So herein lies the problem. Many
a good company seeking capital
has nowhere to turn, and investors
wanting to invest may never
have a chance to find investment
opportunities that may interest them.
Enter disruption. Enter
Until quite recently, there
has been very little adoption of
technological efficiencies in the
private capital markets. Much of the
process is antiquated and laborious,
requiring person-to-person interface
and paper pushing along the way.
Administration costs are high and the
entire process requires a great amount
of time and involvement by the EMD
and the dealing representative to
execute. Some of this is certainly
a result of securities regulations,
however the other part in my opinion,
is that the investment community has
been slow to adopt the technological
From client onboarding to
transaction execution, today’s
dealers can achieve efficiency by
embracing technology, not simply to
comply with securities regulations,
but to improve that compliance and
create a better environment for their
investors. This doesn’t mean that
person-to-person interaction is not required at certain points,
and in certain circumstances particularly in order to comply with
KYP, KYC and Suitability obligations, but technology can assist in
lessening the administrative burden while improving compliance.
We believe that the pr ivate capital markets are undergoing a
shift as investors seek to discover opportunities outside of their
usual networks and make investment decisions independently.
This has been occurring in the public markets for years,
illustrated by the significant rise in popularity of online discount
brokers compared to traditional full-service brokers. It is a natural
progression to start seeing in the private markets.
Our goal in developing the ECN Capital marketplace is to
use technology to improve the private market experience for all
stakeholders. We are a conduit to connect investors to unique
opportunities that would be typically inaccessible to most investors.
Implementing technological efficiencies in different parts of
the economy typically results in broader exposure, convenience
and a reduction in the costs. The competitive nature of industry
means that those savings can be passed on to the end user. It
should be no different in the private capital markets. These savings
should be passed on to the investor and the issuer. This is our
mission at ECN Capital, and it is an evolution that will undoubtedly
occur in our industry over time.
Without question the disruption has begun, and technological
efficiencies will be implemented in the private capital markets reducing
costs for both investors and issuers. In our opinion, intermediaries like
EMDs will have to adapt and what is lost in revenues per transaction
will ultimately be made up by multiples in volume.
For more information contact:
“A disruptive business model expands participation in the market by lowering the
cost to serve previously unprofitable customers, typically through the introduction
of a new technology or business process.” Ryan Caldbeck, CEO CircleUp