. And I’m a real estate fund. And I’m going to do a REIT. And I’m going to spend time energy resources marketing to the public and saying, We think we’re going to give you 8% dividends. And that’s what our target is, is one example of a company that might be raising capital. And those investors go, hey, I think this is pretty good guys, this is I’m going to invest in the REIT. And let’s see how you perform. I get my 8%. In fact, six months in three months, and I get 12% dividends, wow, I’m really liking this, I want to reinvest when they want to reinvest, what’s the process they have to go through? So when we’re talking to issuers, and they go, Oh, my gosh, I wish there was an easier better way. Because now that person I got I’m excited, I spent all this money marketing, it’s hard marketing, it’s getting that exposure, I’m executing on my business model. And in this case, in this case, they were doing dividends, the investor comes in, they go, I want to reinvest they’re typing in the data, they said, oh my gosh, I gotta do this again? I gotta put in my, all this data again. Oh, my computer crashed dog bark. You know what, I’ll do it later. Huge friction point, the number of people that abandon a transaction, we all know what it’s like in the E-commerce world. We know that in the marketing world, it takes about seven touches for a transaction to occur. So I’ve got you this far. I’ve got six of those touches, you’re entering your data and I lost you. Investors frustrated.
Rafael Gonçalves 33:52
Yes. Yeah, we actually have the, we created the idea of investor fatigue right here at KoreConX. And we tried to tackle investor fatigue with the KoreID. Right?
Peter Daneyko 34:06
So yeah, so I didn’t really honestly when we were first doing KoreID, I’m going okay, where’s the problem here, I made my investment. I wasn’t even thinking about reinvesting like in my head. It was our issues that are telling us successful companies raising capital, they go, Wow, my investors want to reinvest. We see companies that were doing things like 50% reinvestment rates, it may not may be a dividend scenario, or maybe a company hitting milestones. They continue to tell their marketing story. And they and your shareholders going, I dipped my toe, and I really like what you’re doing. I’m a, I’m a follower of this. I want to be part of this, whatever, whatever segments you’re in, and whatever it is, whatever emotional connection is exciting. So so they are the ones that said make this easier. So here’s the so here’s the premise. So this is 2023 KoreID and this is kind of one of the things we’re talking about. So KoreID is like my passport to investing online. I invest once I get a KoreID, my KoreID is on the blockchain on our permission chain. My KoreID is like my thumbprint and a sense, in a secure manner, I can come in anywhere I see a KoreID badge on a property, I go, Oh, I got a KoreID, I can reinvest, it’s going to repopulate all that information associated with me in a secure manner. I don’t have to have that friction point of re-entering all my data. I can reinvest from my KoreID. So that’s going to allow we don’t know the numbers aren’t out yet. Because we just released in KoreID, what percentage of those investors if we take away that friction point, it’s like me going shopping online, or it’s like me not having a power failure in my house that I suddenly can’t do something, you take that away? So so we’re excited about that, you know, three investment side, that’s really what KoreID, okay, KoreID, that ability for that investor to make reinvestments? It’s their digital passport, easily and quickly. And compliantly? I mean, at the end of the day, and most importantly, securely, okay, yes, securely. So anybody and any issuers in the core ecosystem, I can do that reinvestment now, there’s something else that companies were looking at. And this becomes important to the investors. So if we’ve got this KoreChain, and we’ve got this KoreID, and we’ve got this, I’m coming to web properties, we know that the market is going to explode bigger and bigger, when it comes to private capital raises the data is telling us this, it’s growing exponentially. Unfortunately, what else happens when that occurs, you get bad guys coming into the game. Hey, I’m gonna set up a website, I’m going to do, I’m going to do whatever I want to do to try to raise capital. I mean, we’ve