Dacxi Team

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.

Music courtesy of BlackIrisFilms.com

Andy Pickering – Host

Hi folks, it is Andy here. Welcome to Unleashed with the Dacxi Chain, a Dacxi podcast where we learn all about the Dacxi Chain and the incredible opportunities it unlocks. Let’s get on with the show.

My guest today is Jori Armbruster. Jori is the co-founder at EthicHub, which aims to disrupt the current financial lending system by creating a fair global crowd-lending system using regenerative finance. Very interesting. Welcome to the show, Jori. 

Jori Armbruster – Guest

Yeah, thank you very much for inviting me. 

Andy Pickering – Host

Pleasure to have you here, Jori, let’s do what we do at the beginning of the show. Could you please introduce yourself? Love to just hear a little bit about who you are and what you’ve been doing in the lead-up to co-founding Ethic Hub. 

Jori Armbruster – Guest

Yeah. So I am half Mexican, half Spanish. Before funding EthicHub, I was running a wholesaler in Spain, and previous to that, I was managing my family’s coffee farm in Mexico. So I know about coffee, I know about the different cultures and situations of these two worlds, and so on. When I decided to start something in 2016, I did an innovation degree, I learned about blockchain technology and I said this will change everything starting with the financial system. So how can I do something with this? And EthicHub is basically connecting Europe with Latin America in the coffee production vertical with small farmers leveraging crypto. And we were one of the very first to do something like that, to use blockchain technology to connect to the real world with a focus on impact. 

Andy Pickering – Host

Yeah, that’s fascinating Jori. So EthicHub is a Regenerative Finance project using blockchain technology to create a more sustainable and equitable economic system. And so tell us a little bit more about how this works. So the way I understand it, you guys at EthicHub, you aim to do this by providing a platform for farmers to sell their produce directly to consumers. Tell us a little bit about how this works and how you’re tying in the wonderful world of web3 and blockchain. 

Jori Armbruster – Guest

Yeah, so on one side you have the decentralized protocol which will become a Dao and is based on the Ethix token run by smart contracts and the lending protocol. 

And this is about both providing working capital to the farmers, but also and most importantly about providing them with collateral so you as an investor can decide which role you prefer to have. The low risk, not that low return option is 8%, for now you lend stable coins or you have the higher risk position which is you buy Ethix, which is our token you stake on behalf of the farmers so they have collateral, so other people lend them money. 

And the coffee side of it is a bit like a byproduct of the equity company behind EthicHub. The business model is to buy and sell coffee. So when we act as an auditor looking for new loan originators, we look for a cooperative of coffee producers which we are interested in selling their coffee so we finance the production, transformation and exportation of that coffee. 

But the idea is that in the lending protocol there will be other auditors with other kinds of products or verticals. We are just starting with Heifer International, which is a huge NGO working in ten countries with hundreds of cooperatives. And some of those cooperatives are not in the coffee vertical, they are in Cacao or whatever. And we are also working on a pilot with another project that will act as an auditor for the solar panel for smallholder farmers vertical. Because there are 1.2 billion smallholder farmers excluded from the traditional financial system, which is almost a quarter of the world population. But you also have a very similar number of people excluded from electricity, because they are far from the grids, the traditional electric grid. So the only way to give them electricity is with solar panels. 

Andy Pickering – Host

Yeah, got it. Thank you, Jori. And so you said you’re working with coffee farmers initially and then that will expand out to other products. Tell us, which countries that the coffee farmers are located in at the moment? 

Jori Armbruster – Guest

So for now we started in Mexico, because for us we are Mexicans. And we also started doing a couple of pilots two years ago in Honduras and Brazil and last year we also started in Colombia, Peru, Equator. For now that’s what we are doing. But most of it still is in Mexico. 

Andy Pickering – Host

Got it. For people who are wanting to look at EthicHub and support your community of farmers and even potentially get a return on their investment by doing so. Can anyone in the world support the farmers through EthicHub? Is it restricted to any countries? 

Jori Armbruster – Guest

It is restricted, at least for retail investors. We don’t accept US investors and Chinese, I think, because of their regulations and it’s super expensive to ask for a regulation over there and they are very strict. But wherever else in the world you can lend and even in the States you can stake, which means buy Ethix and stake on behalf of the farmers because that’s something that still doesn’t have any regulation at all. 

