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In this edition of the Protocol Newsletter, we spoke with Ciaran Hynes, COSIMO Ventures Co-Founder and Managing Partner, about their tokenized VC fund, COSIMO X, and the appeal of digital securities for institutional investors, including the implications of the endowment market's recent interest in investing in funds that use digital securities (security tokens).
1. Who is Cosimo X and what do you do?
COSIMO X is a tokenized venture capital fund that invests in blockchain protocols, cybersecurity platforms, machine learning, and digital assets. As a group of successful entrepreneurs, COSIMO specializes in working closely with emerging companies that require working capital and professional mentorship to excel at their next inflection point toward becoming an industry leader.
2. What is COSIMO X known for?
COSIMO X is the world’s first evergreen, tokenized fund that utilizes a third-party valuation provider to publish a net asset value (NAV) to investors on a quarterly basis. The fund is also positioned to invest in cutting edge next-generation technologies that will serve to transform markets within the fields of financial technology, cybersecurity, artificial intelligence, and healthcare.
3. How long have you been working with Securitize and in what capacity?
We have been a client of Securitize since 2017. Securitize has executed the design of our fully SEC-compliant digital security which represents an indirect economic interest in the fund.
4. What problem did you solve with digital securities?
The limited transparency, liquidity, and market-to-market capabilities of traditionally structured venture funds have often relegated these kinds of private equity investments to institutional investors or ultra-high net worth individuals. With the advent of digital, programmable securities, COSIMO X is able to offer far lower capital hurdles to a wider demographic of investors with enhanced liquidity and superior valuation transparency.
5. Do you think that digital securities offer you any sort of competitive advantage in the venture capital space?
This new model will likely serve to democratize the investor base and allow for far more accurate reporting than traditional venture capital funds are able to offer.
6. What appeal do digital securities hold for institutional investors?
Digital securities offer enhanced liquidity, more attractive economics for long-term holders, greater valuation transparency, and full capital call discretion.
7. You recently released a press release about breaking into the endowment market, what does this mean for endowments and your market as a whole? And how large is the endowment market?
Rochester Institute of Technology’s anchor investment in this new fund signals to the market that holding an economic interest in a venture capital fund in the form of security tokens has real advantages for institutional holders. It also demonstrates the ability of our fund and the Securitize protocols to stand up to the high level of scrutiny that such a large and sophisticated investor demands. This will signal to the market that not only is our model an attractive one, but that it has the potential to gain prominence across the industry.
8. In addition to the endowment market, you have a large footprint in Europe what focus do you have there in 2020 and beyond?
We have an office in Dublin, Ireland with two primary areas of focus. We have access to a very strong, high-quality European deal flow, with well-established relationships in the ecosystem there. The amount of investment capital targeting these deals is lighter relative to other parts of the world and results in high-quality prospective deals at competitive valuations. The Dublin office also targets the European investor market to expand the reach of the COSIMO X investor base to European blockchain enthusiasts.
About COSIMO Ventures
The COSIMO team has been at the forefront of innovation and value creation for early-stage companies over the past 25 years. As technology pioneers, we have developed products used by hundreds of millions of users every day and have created many firsts: from the first commercially available financial service on the Internet to the first Internet push notification. We are technology pioneers resolute in our mission to help emerging entrepreneurs build legendary companies.
To learn more, please visit their website.
Securitize delivers trusted global solutions for creating compliant digital securities. The Securitize compliance platform and protocol provide a proven, full-stack solution for issuing and managing digital securities (security tokens). Securitize's innovative DS Protocol has the highest adoption rate in the industry and enables seamless, fully compliant trading across multiple markets simultaneously. Multiple Securitize powered digital securities are already trading globally on public marketplaces with many more in the pipeline.
To learn more, please visit our website.
This site is operated by Securitize, Inc. (“Securitize”), which is not a registered broker-dealer. Securitize does not give investment advice, endorsement, analysis or recommendations with respect to any digital securities. All digital securities powered by Securitize’s technology are offered by, and all information related thereto is the responsibility of, the applicable issuer of such digital securities. Neither Securitize nor any of its officers, directors, agents and employees makes any recommendation or endorsement whatsoever regarding any digital securities powered by Securitize’s technology. Nothing on this website should be construed as an offer, distribution or solicitation of any digital securities. Securitize does not provide custodial services in connection with any digital securities powered by Securitize’s technology.