Music courtesy of BlackIrisFilms.com

Andy Pickering – Host

Hey folks, welcome to episode one of our special three-part series that delves deep into the revolutionary world of Dacxi Chain, which, as you know, is an advanced crowdfunding solution led by a very dynamic CEO, Ian Lowe. Ian is overseeing the imminent launch of the Dacxi Chain. In this three-part series, we’re going to learn more detail about all things Dacxi Chain. In this, the first of these three special episodes, we’ll lay out the context of what Dacxi Chain is trying to achieve in this evolution of global equity crowdfunding, and we’ll learn about the genesis of Dacxi Chain, and Ian’s vision as CEO. Welcome to the show, Ian. 

Ian Lowe – Guest

Great to be with you, Andy. Excited to be talking about where we’re going. 

Andy Pickering – Host

I’m excited as well, Ian. So I think we better just dive right into it. Let’s hear about your personal journey, Ian. Please share a little bit about your background and what led you to join the Dacxi Chain team and take up the leadership position of CEO. 

Ian Lowe – Guest

I’ve spent the better part of 30 years founding, co-founding, running, and growing technology businesses. So principally, software businesses, but software businesses that operate in a range of different industries, including media and digital media. Finance, sustainability. And the common thread in all of those businesses is really first of all, as a growth enabler. So I naturally gravitate to high-growth business opportunities and take a very hands-on approach to being a catalyst for realizing that growth and getting businesses on a high-growth trajectory. But also, along the way, I’ve been lucky enough to innovate in different industries, both as a cofounder and also a founder and also being brought in as a professional leader or a CEO into existing businesses. So it’s really about technology. 

It’s about high growth. And for me, it’s very much about innovation. The opportunity to innovate is something that appeals to me greatly on a personal level. The opportunity to reimagine an industry. These are all things that I find really attractive in a professional context. 

Andy Pickering – Host

Thank you, Ian. Let’s set some context in terms of what are the main challenges that exist within the current equity crowdfunding framework? And how do these limit its potential? 

Ian Lowe – Guest

I’d be happy to talk about that. It may not surprise you that we’ve spent a really significant amount of time going into that and really understanding it. So, look, there are a couple of headline constraints for the equity crowdfunding industry, if you like, today. And so when I talk about the industry, I’m talking about equity crowdfunding globally. And I should also, just for the sake of context, make it clear that we’re talking about equity crowdfunding. So crowdfunding does exist in other flavors. There’s community crowdfunding and debt funding and things of this nature that still tap into the resources of a crowd. But what we’re talking about here specifically is probably the most prominent of all of those, which is equity crowdfunding. 

That is many investors investing typically small amounts per investor to take equity or shares in a privately held growth business. So a business looking for growth, it needs capital to realize that growth, and a crowd of investors who will invest in return for equity or shares in that business to empower it to grow. 

So if we look at the global equity crowdfunding industry today, the first thing that I think is really important to note is that depending on the numbers that you reference, but they all generally agree that today is about a 1 to 2,000,000,000 US dollar industry per annum. Okay? Now that sounds like a big number. 

But when we compare it to the amount of growth capital being invested by VCs or venture capitalists, it’s much less capital than what is being invested by VCs. So in other words, the seat that equity crowdfunding has at the table of, you know, funding the innovation economy, which is ultimately what this capital is doing, is a very insignificant one, and it plays in the broader scheme of things a reasonably insignificant role. Now clearly, the businesses that raise capital successfully through equity crowdfunding would take a different view, and that really speaks to the potential of equity crowdfunding. But at the moment, it’s less than 1% of the innovation economy. Now why is that? 

You know, 10 years ago, I think there were a lot of businesses that were created, some of which still exist today. Equity crowdfunding platforms that said, this is the new frontier of the innovation economy. This is the new path to capital for growth companies. But as we sit here today, whilst growing from nothing and continuing to grow incrementally, its participation in the overall scheme of things is really modest. And so there are really a host of underlying issues that speak to why. But there are two headline issues. The two headline issues are the following. The first is that equity crowdfunding today is almost by definition a local market proposition. 

So what we mean by that is you’ve got a platform that’s gone out and acquired a license to operate, because Dacxi Chain, we can only operate in a licensed context, and in almost all regulated markets, you must have a license to operate an equity crowdfunding platform. So they go to the trouble of getting that license, and then they set about doing two things in parallel. The first is to go and speak to lots of early-stage companies to understand how they can service their requirements around access to growth capital. Companies that need money, they’re constantly out there talking to those companies trying to attract them to their platform, to build a catalog of investment opportunities. And then on the other side of that same platform, they’re looking for investors. This is the crowd. 