Andy Pickering – Host

And this is really an example of what people call impact investing. Right Jori, so I wonder how you define impact investing? 

Jori Armbruster – Guest

Yeah, I think we have to all move farther than sustainability and think about regeneration and how you measure that is very complicated. But I think the easy way of doing so is with the Sustainable Development Goals which is like a way to have a common language of what are the biggest problems of the world that need to be solved. And if you have a business model that is not like the traditional social responsibility thing, okay, you are a petrol company but then you give some grants so you balance your impact or something like that. But being an impactful company, a regenerative project means your business model has to create positive externalities in some of these Sustainable Development Goals as part of the business model. Not like to balance the bad impact you did before. And we are contributing to eight Sustainable Development Goals one way or another. Most importantly for sure, it reduces the inequalities. 

Andy Pickering – Host

Yeah, absolutely. And it’s so important. Can you talk then a little bit about what kind of impact EthicHub is having on some of these farmers? Like what are they seeing out of the support that they’re getting from people investing in what they’re doing via EthicHub? 

Jori Armbruster – Guest

So this is a bit of the why behind EthicHub, right? Because people don’t know that these more than 1 billion people’s only access to capital is cash loans at 100% interest rates and things like that. So for sure, if you provide them with an alternative source of funding it’s not only that they pay less interest but also they can really ask for a loan because now it’s affordable to invest and improve their productivity. We focus from the beginning in this vertical because here you know that the money is not going to buy a TV, the money is going to invest in their productivity so they can get out of the poverty cycle. Which is precisely that because if you don’t have money, you cannot improve your productivity, you then don’t increase your income so you cannot run out of this busy circle. 

Andy Pickering – Host

Yeah, that’s exactly right. Very well said. And look, we talked about impact investing, which is really just an investment strategy that seeks to generate a return but while also creating a positive social impact or environmental impact. And I think EthicHub is definitely an example of impact investing. But we talked also I talked about in the beginning about regenerative finance. So I wonder if we can just explain that a little bit more because I think that is kind of tied into the environment looking after the environment as well as the social capital side of things. Right, Jori? 

Jori Armbruster – Guest

Yeah, for sure. So on one side we are talking about this moving forward not only from sustainability but towards regeneration which means you are not balancing your impacts but really taking out, for example, carbon from the air. It’s not that you balance your emissions. No, and we are too late for that. We need to take carbon from there. The other part of the world is regenerative finance. The finance part of it is about rethinking financing in order to be regenerative leveraging web3 tools like smart contracts, tokenomics and distributed ledgers. So I think it’s basically projects that are aligned with the Sustainable Development Goals, which are providing regenerative practices, incentivizing regenerative practices in between their business models and leveraging on crypto in order to be more scalable and align incentives. 

Andy Pickering – Host

Yeah, well, that’s exactly right. And that is exactly what we here at the Dacxi Chain are working on, Jori. We’re trying to create a new global regulated ecosystem where investors all around the world have access to interesting opportunities in far-flung parts of the world such as Mexico and Spain and the areas where you’re talking about. And if we can connect those investors with different innovators around the world and then link some of those investment opportunities to tokenization, create secondary markets where that equity can be traded, then eventually that means that these investors and innovators can meet each other in a marketplace that is regulated. And that’s the future that we’re all working towards, thanks to Web3 blockchain tokenization, right? 

Jori Armbruster – Guest

Yeah, for sure. I think the regulated part of it is very tough because we are facing, when we are talking about innovation, it takes years for regulators to understand that innovation and create the framework for that kind of new financial tools, for example. Right, so I think we are starting to see something in Europe which is where I’m more aware of the laws we have now, which is a good first step forward, but still is about cryptos, for example, not NFT nor DeFi tools. So it will still take years to have a framework for that to be regulated. 

Andy Pickering – Host

All right, well, as we start to finish off, just tell us what you’re working on at the moment with EthicHub. What is coming next? What are you working on? 

