These are the necessary steps for private securities to become a transparent and utilized asset class
For private security investments to become a more transparent and utilized asset class, it has to be possible to access opportunities, manage them and, if necessary seek liquidity. This could be done on an exchange that supports multiple asset classes and allows for a diverse set of investors to transact with each other.
In my 20+ years of working at leading investment banks across the globe, I saw a continuous strive for solutions that would support different asset classes. Facilitating transactions across all institutions that are participating in the private markets, creating a single ecosystem if you will, with less emphasis on relationships. Instead, this platform I envisioned would focus on efficiency, convenience, and fairness of access. The common dream was to have one place to invest and trade all private instruments.
More importantly, most investors would prefer to have records of their asset ownership in one place so that they can easily track and manage their portfolios. Even today, I consistently hear employees at RIAs and family offices talk about the notion that they do not want to be forced to use multiple reporting services just to figure out how their portfolios are performing.
I strongly believe that investors and issuers will benefit more from being part of a larger market than by creating walled gardens for select investments and investors.
Angel investor groups often discuss the option of a white-labeled investment system for their members to utilize, essentially their own walled garden of investment opportunities. I am not in favor of white labeling our software, although it is a logical request, because it will limit the access and liquidity that a consolidated trading system could provide investors and issuers. A consolidated investment platform will also provide qualified investors access to an institutional-grade platform for their investments, a broader choice of investments, and the potential to engage in secondary market liquidity.
For entrepreneurs, a platform that allows them to raise their early rounds of capital from angel groups and then use the same investment platform to raise subsequent rounds of capital will be extremely valuable to the issuer and investors. When relevant, companies could raise money from venture capital investors, UHNW investors, and institutional investors that are seeking direct access to emerging companies. Entrepreneurs will also be able to streamline their investor communications and manage the cap table for their company – all in one place.??
The team here built Corastone from the ground up over the last two years with the goal of supporting a variety of financial instruments. Corastone is completely digitizing the process of private securities issuance, asset lifecycle management, and eventually secondary trading processes for these assets. This digitized process will create a more efficient trading system for private securities, and simplify portfolio consolidation for performance reporting.
We believe that technology can lower the costs associated with existing private securities processes for all market participants while ensuring investor protection, cybersecurity, and complete privacy. Our plan is to build additional solutions for financial innovation that will be relevant to investors such as pooled structures, closed-end funds, and tracking securities. Corastone can also provide tools for syndication, cross-group engagement, and a more efficient private securities trading system.
This is an important strategic direction we’ve chosen as a company. By placing the investor’s interests at the core of our product, we are able to implement the vision of an efficient, convenient, and fair trading system. We will continue to support private securities participants in our mission to educate investors and entrepreneurs on the private securities market.
Rashad Kurbanov
CEO & Co-Founder at Corastone
With more than 20 years of professional experience in capital markets and the management consulting industry, Rashad has an in-depth knowledge of complex front-to-back processing environments, market trends, technology’s impact on capital markets and regulatory changes. He also has proven experience working with C-level executives at major investment banks and successfully managing multifaceted change and regulatory programs.
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