They’re looking for individual investors to come in, register on the platform, open an account, and start to participate by investing in some of the catalog of opportunities that they’re bringing to that crowd. So that ecosystem or marketplace is a silo that operates almost exclusively within a single market. And if you think about it, that actually makes very good sense. I mean, how is an equity crowdfunding platform that sits in a particular country, logically going to convince companies that don’t exist in that country or their executive team is not based in that country, that they need to use a platform in a different country of their own to actually go and raise capital? It’s very problematic. And, of course, that’s why it just doesn’t happen. 

And then similarly, when it comes to building the crowd, building an international crowd is theoretically possible, but the reality is that it requires significant capital, significant effort, and real marketing skill to successfully build a crowd of active investors. And so inevitably, what that means is that the local equity crowdfunding platform is also sourcing its crowd locally. Because doing that across multiple markets being based in a different market is, again, highly problematic. So what you end up with if we sort of draw the lines of the equity crowdfunding industry is a lot of disconnected independently run local crowdfunding platforms. Now at face value, that may not sound like a problem. But it’s actually a really big problem. And in many respects, we believe it’s the most fundamental problem. 

And it’s the reason why equity crowdfunding today is less than 1% of the innovation economy, and that is the following. If I wanna invest in a business that I think has good prospects, I will do it based on a basic understanding or better. In other words, maybe not just a basic understanding, but some previous experience or knowledge that I bring, I will do it on the basis of that knowledge. In other words, for a business that might be selling some highly specialized medical device, the average investor is going to struggle to get to a point where they feel like they truly understand the problem, the solution, and the opportunity that solution creates. 

And so what we need on the investor side is, we need real scale to get to a point where more and more individual investors have enough confidence that they understand the investment opportunity because they understand the underlying business to then participate in the crowdfunding. And so where you’ve got a local construct with local issuers or local companies, growth companies, only raising money from local investors, that scale is very difficult to achieve. So scale on the crowd side of the equation is a fundamental barrier to equity crowdfunding realizing its true potential. 

So that’s on that side of things. But then, of course, there’s also this chicken-and-egg dynamic whereby the richer the catalog of investment opportunities, the more attractive it becomes to the investor. 

So on the supply side of that same equity crowdfunding platform, you’ve got deals that are only sourced locally, which means there’s only a certain number of those that are viable for equity crowdfunding. And so of course, that constraint means that it’s much harder to get the crowd to participate and to recruit them in the first place. So you’ve got this chicken and egg dynamic all of which wrapped up means that there’s a lack of scale in equity crowdfunding today. But if that can be resolved, if we can offer equity crowdfunding at genuine scale, the opportunity to become truly global, we think that completely reimagines what’s possible for equity crowdfunding. So that’s a very long-winded point 1 to a 2-point answer to your question. 

The second constraint is really around liquidity for the investor. So at the moment, if I want to invest in a privately held company, the one thing that I understand when I invest is that I don’t know when I’m actually going to get a return on that investment. I just have no idea. I don’t know what the time frame is. I don’t know what the harvest is going to look like. Now some professional investors would suggest that is the romance of investing. But, of course, for the average everyday investor, that creates friction in the process, and it erodes their confidence. Because they can’t see a clear path to a harvest. And so what we’ve always believed is in the innovation of blockchain which is borderless and allows any kind of tokenized asset to be traded on secondary markets freely and easily. Blockchain completely removes that constraint. 

So we get to a point where we’re saying, the two biggest problems are lack of scale because it’s a local siloed proposition. And secondly, a lack of liquidity for the individual investor. The solutions to this are – let’s make equity crowdfunding global so it has the scale it needs both on the investor side and on the supply side. And secondly, let’s tokenize that equity so that the investors that hold that equity have a clearer path to a harvest at a time frame of their own choosing. And so that puts them in a position of far greater control. So, look, that’s a very long answer, but, hopefully, that speaks to the heart of the constraints that the industry faces today. 

Andy Pickering – Host

Yes indeed. It does, thank you, Ian. So if that’s the case then, we’ve heard your views on the main challenges that are holding back the current existing equity crowdfunding model and a little bit of detail on how the Dacxi Chain will start to address that. I said at the beginning, Ian, that we’d also learn about the genesis of the Dacxi Chain. So in this first launch episode, we should include a little bit from your perspective on the origin story of Dacxi Chain from its genesis to where it is today. Please tell us the story. 