Jori Armbruster – Guest

So one very important thing that maybe your community can participate in is we not only need the people to lend to the farmers and the people who provide collateral by staking in Ethix, but now we are doing a crowdfunding equity round for us as a project. So this is in Adventurees and I can share the link with you so you can put it in the podcast notes. And this is the minimum ticket, 1500 euro. And you can do it from wherever in the world too. And the other part we are working on is a product, for sure, tens of parts of the product that have to be still improved. We are moving towards launching the Dao for the lending protocol for the end of the year, beginning of next year. 

And like a bit of side products of EthicHub, we are working on how to tokenize the carbon credits of our farmers because they are not only excluded from the traditional financial system, traditional certification, organic certification, for example, but also from carbon credits markets because they are too small to do the proper due diligence on how much carbon is there. But we are very creative as we have been with the financing part of it, and I think we can find solutions for that. And we are also working on these pilots with the solar panels etc.

Andy Pickering – Host

Awesome. Well, thank you so much for sharing some of your story with us. I’ll certainly put a link in the show notes to that crowdfunding round that you talked about. There’s also a link in the show notes to EthicHub. But listeners, if you want to check it out now, it is just Ethichub.com. Jori, thank you so much for coming on the show. All the best and bye for now. 

Jori Armbruster – Guest

Thank you very much to you and thank you for inviting me.

Andy Pickering – Host

That was Jori from EthicHub. And I thought this episode is just a good example of the promise and potential of where the Dacxi Chain is heading. We’re creating a new, fully regulated global ecosystem. The idea, of course, is that investors all around the world will have access to new innovation investment opportunities. And for the founders of those innovative companies and ideas, they will need funding for those ideas, and they will be able to access that global investor pool. All done in a safe, sophisticated, mature, and regulated way. Of course, it’s done at scale globally via tokenization of those equity shares so people can invest in whatever amount they wish in line with the regulations in their country. 

And so, of course, the Dacxi Chain is going to solve the liquidity issue, give people the ability to trade in and out of those equity positions via tokenization at the local level. Through a network of locally owned crowdfunding platforms, Dacxi will launch a specialist secondary market for trading. I think EthicHub is one example of a platform that could be connected to the Dacxi Chain by phase two, phase three, phase four of the Dacxi Chain rollout in the years ahead. So, yeah, it’s exciting times. And of course, don’t forget that later this quarter, the Dacxi Chain will announce phase one and its first launch partners. So we have all that to look forward to in the months ahead. 

So do make sure you keep listening to the podcast and make sure you’re subscribed, but that is today’s episode. Thanks, team. Thanks for listening and bye for now.

www.ethichub.com/es/

https://www.adventurees.com/ethichub-1

Music courtesy of BlackIrisFilms.com

Andy Pickering – Host

Welcome to Unleashed with the Dacxi Chain – the podcast that features Experts from within Dacxi and from across the industry who are here to share their insights on developments shaping the global crowdfunding economy…

Andy Pickering – Host

My guest today is Kimmo Rytkönen. Kimmo is the co-founder and CEO of Income, which is a next-generation peer-to-peer marketplace offering a safer and more transparent way to invest in loans, to earn a passive income. So we’ll learn today exactly what that means. Welcome to the show, Kimmo. 

Kimmo Rytkönen – Guest

Hey, Andy. Thanks. It’s a pleasure to be here. 

Andy Pickering – Host

Pleasure to have you here, Kimmo. Let’s do what we do at the beginning of the show. Love to hear a little bit about your background and what you’ve been doing in the lead-up to co-founding Income. 

Kimmo Rytkönen – Guest

Okay, cool. I’m Kimmo. Basically, my background is in fintech, more so in consumer lending, SME lending. So that’s what I’ve done for most of my adult career. And then through different turns and events, I ended up on this side of the ecosystem, if you may, to provide funding to those lending companies through crowdfunding or peer to peer as what Income is doing. Yeah, and that’s what we do today. We’ve been doing it for two years. It’s available on Getincome.com. And what we really do is we don’t issue loans ourselves, but we cooperate with different lending companies around the world to provide them funding. And on the other side then, to allow the crowdfunding investors to invest in loans and earn passive income, as you mentioned in the intro. 

Andy Pickering – Host

Awesome. So let’s learn a bit about Income then. The idea is to provide people with an easy way to invest their money in assets such as consumer loans or real estate portfolios, anything like that. People that come through that funnel to you guys. So talk a little bit about, I guess, the vision for Income and where are you guys based and how long since you’ve founded the company? 