seen it in the ICO world, we’ve seen it in other areas in space. But here’s this a regulated environment. So from a trust and compliance perspective, you also need the investors in all the participants in a regulated environment to present that trust and compliance. So something else that KoreConX has done and we talk about KoreID for the investor side of it. And I’m gonna explain a little bit more on how that dovetails into another new think release that we’re coming out with next week. But we also have what we call KoreID verified. So KoreID verified is really a certification mark, for a variety of different parties. The parties would be like, broker-dealers. So the KoreID certified means like, it’s a mark. It’s like a Digi cert when companies see a Digi cert on their website. They know that my information as far as it’s moving here, this site is trying to is being compliant as far as not disclosing particular information, my email address, for example. Digi certs will be at the end of the day. They’re really protecting my privacy, right? That’s what it does. You start doing these protecting my privacy, it gives me a level of trust. It’s dated, and my data integrity is not being shared. So that’s that badge that’s like that certificate. I mean, it’s been around for 20 years, but it had to start somewhere. So KoreID verified is doing the same thing. Remember, we’re valid, we’re verifying all of the intermediaries that are in our ecosystem. So imagine, if you will, I’ve got this badge. I’ve got this certification mark, that an individual investor can say, hey, wait a sec. This is a FINRA-registered broker-dealer. That broker-dealer. I can look them up and I can see that they’re in the central registration. They’re in good standing with FINRA, here, you got a regulatory body. So we’re bringing all these regulatory bodies together. broker-dealers are on one side, the issuer themselves, it gives that level of trust to that investor, you’re taking one step away that all of the participants in this raise are, are not only compliant, but they’re also part of this regulatory infrastructure. So bad actors that might be let’s be honest, bad actors are going to do things, okay. You’re gonna say, hey, you’re gonna fail, and I don’t, I’m a broker-dealer. You’re gonna feign this, and I hate to say it, so you need that level of trust and compliance. So this is something else that we’re bringing out. Its KoreID verified. It’s for all the participants, from the issuer to the broker-dealers, to the legal community to say, hey, I’m certified. I’m following my own regulatory guidance. As in my community in the case of like FINRA and the broker-dealers. But I’m also interconnected with all these other intermediaries. So the issuer can places on their site, broker-dealers can utilize it. So this is just an evolution of, again.
Rafael Gonçalves 40:20
The investor can be sure that that offering this is real to companies there, it’s all compliant with SEC with FINRA right?
Peter Daneyko 40:29
Exactly, exactly, exactly. Because let’s be honest, how much I don’t want to go to all these different places to say is this piece Good? Good. So consolidate that with a verified KoreID mark. And that’s where that comes in. So we got the KoreID for the issuer. We’ve got KoreID verified for all the intermediaries, or the investor KoreID what I should say. Yeah, and so that’s, that’s something new that we’re doing this year, it’s all about trust and compliance. We always emphasize at KoreConX that we’re going to take no fees from any of these intermediaries, it allows us to be extremely agnostic and stay in our lane, or lane as a technology provider. Our lane is to facilitate capital raises, optimize and maximize the exemptions, and lower costs for the issuers. As odd as that sounds, it’s for the long game. It’s not for this, it’s not transaction based. And this is what the Jobs Act was all about. Begin to democratize capital, don’t take out one leg of the chair. And have it all crumble, so to speak, you know, and trust and compliance are necessary for that.
Rafael Gonçalves 41:39
Some of the folks like Oscar. Oscar always says that David Weild, has said that private companies are responsible for generating innovation, right? Iinnovation and jobs. And that’s where innovation relies on, right? In private capital. public traded companies are often for profit. It’s fair, okay.