Ian Lowe – Guest

About six years ago, the world’s first tokenization conference was held in New York. And that conference really was the creation of the idea that became the vision of Dacxi Chain. This idea that tokenization will over a period of time change the way that we think about acquiring, holding, and disposing of assets. And tokenization is, like the Internet was just before it became ubiquitous, we’re very much at that same point in time as it relates to the tokenization of assets. And the tokenization of equity and privately held businesses would revolutionize the opportunity for investors to participate in the capital that must be raised by those companies. 

So it was six years ago that the seed was planted. And from that very first insight, there’s been a number of iterations to the development of the Dacxi Chain vision and mission, and more recently, the business model itself. And I think there was also an appreciation along the way that it was too early 6 or 5 years ago or even 4 years ago in the life cycle of tokenization. 

It was too early to feel confident that we could go to market with a solution and be that far ahead of the adoption curve. At some point, you really do need to synchronize the plans you have for your own growth with a broader understanding and acceptance of the underlying blockchain technology generally. And so we’re now at that point where, you know, a lot of people hold crypto. 

A lot of people understand that blockchain is relevant to asset classes way beyond just crypto and that digital finance, digital is the path that we are on, and nothing that Dacxi Chain does can change that. But our opportunity is to participate by leveraging that change. And so the time frame that we set ourselves really was to say, look, 2023 looks like it’s going to be the right time for us to launch this solution. 

And what that gave us was in some respects, the luxury of time to really do our homework on the state of the industry, talk to some of the established equity crowdfunding players to understand their challenges and opportunities, take a really close look at how the technology on those platforms operates, really delve into the regulatory frameworks in different parts of the world because there are common elements across all of the regulated markets when it comes to equity crowdfunding, but there are also unique elements in each market. So understanding that landscape was really important. And then, of course, going out and building a really detailed understanding of the requirements that we needed to satisfy building the technology, engaging with foundation partners, and getting in a position to launch. 

So that’s a quick version of what has been a long history with plenty of twists and turns. But what I can say is we sit here today with a level of understanding about our solution, the problem it solves, the technology that underpins that solution, and what the future of equity crowdfunding really needs to look like, a level of understanding that we just simply didn’t have even two years ago. So that puts us in a good position and gives us a lot more confidence. 

Andy Pickering – Host

Got it. Thank you, Ian, that was a great summary of the Dacxi Chain journey. So as we finish off this episode, what can you tell us in terms of dates that people should be aware of, just give us a sense of some of the next steps in the arrival and launch of the Dacxi Chain. 

Ian Lowe – Guest

We’ve got some enormously exciting milestones coming up in the very near future. So we’ve already confirmed June 28, which is the launch event. We’re also going to announce as part of that the time frame or the specific date on which we’ll announce the first deal. So the first deal has been earmarked, and all of the detail around that has been worked through. So we’ll be in a position at launch to announce the date on which we will tell everybody about the first deal. Shortly after that, the first deal will open. It will close in a handful of weeks later. And at that point, you know, we really will be in a very exciting position because we have every expectation that it will be a very successful first deal. 

And really at that point, what we’ve achieved is we’ve validated the technology. We validated it in partnership with market-leading, fully licensed equity crowdfunding platforms that have a run rate and an excellent reputation. The investment funds will have flowed between multiple parties through the Dacxi Pipes. And the issuer will have received the growth capital they’re looking for at the end of that first deal. And just as importantly, the investors that participate will have received their equity. So all of that’s really important and, of course, wrapped up in that is we will have clear unambiguous evidence of the Dacxi Coin use case which is really as a transaction currency in this Dacxi Chain ecosystem. And so at that point, really, we turn to two critical bodies of work. 

The first is expanding the network with more and more equity crowdfunding partners, and we’re going to do that really aggressively. So there’s a big body of work there. I’ll be directly involved in that myself and I’m looking forward to that. And then the second stream is really about iterating the technology to continue to provide more and more features to individual investors and the partners that use that Dacxi Chain technology. 

Andy Pickering – Host

Fantastic! Thank you, Ian. Well, folks, this was just the first of 3 special episodes of the Unleashed with the Dacxi Chain podcast that we’re producing and publishing in support of the launch of the Dacxi Chain, which as you’ve heard from Ian is coming up on June 28. So that’s episode 1. Today, we’ve talked about the problems that have been holding back the real potential of the global equity crowdfunding movement. We’ve learned from Ian all about the Dacxi Chain genesis, the origin story. We’ve heard about his vision as the CEO. For our next episode, we’ll learn more about the power of the Dacxi Chain itself, the network effect that is going to drive the Dacxi Chain forward. That is all coming up in episode 2. See you then.