Simon Dixon on BnkToTheFuture’s investment platform for fintech deals

0:00I'm Ashlyn Addison from event chain for investmentpitch media and FinTech news network and today on blockchain interviews we have Simon Dixon the CEO and co-founder of Bank to the Future Simon thank you so much for being on the show it's a pleasure to have you here today great thanks I have a me you're very welcome let's start with a little bit of background on Bank to the future can you

0:22please give us an overview of the company and the solutions you're providing in the industry sure yeah back to the future calm is an online investment platform for investing in fin tech and crypto companies we were the first securities business to enter the crypto space we started in 2010 and we spent many years on the regulars rate we're assume a registered company and we

0:48have facilitated some of the largest funding rounds in crypto so some of the companies that have gone on to become the largest company so companies like bit generics bitstamp kraken big pay and over a hundred others and say we do primary offerings and secondary offerings whereby you can buy and sell equity in companies which is obviously very different from tokens and security

1:14tokens and other products mmm-hmm very interesting now if I get if I got this right investors are investing just equity in lot mainly blockchain platforms is there a reason that you guys straight away from token offerings and also security offerings have been something that's been more popular growing now throughout 2019 so we've been through the whole process that when

1:38we started there was only Bitcoin you know I was working in investment banking in 2006 and then I was invited to speak at the first Bitcoin conference in the world in Prague and we launched a platform in 2010 just after Bitcoin was created or started the platform it took several years in regulations and in rant about 2015 was when we started to do some of the larger

1:59funding rounds and the token size only really started in 2013 one of our first deals that we did was a theory 'im a mining part and we did many of the earlier token sale like a factor storj made safe and various others but what we did is we always did things in compliance with securities laws say we put together a contract that gave people entitlement of

2:26these tokens and more recently everyone started to get interested in our industry through security tokens and we've invested and put put deals on the platform for many of the companies like securitize and more recently DX exchange and many other companies that are involved in the growth of the security token industry mm-hmm that's very interesting so is it possible for any investors or

2:50VCS or fund managers to invest into the offerings on bank to the future I'm guessing that there's a kyc that's needed and are there geographic restrictions to who can invest sure as a registered securities business and we have to adhere to securities laws are local securities laws and also anti money laundering laws so if a country is restricted for anti-money laundering

3:14sanctions reasons then we're we're prohibited from dealing with such countries but what we have done is anybody that is able to comply the invest then we've done custom onboarding processes for many different jurisdictions so as as we have subsidiaries within our company that are regulated in different countries so if you're from the US then you would go

3:37through our US Pro dealer and so we've put together custom onboarding processes to open up the pool to as many investors that are legally and compliantly allowed to invest depending on your jurisdictions so if the rules change in your country then we will make an update to our onboarding process and allow for search but this is a high-risk high-return asset class and it's most

4:01suited to people that can afford to speculate in such a high-risk high-return environment and is long-term patient investments as well yeah I completely agree now in the industry with bank to the future are there other investment platforms that are doing similar things to you guys and what makes you different what's your competitive advantage so the background

4:23is is that in back to 2010 when we started there about three companies in the UK that were looking to allow for equity online I do online venture capital we were one of them and it took us approximately in four years to get the UK regulator to agree to that and later that led to legislative changes in countries like the US through Jobs Act and various

4:48other things and there's a couple of different industries there's we were we were out and for the birth of you know online investing and then having spoke at the first Bitcoin conference and being early investors in Bitcoin we never needed funding because the the Bitcoin investments facilitated our growth and so we really dedicated the platform to supporting this industry in

5:09a time when no venture capitalists wanted to invest in the industry nobody was interested in the industry and so many of those early deals were done through banks of the future and more recently you know the the industry has changed and there's been a lot of interest obviously but so at the moment you might find blockchain based platforms that are allowing for tokens

5:33and various other products or you might find online portals which allow for investing in equity but as far as I know we're the only equity platform that specializes in FinTech and has been around for the whole growth and we're now investors in a hundred and twenty different companies six of which have gone on to become multibillion-dollar unicorns wow that's great and I could