Peter Daneyko 42:01
It’s fair. And we want that. But now when you’re looking at private companies, and I’m glad you brought that up when you look at they go, I get the question often goes, what’s the best sector? Is it real estate? Is it med tech? Is it this? The beauty of democratizing capital, the beauty of the ability for private companies to raise capital is it doesn’t matter what sector you’re in, you have an audience. I’ve said this before in talks that I go, my daughter, she’s a biomedical engineering student, and, and she’s 21 years old and has a real global view when it comes to well, ESG the environment causes different things. She hears different companies do their pitches, or different companies doing their raises, or they’re looking at using the exemptions and regulations to raise capital. And one of the comments she will say is, hey, I would invest in that. And I go, why. And she goes, I like what they’re doing. That’s that was before, here’s my upside, you know, from a public company, Look, I, I invest in a public company, I’m just going when is it going up? I might, the emotional connection isn’t necessarily the same, same thing. So different people invest for different reasons. I said, the real estate guys, look, I’m getting my dividends. It’s an asset that I am in a private company that I’m getting a return I’ve got so immediacy, somebody else’s, and an ESG. Somebody else might go, you know, in the med-tech space, this is a long journey. Remember, I said about reinvesting. If I can take the friction to reinvest and I’m following this med tech space, and I’m seeing they’re going through, you know, initial trials and they’re going towards FDA approval. They’re hitting milestones, their company is gaining in value. I want to reinvest, how do I take that friction away? You take it away with KoreID. That’s the whole beauty of this. I mean, that’s why it was so so exciting because it was driven by companies that are successful through capital raises today saying ‘make it easier for my firm’s people to reinvest.’ And so many of these companies today that haven’t even started aren’t thinking about reinvestment. They’re worried about that first investor. But you’re raising capital in multiple tranches. Even if you think that I’m never going to need money before I’ve been an entrepreneur and failed entrepreneur and we know that things happen. COVID happend. Lots of businesses didn’t need money that you know, before COVID Hit. They needed money to bear weather the storm when it did hit. So you’re always raising capital, you know, as far as you want to grow. And this is just simply one more vehicle. It’s not the panacea for capital raises. You use multiple different areas or multiple different opportunities to raise capital because that’s what it is to regulate. Since providing an opportunity for companies to raise capital. So KoreID, then we got this other new thing coming out.
Rafael Gonçalves 45:10
Yeah, the big thing for it’s already on the app stores, right? But the official launch is next Monday, I believe. But it’s already on T Mobile App.
Peter Daneyko 45:22
KoreID mobile app. So take to the next step. So we’re actually using the beauty me that’s exciting is we’re using blood our core blockchain KoreChain. For actual functional purposes. It’s not just thing to make something up out of thin air and say, this chain is going to do this. We’re utilizing it to connect all these intermediaries. And there are so many possibilities for it Raphael that that’s kind of exciting to us. So core, the mobile app, for example now, and the reason I keep bringing it up, bring up chain and blockchain etc Now I’ve got this mobile app that the individual investor can download. We always had the ability for me to reinvest. There you go. Let me see that. Let me see you. Yeah, so there it is. You got KoreID. So what does that really mean? Okay, I’ve got this unique identifier. I’ve already invested in your company. I have this unique ID, unique ID, it’s on my, it’s on my phone. Mobile, mobile phone engagement is seven times higher than my email. That’s public knowledge. So if I get a message on my email, for example, I have a higher open rate. Simple as that. Okay. So I download, I download this app. And the reason the app was made, again, was demand from companies that were doing multiple raises, they said, Hey, KoreConX team. We’ve got a big audience. We’ve got 50,000 investors. We’re going to do multiple raises. And multiple raises, for example, might be a motion picture company that’s doing multiple films. They have a fan base, they have they have a brand advocate base, they have a community at the end of the day. Yes. They said, I like what you’re doing. I want to invest in the other one. I got to fill all my forms again, on my online, no have a KoreID. We’re going to we’re going to fill those forms in for you. Now take it to the next step. I spent far more individuals, consumers, we spend more time on this now than we spend on the computer. \
Rafael Gonçalves 47:38
Yes, so I’ve got I’ve got my list. In Brazil, at least here in Brazil, the number of mobile phones in houses is like more than the actual population in Brazil. There are mobile phones here and people.