Kimmo Rytkönen – Guest

Kimmo yeah, so I’m originally from Finland, but I’ve lived in Thailand, Estonia already for about 15 years, and that’s where we’re based as well. Estonia has a vibrant startup community. So basically we decided to set up the company here. And where the idea came from was originally when we started during COVID times to develop the idea with my co-founder, we thought that the current peer to peer marketplaces were a little bit like fire and forget from an investor perspective, meaning that there was very little security for the investors. There had been a lot of frauds in the space as well. So we thought that, okay, we can do this better. And that’s where the idea came from.

Let’s take some of those things we learned during our careers in consumer lending. So we raised funding from institutions. They usually took the loan book as collateral to the investment. And that was something that was lacking in the peer to peer or crowdfunding space. So, in a similar fashion, if you’ve done real estate crowdfunding, the project is usually the collateral. Right? So you invest in a development project or a rental property, and you know that your money is backed, your investment is backed by something real, a real asset, as such. And loans are an asset just as well as a real estate project, meaning that they have a cash value. So if the cash value of a house is the money, you can sell it for, the cash value of a loan is the money it produces. 

So the cash flow that’s coming in from the loans, this is something we can use as collateral, as a security to, let’s say, keep the investors safe to improve their situation versus what was before. We launched in February 2021, and then essentially since then, we’ve been scaling up and growing the business. And today we have about 4000 active investors and around 10.5 million already on the platform invested. Cumulatively, maybe 40 million has passed through the platform already. But the outstanding investment is what’s my KPI that I’m keeping my eye on. 

Andy Pickering – Host

I can see that you guys did indeed start in COVID Times. I believe you were nominated in several categories for the Estonian Startup Awards in 2021. And I understand that you also, in the early days, as you were getting going, you completed a successful crowdfunding around yourself?

Kimmo Rytkönen – Guest

Yeah, we used Seed blink, actually. So during the round, we had a lead investor from Singapore who took most of the round, and then we cooperated, actually with two different platforms. One was Seedrs, the other one was Seed Blink, both successful in their own right. With Seedrs, we actually decided then not to go forward with it. So there was such a big gap between actually getting all the structures ready from their side that a lot of things had passed. Right. So we were closing that at the start of 2022. Then the war in Ukraine broke out, and there was a big gap between actually closing the round in terms of Seedrs and then actually being able to download the funds. And a lot of the fundamentals at that time had already changed. 

There was a downturn in the economy and all those things. So we thought, okay, let’s rather not download the money because our expectations on the growth of the business had changed. And then we discussed it with Seedrs and we thought, okay, let’s do this. This is the right thing to do for the investors, but seed blink, we downloaded and we did complete the round on both platforms. So all in all, a good experience of equity crowdfunding also. 

Andy Pickering – Host

Yeah, well, that was going to be my next question. So it sounds like a little bit of a convoluted process as you dealt with a changing macro environment. But all in all, that was a positive experience for you, going through the crowdfunding route? 

Kimmo Rytkönen – Guest

Yeah, absolutely. I mean, both platforms were actually a pleasure to work with as such. All in all, a very good experience. We learned a lot and I would definitely say that crowdfunding is a very good way to raise funding for startups. 

Andy Pickering – Host

Yeah, fantastic. And one of the things that people really did start to learn about during the pandemic, a lot of people had more time on their hands, as I’m sure you’ll remember. And as well as watching lots of Netflix, a lot of people started turning to the various different investment options and started exploring the world of fintech, certainly the world of crowdfunding cryptocurrencies, equity stock portfolios. Lots of different investment options are now available. And of course, one of the other, I suppose, knock on effects of the money printing that all the big central banks engaged in during their response to the Pandemic – It’s led to this situation with inflation, which is increasing rapidly in many parts of the world. 

And as a response to that, of course, how can people respond to inflation, how can they protect their money? One of the best ways really is of course for them to invest their money. So I suppose what I’m saying, Kimmo, is investing is well, it’s a hot topic again, right, I’m sure you’ll agree. Why is it important, do you think, for people to learn about investing? 