5:55see how regulations especially starting now from scratch to jump through all of those hoops to set up properly and do it the right way would obviously be a big barrier to entry for people that are looking to compete with somebody who's already grown well we're all for competition so we often invest in our competitors so you know you'll see deals on our platform we you know for people

6:18looking to get into security tokens we've done other you know platforms that do online investing more recent incumbents we're here to support the growth of the industry and provide the best investment opportunities we can find for our investors and if that means we fund somebody that's looking to compete with us and disrupt us then we'd rather be an investor in them and and

6:39support the industry then that look it is you know non competition mm-hmm that's very interesting and how many deals has bank to the future done since inception and also what does the assets under management look like for bank to the future in the portfolio right now so we've done approximately a hundred and twenty deals and we facilitated investments to the tune of seven hundred

7:06and fifty million dollars in funding rounds listed on our platform some of the equity that we hold includes companies like coinbase ripple labs the company many people my own ex I'll be the token but actually the largest holder of rip of X RP is ripple apps the company circle BitFenix bitstamp kraken and many many other companies in the industry shapeshifter is sometimes

7:36tricky to remember all that but that's the total number of investments in terms of the value of all the equity that we hold I haven't actually done that stat would be a very useful one to get I think but it's you know we've got several unicorns in there that's amazing and traditional investors when they're looking at a deal they usually take to account the the power law rule where a

7:57lot of investments that they go into know only ten percent or so turn into unicorns this space has been extraordinary in the last ten years have you noticed that a large amount of the deals that have been through bank to the future are all successful and have you broken that power law so let's cyka doing some stats now so we've had 120 deals six of them have

8:23gone on to become multi billion-dollar unicorn and so that's about if I'm doing my math right that's about 5% but then there's been also ultra other ultra high return opportunities like we were investing in the theory of mining right from the beginning some of the investors they actually invested in the theory of mining product and they haven't actually logged back in

8:43their account and withdraw those eath and some of them you know they hold incredible wealth on the platform that they haven't even looked at so this is pretty interesting BitFenix was the hack recovery equity round that we did was one of the more profitable opportunities bitstamp was an exit they recently got acquired and giving people a you know a return there but at the

9:10same time we I would say that it is still you know meeting that 10% rule we probably had of the hundred and twenty twelve ultra successful deals and the others are sitting around in the middle seeing if they're going to reach their hockey stick growth yet and we've had several bankruptcies so it is all about diversification you know we started the platform because I just

9:30wanted to diversify widely I believed that this was a disruption of a multitrillion-dollar traditional financial industry and I didn't know which companies was going to invest in say I was one of the first customers for banks of the future because I just wanted to diversify widely and spread over lots of different opportunities yeah that's really interesting

9:50assignment and how does the revenue model work with Bank to the future is it like a traditional portfolio investment management where there's a two-and-twenty or how do you guys profit yes so when the issuer raises funding through our platform in most cases then we would get 5% of whatever we end up investing through the platform we don't charge any management fees or ongoing

10:16fees but we do charge the investor 5% of any returns that they make so we would hold everything through one of our SPV structures and we would do that for free but if the company goes on to get acquired or exits or pays any dividends then we would just we would with the investor on the cat table we pulled together all the other investors we were distributed and we were charged a 5% fee

10:41on any dividends or returns that are distributed so I mean that keeps us in line whereby the highest returns are made if the companies succeed as opposed to just being a broker and we're looking to support the companies and our portfolio companies because the highest returns are made for us when there's a distribution yeah that's great and can you talk a little bit about the

11:02secondary market that you have for trading equities yes I we recently launched into Bates secondary market so deals that have becoming household brands and maybe some of our investors want to you know realize or liquidate then we have an over-the-counter order book whereby new investors can maybe come in and get exposure to some of the companies that