Peter Daneyko 47:50
I believe it I mean, everyone, unfortunately, like my phone bill, everybody in my household like, oh, geez, I got three kids. You just pay for cell phone bill. I mean, yeah. So now I’ve got my phone app and those reoccurring investments. So okay, I’ve got it on my phone. But I’ve only invested in one company I invested in your company. But that company is constantly updating information. The problem with company and communication with traditionally let’s look at the historical go. I invested in a private company, and I’ve got my share certificate sitting in my filing cabinet. I never heard from them for 10 years. Log on to the computer, and try to pick up the phone. If I can reengage good news or bad news, bad news with my shareholder community with my brand advocate. And a lot of companies I mean, I’ve talked to guys, they said, Oh, by the way, don’t even call them shareholders, the shareholders. They happen to be there like my family, or they have to be owners. There’s a racehorse company I was talking to and they syndicate racehorses, and they do fractionalized ownerships of horses, and they do 10s of 1000s of transactions pretty much daily. And in that particular incidents, people are buying and selling pieces of horses. They’re communicating with their brand advocates. In their case, they’re their owners all the time. Now they’re communicating now and then communicating with the phone, you can push information out to the individuals to say hey, here’s an update. Oh, I got an update. Oh, this is doing really well, whether it’s my REIT, whether it’s my home, whether it’s a milestone, whether it’s a real estate company. Put a shovel in the ground, they’re progressing, making it easy meet for me to see the information. Now make it even easier for me to reinvest in your company. So not only does the phone app allow the investor to make easy reinvestments but they’re alerted to updates that the company has. So KoreID is this really closed-loop communications tool as well as a secure way for me to make an investment, and reinvest. So it’s just there. Like I say, it’s just early. And that’s just the new package that, you know, we’re bringing it out. So that’s kind of, I guess what we’re here to talk about today was to say, Okay, you got KoreID, you know, KoreID verified in case.
Rafael Gonçalves 50:19
You mentioned film producing companies with Motorola, just, if we had launched the KoreID before Ironman wouldn’t have to be killed. Right? We could still have our own man there.
Peter Daneyko 50:31
But But But true stories, just from a common sense perspective, you think like, it’s hard marketing. It’s hard, you know, to create awareness, it’s hard to share your information, but you spend all that time and energy doing it. Your best customer is the one you’re already engaged with. The better job you do with communicating with that customer allows, I mean, it doesn’t allow them. They’re just more comfortable sharing that story with someone else. So we talked about offline, viral, offline viral is two people sitting, you know, having a cup of coffee and having a conversation and going, hey, you know what, I just invested in this company. Oh, really? Show me what does that look like? Yeah, this is how it looks like this, look at my shares. Look at this is what I’m doing. Here’s the company. So we’re the first company that I’m aware of, we never, that actually took the approach that we took to have a mobile app that unifies the shareholders, and gives the ability for all the issuers to push out information. So it’s, it’s just super, super exciting.
Rafael Gonçalves 51:41
So we’ve got communication, we have investments, we have trusts, we have compliance, we have permission-based blockchain in which the information is not there all the time and have to allow the, the parts involved to gather information. So it really the KoreID environment really connects itself to deliver a very good experience to all the individuals involved. Right. Each verse individual investors, broker-dealers, escrow providers, I mean.
Peter Daneyko 52:13
It’s all in it. And it’s just the start of it. Right. I mean, it’s we know that the market is early stage, and the market is growing. But we also know that there are lots of these friction points, you know, so again, trust and compliance. 2023, you’re gonna see, you know, a lot of great success stories in the private capital markets. You’re gonna see horror stories, too. So part of our job is to, you know, there is no great the regulations exist for a reason. Whether I liked them or not, by the way, wrap like, I mean,
Rafael Gonçalves 52:49
It’s about complying right?