Kimmo Rytkönen – Guest

Sure, yeah. I think from my own part personally, but also from the people I know. And what we discussed at the end of 2021 was kind of when the music was at its loudest. And you’re absolutely right, I think people had a lot of spare time on their hands and a lot of extra cash as well to invest. And I think that in itself drew a small bubble, maybe even in many places. So we saw good growth, then cryptocurrencies saw very good growth, stocks as well. And there were a lot of projects on the market that even in equity crowdfunding that raised funding, but necessarily were just based on an idea. They didn’t even have a product yet, so money was being spilled all around. And I think VCs also saw that they had a slight hangover this year. 

Now what we hear is that they’re dusting their checkbooks again and looking at what other real investment opportunities that they could actually have in our case. Right? So what we offer is we offer a fixed income product as such. So when you invest in loans, it has a certain maturity. Twelve months equal installments. So if you put €1000 in, you get 112 back each month, plus you get an agreed interest from the loan company. We had capped these interest rates at 12%. Back in the day, this was when we still had the zero interest environment. Now today we’ve actually increased it. So now we’re capped at 15. So basically meaning that most of the loan companies that we cooperate with are happy to offer the 15% to our investors just to secure the fact that they have funding. 

So this was partly driven by inflation, partly driven by yields that have gone up investments. It doesn’t matter if you look at bond investments, if you look at even set-term deposits, those have all gone up while assets are then down. Like you mentioned, cryptocurrencies. So these are still mostly the yield comes from, well, staking, but mostly from increasing value, I’d say for a lot of people. So they have been a little bit depressed. So maybe fixed-income products have raised their head a little bit during the asset downturn. But yeah, I think it’s super important that people have a diversified portfolio. They know what and they try to protect their money because otherwise, inflation hits it all. 

Andy Pickering – Host

Yes, that is exactly right. Kimmo, just describe again how Income works and what you mean when you say that people can invest in the loans. So in my mind, if I’m explaining it really simply, you are providing a platform. So Income is the platform. So if someone wants to invest, they come along, they sign up to your platform, create an account, and then they can look at the different, what you call loans that they want to invest in. And on the other side of that is what can be a range of different entities, but it could be startup businesses, people like that are looking for new funding, capital injections. Right? 

Kimmo Rytkönen – Guest

In our cases, essentially, we don’t have equity investments at all. So we do purely the loans at this point. So yeah, exactly what you said. How it works is you register on the platform. You come to getincome.com you register, you go through our Electronic KYC. Once your account is set up, you deposit a little bit of money, or a lot of money depending on your preference. And then you can take a look at the investment options. Right? So the investment options in our case are different loan companies. So we have Indonesian, Mexican, Bulgarian, Finnish. There’s several different entities. These are all separate loan companies. 

And what we do with these loan companies before we onboard them or as we call it, investment opportunities when we open on board them, we do a due diligence on these companies. So we look at the quality of their loans, we look at the quality of their financial data and then we decide if they’re eligible to be actually listed on the platform. And once we say okay, let’s go, you guys look to be solid, then we integrate with their back end systems and then they can just list individual loans on our platform. So let’s say you have a Finnish entity giving SME loans and they give out a loan in Finland to a small company worth €5000, for example, they click a button on their loan management system. That loan appears in our system and now it’s available for investment. 

And then our investors on income, they will be able to buy a part of that loan. So you can think of it sort of as a small share or a percentage of the loan that they buy. So let’s say the €5000, they can buy the whole loan or they can just buy €500 worth it or €10 worth it or €100 worth of that loan. And then they get the economic rights related to that piece they bought and an agreed interest that the loan company is willing to pay them. And then as the loan gets paid back, they get part of the capital pack and they get also part of the or they get the interest that has been agreed for the invested capital. 

And then most investors put it on an auto invest, meaning they don’t need to log in and choose the individual loans. They can just say my portfolio is €5000, I want to invest it in these loan companies. So they click the ones that they want to invest in and they say that I want to put €100 per loan. I don’t want to be exposed to just one loan with a full 5000 and I want to have 50 loans or 500 loans or whatever. And then the system itself keeps a track of it and keeps investing in the loans based on the parameters you as an investor have given. So your money rotates and earns interest. And then if you wish to stop investing, you just stop your auto invest. 

