Putting Private Equity On Chain: The Future of Capital, Liquidity, and Ownership

Joshua Wilson: All right. Good day everybody. Welcome back to The Deal podcast. This is this is part two of our conversation now. If you wanna watch some YouTube shorts of joris and talking about ferment and democratization of capital and the upside of capital. And, tokenization and what the heck does that mean?

You might wanna go back and watch some of the clips, but we're doing this special edition for people listening in. You're running, you're jogging, you're at your computer, you're pretending to work, whatever that is. This interview is a longer form to hear his story. It's really cool. This is powered by FA mergers and we're gonna dive into your story.

So Joris, welcome to the Deal Podcast Man. 

Joris Delanoue: Thanks for having me. I love it here. 

Joshua Wilson: Yeah. So really cool hat. How do, how did we get one of your cool hats? It's fair, it's black and white. Says 

Joris Delanoue: Yeah. It's on, it's reserved to insiders only. 

Joshua Wilson: Ah, got it. So we gotta invest. Okay, cool. 

Joris Delanoue: But yeah you, but you can always reach out to me.

Yeah. I'll make sure you get one. 

Joshua Wilson: Fantastic. Fantastic. Maybe we'll get involved somehow with the group, but, why don't you start with this? What is Fairmint? 

Joris Delanoue: So Fairmint today is, it's a company that helps issuers to bring their equity on chain. And we do that by turning the cap tables into smart, a series of smart contract.

And the goal is pretty simple. Like most of the issues that we know and see today come from the over intermediation or the wall garden of specific vendors. So Fairmint is here to leverage the blockchain technology to de intermediate, and at the same time offer better rails for whoever wants to take the control back of their equity and equity story.

Joshua Wilson: Yeah, copy that. All right, so let's run some scenarios. I'm a private company. At what point do I wanna start considering putting my equity on chain? Is this for mom and pop, shop that we've, we sell flowers on the, corner as a hobby, or is this for a certain size company? 

Joris Delanoue: So we have a companies at any stage, whether you just incorporate and you want to have your.

Company on day one on Fairmint, or if you want to come after multiple series of fundraising that you already, at the moment that you start to have one or two or 100 shareholders, you want to make sure that you prepare for the future of the company, how to manage those shareholders, how to make sure that the data transfer is requested by one of them.

Or the moment that you start to hire more employees, you want to make sure that all those people that are stakeholders, shareholders of the company, they should be managed. And we offer you the rail to do that. The blockchain is the under underlying technology, but the reality is that. Who cares.

Everyone is actually focused on what's the real benefits, what's the ux and the user experience, what's the journey for a shareholder? And so we bring the whole studio admin, you call it as you want, where a funder or board member get access to, or even a lawyer to a complete administration panel where they can easily.

Prepare their cap table integrate all their legal doc associated to the cap table, and any investment from incorporation to IPO and where you get a chance in a few clicks also to set up a fundraising. So you wanna raise from VCs, you wanna raise from angels, you wanna raise from your community. We basically offer you in a few click the opportunity to send a shareable link to invite all those people to give you their cash as an investment.

And of course, when you start to hire employee, you want to have the same easiness when it comes to offering them. Stock option, restricted stock unit restricted token unit, like anything related to the employee is also fully integrated. 

Joshua Wilson: So how are we gonna work? So you have private companies that are owned by you, me.

Whatever. And then you have public companies that essentially have, opened, gone through an IPO and now has a broad bath where anybody can go in and buy stock on the New York Stock Exchange or nasdaq. So how will, what you're doing. Differentiate itself from the public markets. If anybody could just send a link and someone could just buy stock in your company or buy pieces of it.

Joris Delanoue: Yeah. Thank you for positioning where we are because indeed the market today is separated between the public market and the private market and maybe. It was spending a bit of time on the genesis of all this, which is the crisis paper in the seventies where basically, you know, at that time your share were paper based and people started to have a lot of issue to process that because there were so many papers.

That's what we call the paper crisis. And multiple reports were written to study and to get a good overview of. The capital market at that time. And that's when on the public side, they decided to go with the DTCC as we know it today which is, a way to operate with a reconciliation layer and this clearing house that does the job of making sure of who owns what and when.

So you have a public market that is extremely well structured. On the private market, nothing was done. And so it was a mess until 2010, basically when some service as software as a service providers started to work to offer a better solution than just the excel and spreadsheet from the law firms.

And it started with company like eShares and all the capital vendors. But the reality is that the day they started to operate. They created a new intermediary that locked completely the shareholders, the issuer, into their own databases. This is where I think today we get a strong opportunity to offer to the market a much better play.

Because if you are a private company today, rather than to pay a subscription and be able to have a PDF version of your share. That your shareholder can access, but if you stop paying the subscription, no one can access to anything because it's deleted. Today thanks to the blockchain technology, we get a unique opportunity to offer to the pub, the private market, an access.

That is permanent, that is immutable to their assets because they are effectively on the ledger, on the blockchain. And this is why we call it a better technology in a way, because you remove a centralized agent. And you offer a better form of database for the shareholders. And so of course then the big question is, okay, but once you said that, what's the next step?

And of course this is where, when we start to talk about the whole entire realm of decentralized finance that the blockchain technology can offer. 

Joshua Wilson: Got it. Before we go into why is this important to go decentralize and what does that even mean? Yeah. There's a movie back in the nineties called Heat Val Kilmer Nero.

