Private Capital Market Ecosystems Meet the Blockchain

In a move signaling blockchain technology’s continued advancement in the financial world, Hong Kong–based PrivateMarket.io and NY-based Symbiont announced an agreement to build an alternative investment marketplace for closed-end funds utilizing Symbiont’s SmartSecuritiesTM software. The parties anticipate that the marketplace will go live in late 2017.

PrivateMarket’s strategic intent is to ensure that a new generation of wealth managers are able to access, analyze and seamlessly execute primary and secondary market transactions online. Through technology, they deliver concrete solutions that foster a more transparent and efficient private capital market ecosystem.

In a statement, Loïc Engelhard, founder and CEO of PrivateMarket.io, said he welcomed the partnership, noting that the security and privacy elements being delivered by Symbiont are of paramount importance for his company’s success. In particular, he touted the ease of integration and fit of Symbiont with their own internal processes at PrivateMarket.  

Symbiont is largely known for a smart-contracts platform that tethers to institutional applications of distributed ledger technology. Its growing number of disclosed users include 19 financial institutions for Smart Loans™, arranged by Credit Suisse and executed via Synaps; its syndicated-loans joint venture with Ipreo; the State of Delaware for Smart Records™; a major European insurance company for Smart Swaps™ in the catastrophe insurance market; and Orebits, a provider of asset digitization services. The company’s technology has also been used in markets for syndicated loans and digitized gold claims.

Symbiont was started in early 2015 by Mark Smith, Adam Krellenstein, Evan Wagner and Robby Dermody — all of whom have extensive track records in the Bitcoin/blockchain space as well as in fintech. Prior to Symbiont, the trio of Krellenstein, Wagner and Dermody founded Counterparty, the “Bitcoin 2.0” open-source project targeting digital representation of non-bitcoin assets on the Bitcoin blockchain.

In August of 2016, Caitlin Long, a Wall Street veteran of over 22 years, joined Symbiont as chairman of the board and president, assuming responsibility for Symbiont’s commercialization, business strategy and client relationship efforts.

In an interview with Bitcoin Magazine, Long discussed how Symbiont’s new partnership with PrivateMarket is designed to provide an enhanced and efficient approach to private capital markets, with private equity and real assets as a main focus.

“The implementation of our blockchain and Smart Contracts solution will increase efficiency, transparency and the speed of the transactions in the antiquated over-the-counter market. It will also improve greatly the security of the private equity market by simplifying complex and highly manual bilateral contracts.”

She also noted that unlike the current state in private equity, where unlisted (investment) vehicles exist, Symbiont’s solution will greatly improve the liquidity of asset classes through the implementation of its SmartSecurities solution.

“We see blockchain technology having a significant positive impact on the investment world, and it starts with the fact that the foundational document for any investment — the registration of a company — will likely soon be possible to do on a blockchain in Delaware.”

Long says that when securities are issued natively on a blockchain, not only can they be administered via smart contracts, but issuers and investors will be able to communicate directly. In addition, she says, payment of dividends can be handled directly, proxy voting will be clear and accurate, share repurchases and tender/exchange offers for bonds will be easy to execute, and the roster of security owners will always be accurate and up to date.  

Long says that amid these advancements, there are also significant opportunities for improvement of business processes in the fund administration business — whether it be mutual funds or private asset funds.  

“At the end of the day, all of these benefits will accrue to end investors, who we’ve always said should be the biggest beneficiaries of blockchain technology in the financial sector.”