And as the loan gets paid back, the money gets returned to your account and then you just withdraw it normally onto your bank account in a similar fashion as you would do a deposit. 

Andy Pickering – Host

Got it. Thank you. Kimmo and can you explain who can use Income? Are there any restrictions on which people from which jurisdiction are able to use income? And maybe also talk about is Income regulated? 

Kimmo Rytkönen – Guest

We decided early on that we’ll only take investors to start with from the European Economic Area. And essentially we’ll take a look if we’ll add Asia, so forth, other regions. But today we’re doing a European Economic Area mainly because of the Kyc Aml. It’s much easier to deal with the banks in that sense. 

Andy Pickering – Host

Yeah, that makes sense. Kimmo thank you for that. If we zoom out a bit, I’d like to just get your thoughts on how you see, I suppose, the global crowdfunding industry at the moment. It seems to us here at the Daxci Chain that there are lots of interesting innovations happening all around the world, but we’re missing the pieces that can bring it together to really bring everyone together. So we have a truly global crowdfunding ecosystem where different participants can get access to those early stage investment opportunities and of course, innovators can get access to the capital that they need to take their businesses to the next step. But yeah, what do you think is going on with crowdfunding at the moment? 

Kimmo Rytkönen – Guest

Well, I think I’ll continue from the regulation part you asked before. I think regulation is one of those things that we see. I mean, it’s in crypto, it’s everywhere, and it’s sort of tied perhaps to the anti money laundering KYC things, which anybody dealing with banks these days knows that they ask a lot of questions. I think regulation is kind of somewhat targeted at that, but also ensuring that there are only good players or honest players on the market. How well that has been implemented so far is a question mark, but shortly on incomes regulation status, we’re not regulated today because we are not an equity crowdfunding platform. We’re also not a real estate crowdfunding platform which were the main targets of the EU regulation. 

And at the moment in Estonia, you don’t have a regulation for anyone doing loans such as us, I mean, loan, crowdfunding investments. The legislation is being penned by the local legislator, but it hasn’t arrived yet. We’ve seen some early drafts. Essentially it all turns around, the investor security, stability of the platform, and so forth. I don’t expect any problems there. But yeah, the status of income today is we’re not yet regulated. Looking forward to seeing the final draft of the legislation before I can say how much it will affect our business, if at all. So that’s definitely one of the things that I see overall coming more and more, is regulation. We know some similar platforms that are in different jurisdictions. 

They have gone the route of offering securities as such, meaning that the investment opportunities need to have a prospectus and basically listed with the local regulator. So that’s kind of the heavy end of crowdfunding, if we talk about equity crowdfunding, then is it viable for many of these early stage projects, for example, to do a prospectus similar to IPO? And on that scale, I think crowdfunding fills a space. If we talk about equity somewhere around, what I say maybe between VC investments or similar to VC investment. Whereas if you go the security route, if you go to the prospectus route, then you’re turning more into this IPO route, which is probably not the space crowdfunding is at its best, so it should find some sort of a balance in between. 

So that’s definitely one thing. And then if we talk about how to get the companies to be able to operate in sort of like more globally, then we probably boil down to money movement, how to ensure the ownership of these investments. So perhaps some sort of tokenization or some sort of, I don’t know if it’s Bitcoin or whatever, but something that enables you to fast and cheap transfer money without too much hassle to those projects. But I think we’re still a long way from a really global crowdfunding ecosystem as such because a lot of it is based on local regulations and then country specific regulations. 

Andy Pickering – Host

Well, that is exactly right, Kimmo. You’ve really identified the problem there. And that is really what we here at the Daxci Chain are working on. We’re hoping to provide some solutions to that, you said it yourself, through tokenization and working with various locally owned crowdfunding platforms in different jurisdictions around the world. So those local platforms would do their own due diligence on the investment opportunities. And then eventually the Dacxi Chain would build out this tokenized global crowdfunding ecosystem and create a secondary market so that investors are able to access the liquidity in their Tokenized investments. So it’s a massive project and it’s a big project, but can you see the ambition and the potential of something like that? 