11:25they might have missed and they can diversify into companies like blockchain calm or ripple labs or BitFenix or some of these other companies and our investors they can place a sell order as well it's not a deeply liquid market like a token market or anything like that it's you know it's more for long-term investing for building a portfolio but we allow people to place a

11:52spy and sell orders so that they can get earlier liquidity than a traditional venture capitalist might be waiting for the full exit mm-hmm interesting and you mentioned that was in beta is that what you're focusing on with Bank to the future in terms of expanding and growth right now or do you guys have other plans to release more things throughout 2019 yes the secondary market is where

12:15we're you know really focusing our attention right now we're just expanding the ways in which people can invest in the secondary market we've announced a couple of acquisitions recently so we just acquired coined the i/o which is a decentralized exchange that we're looking to integrate with many of the tools that we've built a bank to the future so in allowing people to invest

12:38in securities we've developed a lot of processes to make that you know globally compliant with different securities laws and now we're ready to take some of those processes take them out of the platform and allow people to self custody their own security tokens and trade those in a more decentralized way but obviously still having to comply with the security law requirements so

13:00really we're looking to disrupt ourselves through these acquisitions firstly by investing and other companies building the future and if they're if these ways we can give our investors choices if they want to do in a more centralized traditional way or if they want to actually do it through you know some of the tools that are available how this technology has progressed through

13:21the query for the security taker market that's great I'm really glad that your team is focused on that and it seems that a lot of people are saying the future is decentralized and trading on centralized exchanges is very popular right now but the trend seems to be once it they get it right to be able to hold custody of your own coins and funds and do that in a more

13:43decentralized manner so do you guys have a timeline for for that yes we're working on the exchange we launched our own token the banks of the future token in 2018 and in 2020 where you know we're currently working on the the regulatory model for the exchange but at the same time we've got live products in secondary markets so we you know we're we're eating out it won't be this year

14:10it'll most likely be next year but you know we're looking at iterating out and giving people choices of doing it in both ways my hope is that we end up in the decentralized way because that's both better for the customer being able to open their own assets and also the exchange in order having to take the responsibility of custodian those assets as well so my hope is that we can invent

14:32to lead fulfill the promise but if you look at you know the ICO market for example that was an idea in 2013 with master coin and the Omni protocol now but it wasn't until 2017 that it got deep liquidity so you could expect a similar thing you know people started looking at security tokens in 2018 I imagine there won't be till 2022 that you'll start to see some a deeper

14:56liquidity in those markets I definitely agree it may take some time now in your expansion plans are you guys looking for more strategic partners more investors or just more companies to start listing on Bank to the future so we're here to support the industry we're a mission led company and we believe that the future of Finance looks very different from the

15:19past and you know we're here to facilitate the growth we don't want to start putting loads and loads of deals on the platform if there is no what we consider to be a good investment then we'd rather have no deals and just focus on the secondary market so at the same time we want as many investors that are interested in investing in high-risk high-return and

15:43diversifying into this industry because we will want to push more and more investment into the industry but you know it's it's it's a question of you know we're principal leads we're looking to support the growth of the industry and we believe that more and more people we've now got 87,000 high net worth investors and so we can get funding around done pretty quickly and if people

16:07own our token they can stake it and they get priority access to deals and they can also get a discount of trading fees as well when you're using our secondary market and if investors are looking to learn more about bank to the future or get involved what's the best way to learn more I'm so splitting it into a couple of things you know where if you can go to bank to the Future comm and

16:29you can create an account see if you qualify to invest if you're involved in building something disruptive in the future of Finance you can apply very quickly send us your deck and there's an apply to button on the page we're also we go live every single week on our youtube channel at bank to the future comm giving investors updates on roadmap and me personally if you're more

16:49interested in you know Bitcoin politics and that type of stuff then I personally use my Twitter channel and my youtube channel Simon Dixon and to give regular updates on how I see the economy which is different to you know the bank to the Future which is purely for investors that's great well I'll leave those links in the description box below for the viewers and that's all the

17:10time that we have today Simon but I really appreciate you coming on and speaking about bank to the future let's follow up in the near future well thank you