- The document discusses how blockchain will disrupt traditional investment banking by enabling companies to raise funds through initial coin offerings (ICOs) rather than traditional routes like IPOs.
- This will lead to investment needs being addressed much earlier in a company's lifecycle. It will also compress the investment/life cycle as marketing, fundraising, and investing grow closer together.
- The author argues that large investment banks will still be needed for very large deals but that mid-sized and smaller banks will struggle. He proposes a new model of "Investment Oracles" that use blockchain to more efficiently connect startups, investors, and services across borders.
5. Contents *
• My background
• Investment banking today
• Major disruptor
• Investment banking tomorrow
• Conclusion
* details in white paper, definition ICO
6. My Background
•Born & raised in Switzerland, apprenticeship
(Lehre) in retail banking
•BA Economics summa cum laude, Humboldt
State University
•Morgan Stanley & Raymond James Financial
Services
•Asset management company & fintech startup in
San Francisco Bay Area, Crypto Valley office
•Topic of disruption ongoing theme
•View on investment banking and blockchain can
shift
Hans Overturf
7. Investment Banking Today
• M&A, IPOs, follow-ons (secondary offering), some debt
• Investment banks come into the picture after the
company's initial growth phase
• My experience at Morgan and Raymond James
• Most deals done in one jurisdiction
• Investment banking is dominated by a handful of banks
8.1 %
JPMorgan
7.2 %
Goldman
Sachs
6.1 %
Merrill
Lynch
5.8 %
Morgan
Stanley
5.3 %
Citi
4.5 %
Credit
Suisse
12. Disintermediation of all financial transactions
The famous: http://cryptogeeks.com/bitcoin-how-banks-think-blockchain-will-disrupt-their-industry
13. Potential Impacts of Blockchain
on Investment Banking
•All small and mid-sized IPOs will become ICOs
•Cheaper, simpler, multiple jurisdictions, no
audits, no transfer agent
•Capital needs of a startup come into play at the
very beginning of a startup's life cycle:
•VC, seed investor, super angel, along with
crowd, is taking on key role.
16. PC / Investment Oracles Mobile / <unknown>IBM Mainframe / Investment Banking
The next Apple is currently founded
17. Customer centric value proposition
of an Investment Oracle
•Token has more functionalities and can be
traded cross borders and more cheaply.
Can build regulatory restrictions into the
token code.
•Fundamental difference to traditional
investment banking: Fund raising is done
much earlier. Seed money is part of the
process very early on and it integrated into
the ICO process...
•...startup can become captive client.
19. Investor readiness
VC, Seed, Super Angel
Distribution channels
Legal structure
Token development
SEC filing
KYC & Cyber Security
Crypto Exchanges
Market MakingTeam structure
ICO
!19Copyright 2018 Jadeberg Partners
20. ICO Regulations
•Unclear regulatory environment. BaFin does
not provide clarity
•FINMA regulations are clear, but subject to
change
•SEC does not classify ETH and BTC as
securities, but may classify most ICOs as
security tokens and NOT as utility tokens
(Howey Test)
•Independent of regulations, technological
advances will continue and existing regulations
adapted to new realities
21. Goldman Sachs &
Morgan Stanley*
• They will stay in the saddle...
• ...because they have large network of investors,
investment bankers, and trading desks.
Necessary for very large deals.
• Mid-tier and lowest tier investment banks will
fight over the crumbs. Adapt or die.
*talk to me regarding some insights of current developments
22. Life Cycle/Investment Cycle
Compression
• Merging of the following functions: Advertising,
marketing, consumption of good or service, &
investors
• VCs, private equity, PR, advertising, trading,
investor, moving closer together
• This leads to a more organic unfolding of a
company from early conception to rapidly-
growing, profitable, multi-billion dollar company.
• Fraudulent ICOs, FOMO, incompetent team,
dotcom, because no regulations...
• One possibility is a regulated security token
offering followed by a utility token offering
23. What Does it Take to Build the
Investment Oracles?
• Today’s ICO advisory is fragmented and very
inefficient
• Key is to build a large, seamless team, consisting of
smaller, technically very savvy teams. Token
economics and token design competencies are key.
• Platform: on-boarding of investors, coding the
token, KYC, wallet management, cyber security
• Having access to early smart money remains key
• Well-connected with regulatory decision makers
• Go big early: social proof, deal flow, investors. The
bigger the herd, the saver.
• Apparent contradiction: personal relationships are
key
24. What Does it Take to Build the
Investment Oracles?
• Today’s ICO advisory is fragmented and very
inefficient
• Key is to build a large, seamless team, consisting of
smaller, technically very savvy teams. Token
economics and token design competencies are key.
• Platform: on-boarding of investors, coding the
token, KYC, wallet management, cyber security
• Having access to early smart money remains key
• Well-connected with regulatory decision makers
• Go big early: social proof, deal flow, investors. The
bigger the herd, the saver.
• Apparent contradiction: personal relationships are
key
25. Where is the Investment Oracle located?
The vertically integrated investment bank in the Age of Blockchain?