Kimmo Rytkönen – Guest

I think this secondary market is something where a tokenized environment or tokenized assets could really work much better. Individual platforms, tokenizing, having their own token, each of them, you’ll end up with the same problem. So where’s the liquidity? Where’s the aftermarket? We thought, when we started, we thought about, okay, should we do something in a blockchain environment? But then we thought also that okay, actually what we’ve built in the background is a ledger which tracks all the interest payments. It tracks all the other things, capital payments, how much interest do you need to pay? So we built that. 

But we thought that should we go to Blockchain, we thought that, well, a centralized ledger as such run by individual companies such as ours, it doesn’t give us too much benefit because the real benefit would come if a lot of the companies would adopt such a ledger and then really these assets could be in one place. In loans cases, same thing. There’s a huge aftermarket if you would find a way to tokenize individual loans and you could push it to the loan companies and then there’s a lot of players, institutional players, buying loans, non performing loans, right? So even though they have an aftermarket for institutional players, everybody’s doing it a little bit batch based, portfolio based and individually. 

So in a similar fashion, it would be great if all of these assets would be if we talk about loans or equity, if they all would be in one blockchain or one ecosystem, and then the liquidity would come, investors would just come, they could buy, sell, and they would have the economic rights to whatever asset they’re holding. And definitely but as you said, it’s a massive project, and it would require a lot of the market players to adopt. 

Andy Pickering – Host

Yes indeed. We’re working on it, Kimmo, we’re working on it. Well, as we start to finish off it would be good to understand just what is the average rate of return, if there is such a thing that investors can potentially earn on income? 

Kimmo Rytkönen – Guest

I think historically we are around 12% per annum, but we just quite recently increased it to 15%. So the maximum amount that the loan companies can actually offer to the investors. So I would assume it will be going up a little bit. So I would say it’s probably today, depending on your preferences, 13%, 14% is probably realistic, yes. And that puts it a bit higher than some bonds, for example, from similar companies and definitely higher than, I would say, bonds from your traditional banks or others. I think still, let’s say low to mid double digit is still a very good yield. And looking at the current inflation figures, it should leave you even a healthy profit after inflation. 

Andy Pickering – Host

Yes, I think so. Very well said, Kimmo. Well, it has been a pleasure talking to you today, I have very much enjoyed it. As we finish off, please tell people where they can go, particularly if they’re based in Europe and are able to invest on your platform. Tell people where they should go to learn all about the income platform. 

Kimmo Rytkönen – Guest

Yeah, so we’re available on Getincome.com so you can find everything you need, all the information or more information about the company, about who we are, what we do, about the loan opportunities so you can read more about there. There’s a lot of resources online already, a lot of affiliates, and a lot of bloggers are writing about it. So I would say the ecosystem is growing in loan investing. So there’s a lot of stuff available for you to read online, but Getincome.com is a good place to start to understand a bit better what investing in loans means and how it looks. 

Andy Pickering – Host

Got it. Fantastic. Thank you so much for coming on the show, Kimmo. All the best and bye for now. 

All right, well, there you go. That was Kimmo from income. Fascinating talking to Kimmo. And look, if you’re listening to this podcast, you are probably aware that a crowdfunding revolution is coming and it’s set to unleash innovation, world changing potential. It’s the world’s first global equity crowdfunding network. And that is what the Dacxi Chain is. That is what the Dacxi Chain is trying to do. We’re trying to create a new, fully regulated ecosystem where everyday investors all around the world have access to new investment opportunities. And for those founders who have innovative ideas, they need funding for those ideas or they can access that global investor pool. And of course, it’s done in a safe, sophisticated, and mature way. Now, of course, if this is going to be done at scale, what’s the answer? Well, tokenization. 

So tokenization of those equity shares means it can be done at scale and anyone can invest at whatever amount they wish in line with the regulations in their own country. So the Dacxi Chain is working on all of this via tokenization at the local level through a network of locally owned crowdfunding platforms. And then, as mentioned, Dacxi will launch a specialist secondary market so people can offer their tokens for sale. And that all-important liquidity is there. So lots going on. That’s the very brief and concise overview of the Dacxi Chain and what it is. But of course, we’ll be learning more about it as the podcast continues. So do please make sure you’re subscribed to the podcast and ready for each new episode and then you can learn more. 

Thank you for listening and bye for now. 

https://getincome.com/