Peter Daneyko 52:52
Yeah, it’s about complying. And too many companies, I think, you know, historically they go, they’re all doing it over there. While they’re doing this, it must be okay. They’re doing this, it might be, you know, okay, we look at the FTX side of things. Why can’t we do this, I hear the world, I hear this word. If it drives me crazy, one more time, and people go, let’s just tokenize it. And then we have this opportunity. And I’m going, wow, like tokenize, it doesn’t give you anything tokenizing just, it just breaks it down into pieces. You might have put it on, you’ve put it on this immutable ledger, but now you have to transact with it. How do you transact with it, all these intermediaries I just discussed, allow you to transact. So breaking it down into small pieces doesn’t allow you to do something if you’re not following the regulations and the guidelines. And it’s hard. I mean, every day we have to update it and build redundancy as a tech company. So anyway, we’ll close on you know, KoreID, KoreID verified, KoreID mobile app.
Rafael Gonçalves 54:04
which is already on the stores and App Store, or, or iOS.
Peter Daneyko 54:09
Most of our summits are in a big commercial like this. One is it’s not meant to be a commercial I think we’re just real passionate about saying it’s a passport for online investing. The markets, the markets growing if we can take out the friction for you know, the friction points, and really listen to both the investors this was for the investor. And the other really
Rafael Gonçalves 54:31
interesting content is the first content we put out that puts together all the ideas already recorded, verified in the mobile app, right? This is the first time we connect them. Right?
Peter Daneyko 54:41
Well, there was no you’re right. There’s something else that I didn’t realize until I was playing with it the other day. So broker-dealers have a job to do. So the broker-dealer is doing the final remember we talked about KYC a lot of mistakes happen when an investor makes an investment is I didn’t answer my I hit a nine versus an eight I didn’t hit my proper information. And so I’m not going to pass my KYC. Something else that I realized on my phone was during that login and my account because I do a lot of demos and I go, Oh, you entered in dummy data. So I’d like your ad, it pops up to me, Peter, you need to pad for you to do your KYC, you need to change some data, you need to correct your data. Now gave me the ability to actually help the broker-dealer, which is going to help the issuer, which is going to streamline the efficiencies of that transaction, reducing time or just in costs, reduce time and see cost. That’s the whole point. This isn’t some esoteric, why are we doing this and maybe they will come? This is taking away friction points is real. And if it’s real to take away friction points, the costs come down, more more companies can participate. So anyway, that’s kind of where we’re going to end today. I think Raph.
Rafael Gonçalves 55:55
That’s wonderful. That was great. It was great. It was the first time that I myself thought about all this items together. It’s interesting to see from this perspective,
Peter Daneyko 56:04
it forced me to really think of how it all gets to connect it and I think yes, when Dr. Kiran Grihmalla and Oscar when they were putting this together, and I remember, you know, over a year ago, they’re going we’re doing this KoreID and we’re doing this mobile app. I couldn’t get my head around, I’m going I was you know, what I wasn’t didn’t have the vision until you saw the problems that it was solving for actual customers. Until the customers said, why don’t you do this? So they were ahead of the game. We’re always trying to listen, and we’re always open to new ideas, always open to you know, see where we can go with this.
Rafael Gonçalves 56:42
So I believe we can wrap it up. But it was great. I mean, we work together, of course, but we hardly ever have time to spend a whole hour talking about solutions. So a lot of ideas will come was to come up. And of course KoreID verified and the mobile app is just the beginning of it. Right? The best is yet to come. I do believe that. That was very exciting to see putting perspective, into everything we have been doing and we are always here right here for clients, for customers for partners, whoever wants to get in touch with us. We are on LinkedIn, you can email us you can log into the KoreConX website. We are available. We’re here. And that’s it. That’s it if you want to leave your final goodbyes.
Peter Daneyko 57:29
Great, great week. Great weekend to all and to those in the US Happy holiday on Monday. Thanks. Bye bye.
Rafael Gonçalves 57:38
See you guys. Bye bye.