Making private markets digital and connected

There’s an art to making complex and inefficient processes easy. Placement and management of private corporate shares for example, has historically been manual and fragmented, adding cost, risk and friction to a marketplace that has huge untapped potential for issuers and investors alike. But new technologies are simplifying workflows and automating processes — opening up the world of unlisted securities in a way that hasn’t been possible before.

Mandates meet Technology

Business innovation is often prompted either by necessity, or advances in technical capability.

In the case of unlisted share issuance and trading, both forces are at play, seeing the increasing demands for transparency, accountability and efficiency met by new technology in the guise of full end-to-end workflow never seen before.

The world of private markets — a flourishing sector, with investors looking for enhanced returns and decorrelation from unstable listed markets, met by corporates looking for capital injection without the cost of a full IPO — has been well served by existing market participants for decades. Processes are manual and error-prone though, and increasing regulatory and legal costs eat into margins, limiting the market to the higher end of the unlisted balance sheet.

Imagine then, a technology platform that preserves legacy business relationships, but enhances the user experience as well as adding scale, security and accountability to all players, bringing cost savings and better liquidity to all?

The solution is a sophisticated blend of established and new technology. Firms raising capital and offering investments to private or institutional clients (such as boutique investment banks, wealth managers, multi-family offices & investment advisories) suffer from a lack of innovation in an industry that has otherwise been globally digitized.

Enabling these actors to offer, manage and trade shares via an ergonomic and user-friendly interface proves instrumental to improving businesses efficiencies, cost reductions and most importantly achieving peace of mind with regards to compliance and regulatory burdens.

Complex workflow made simple

VALK, the white-label end to end transaction tool, brings together issuers with their investors on an intuitive, easily deployed platform. The outdated manual and cumbersome time-consuming processes that encompass private markets should no longer be an obstacle to doing business.

The VALK solution is an elegant, user-friendly platform that both clients and administrators instantly feel comfortable with thanks to its intuitively designed features. Every problem has a solution, and VALK makes this idea a reality, by carefully curating your investment workflows to guarantee the best experience for your clients.

The possibilities for customization are virtually endless, allowing administrators to pick and choose carefully tailored options in order to make their platform and business available and compatible with all types of clients and myriad situations. Whether issuing shares of corporate, raising for a direct investment, real estate deal or VC deal, the VALK platform is adjustable to ensure real-life procedures are recreated digitally, all while supplying all the tools necessary for adhering to today’s strict compliance and regulatory landscape.

Simplicity where it’s needed — to the user.

When building this solution, VALK made it a stringent point to remain mindful of the delicate idiosyncrasies that encompass the types of businesses which will use our platform. Behind the scenes, the full end-to-end workflow system is underpinned by a comprehensive integration layer enabling firms to interface into the system from their payment and inventory systems.

For example, we knew that third-party application integrations would be important to our customers, which is why the VALK platform was built to be API-friendly, with very ‘familiar’ plug-in components like Docusign or SumSub, or even calculated NAV integrations from fund administrators, readily available to our clients.

Going the extra mile is in VALK’s DNA, all in the interest from setting ourselves apart from the competition by setting the highest standards. VALK made a commitment to design and build a product of the uppermost quality, with the objective of delivering a best-in-class solution all while being developed with state of the art technology. VALK is mindful of longevity and forward-thinking, especially in the rapidly changing digitized world we live and operate in, which is why we decided to raise the bar by designing the platform with an underlying distributed ledger, committing transactions to an immutable record.

Corda

VALK is built on Corda, an entreprise DLT solution designed for the finance industry from the start. Only Corda allows businesses to build interoperable blockchain networks that transact in strict privacy, leveraging smart contract technology to allow firms to transact directly, and with value.

Corda was developed by R3, an enterprise blockchain software firm, in collaboration with over 200 technology and industry partners. Today, Corda is backed by a vibrant community of blockchain/DLT developers continuously adding new features, functionality and more. Moreover, what constitutes Corda’s strength is its institutional partnerships with traditional players of the global financial ecosystem.

For example, the Swiss stock exchange (SIX) is currently in the process of launching SDX — Swiss Digital Exchange. SDX has partnered with R3 to offer a platform for digital asset marketplaces on the Corda blockchain. Capital markets participants will use Corda to support the issuance, trading, settlement and custody of digital assets, creating liquidity and opportunity which previously did not exist for this investment class. The latest one being added to the list being Nasdaq Technologies and their latest digital exchange offering.

According to the R3 CRO Cathy Minter, Corda is already well established in the unlisted asset space and they see it to be an area that is opening up to the capabilities of blockchain. VALK is an intellectual stakeholder in R3’s aims of streamlining complex and inefficient processes that burden so many industries still to this day.

“We […] look forward to our partnership as we will work to open up new markets and institutions to realising the benefits of blockchain technology.” Cathy Minter, R3 CRO

Early adopters wanted

Unsurprisingly, VALK’s primordial client base consists of a variety of early adopters and pioneers from different industries, such as London-based boutique investment bank Glafka Capital, Investure, or Infinity Maritime, the sustainable solution for maritime finance and several other european financial institutions. Private placements in real estate, SMEs, funds and other alternative assets in the hundreds of millions are currently being processed through VALK platforms.

By innovating in its processes and going for a digital infrastructure, newcomers to the industry will have the opportunity to shift the paradigm of investment banking in a pragmatic yet very innovative and savvy way. The VALK solution is of particular relevance given the novel challenges businesses face in the wake of the consequences of the ongoing pandemic.

In times of recession, we believe differentiation will come to those using a solution that enables to minimize process costs and time spent on deals significantly by going all digital while providing clients with a user experience that only digital banks or slick e-trading platforms have today.

VALK’s solution can accommodate several live mandates at the same time, managing various data rooms while monitoring and handling multiple prospects and investors on a perfectly secure infrastructure. After deal closing it can continue to cater its clients with reporting services and arrange secondary market transactions in a secure, digital and efficient environment.

Conclusion

In addition to investment banks and asset managers, AIFMs and fund administrators see a great opportunity to streamline their operations and fundraising processes using VALK’s comprehensive white-labeled solution. Client onboarding and engagement is smoother, counterparty risk and settlement failures are significantly reduced, and ultimately liquidity is both increased and more widely accessible , thanks to the secondary market feature.

Tech in the form of a combined cloud and Corda distributed-ledger backbone, creates a foundation on which share records, cap tables, data rooms, corporate actions, payments and accounting merge seamlessly to provide a rich experience.

Conclusively, with one intuitive platform the world of unlisted securities is simplified and more liquidity is available to all.

As Einstein once said, “The definition of genius is taking the complex and making it simple.”