There's some really good scenes. Yeah. And essentially they were bank heist and they were going after bear bonds. Bear bonds. Yeah. So it's the paper. The bond was on the paper. So if you didn't have, if you didn't have ownership of that paper. You couldn't cash it in. So people invested a bunch of money.

Banks had this or whatever, and they robbed the paper 'cause there wasn't any way to trace it. Anybody could go deliver it. So I think I got the movie so essentially you're doing in a private company, I might invest in a private company. Chris might invest in a private company, my director or you might, and we might get a piece of paper essentially that says you.

Equity holder in this company. I take this piece of paper, shove it in my file drawer, and then hopefully one day they go public or they have series A, B, C, or D Round that comes in and pays out. Cashs out the early equity, right? Am I explaining it correct so far? 

Joris Delanoue: Yeah. On the paper side? Yes. 

Joshua Wilson: You do. Is you take this paper thing and you digitize it and it goes into.

Blockchain. So then now that is the proof of Holder and ownership is now on blockchain 

Joris Delanoue: Correct. 

Joshua Wilson: Validated by thousands of computers across the world, right? Is that how it operates? 

Joris Delanoue: Yes. We don't even do the paper step, it's like natively on chain. That's one of the major differentiator between Fairmint and most of the other players.

A lot of the, a lot of the time the competition is trying to create a digital twin, so they keep. The paper version somewhere and they make a representation on chain. With Fairmint, we build a protocol where precisely you don't have the digital twin because it is natively done on chain. I like to say we bring the low on chain when there is no low on chain.

Then you would, you just have something, but the moment that you start to put everything on chain, including the compliance, it's like really changing the way things will move. And in equity, knowing the constraint that come with securities and equity securities particularly, it is extremely important to go with this type of move.

Got, yeah. 

Joshua Wilson: Oh, keep going there. 

Joris Delanoue: No. Yeah. I wanted to add something like because you mentioned the TBL and all those one of the key differentiator also between debt security and equity security is the cap table. As an issuer, you always need to know who owns what in your company.

Okay? And so it means that you have a ledger. That operate as the source of truth and a major difference that I think is of a hugest strength between the coins, for example, and all the scam that we saw where people are losing their key, they lose their coin in our case. We are extremely strong because as a regulated transfer agent, we are always able to say, Hey this is Chris.

I lost my wallet but here is my passport. And I'm the owner of these shares in this company. You come back to us, we can at any time cancel and reissue. That's our role and that's why. People love so much securities because it is made to protect investor. And so if you want to protect the investor, you wanna make sure that whatever happened, you can always recoup their ownership.

And so tokenizing the ownership is the second step. We saw it with the currency, and the currency has its own set of rules, its own. Challenges, but equity, security and ownership is slightly different because here it is tied to an identity, and I think this is one of the most powerful way when you go on chain because you know that you won't lose your investment.

To contrary. You need to trust the fact that this regulated agent are here, not to intermediate the business, but to contrary. To guarantee that the usage of this new form of technology that is a blockchain is made.

Joshua Wilson: The cap table or capital table, if we look at it, it's a spreadsheet or a ledger, and it shows who owns what of the company.

Yeah. So it might be like, let's just say you're my boss. Juris, owns 70% of the company. Josh owns 1%, Chris owns 19%, right? And the cap table spells it out. The transfer agent. Talk to us about what the transfer agent does, managing that cap table and how they operate in terms of, now Josh wants to sell 19, one out of his 1%, whatever.

Talk to us about what a transfer agent is and what do they do? 

Joris Delanoue: Yeah, so the transfer agent is typically used in the public market. He is the one that helps precisely the reconciliation layer, making sure that the transfer is executed properly. With Fairmint, we decided to bring that to the secondary, to the private market.

Sorry, to make sure that from day one, the issuer can rely on the transfer agent and its expertise. We also make it because when you go on chain. The main benefit that you are looking for is not, to find a new form of spreadsheet, that is on steroid, but better steroids than with web two.

No you go on chain because there is a huge possibility, a completely new market with decentralized finance. And by using the blockchain technology, you blur the line between the private and the public market. And that's where the transfer agent is very important because today anyone can come to us saying, Hey in my cap table, this investor sold to this investor.

But today it is done very manually and it's awful to track because sometimes you need to either do the things by yourself. You need to call, you need to send email, you need to add the lawyers. With the blockchain, you are able to switch from a compliance by intermediation to a compliance by automation.

Sure. You automate everything at the smart contract level and you have a series of smart contract that is able to process a transaction, and this is where a transfer agent. That works in the blockchain era makes so much sense. I have to share that during years, I was wondering like, what does it mean to have a transfer agent or even a reconciliation layer in a form of DTCC at the blockchain era?

The reality is if you want to protect investor and you want to guarantee that some transaction are less shady and opaque than you see today in the cryptocurrency industry. Then you wanna make sure that you have this type of agent. You just need to offer them like a better way of doing their own work.

And smart contract are extremely solid and robust when it comes to executing faster with almost like instantaneous use transfer. When today takes still several hours or days to process everything under the hood in the traditional markets. Yeah. 

Joshua Wilson: Someone who's listening in, they go, yeah, this is a cute idea.

This let's put everything digital. Now, this isn't, you guys are not a new company. You guys have done over a billion dollars in assets. 

Joris Delanoue: Yep. 

Joshua Wilson: A hundred, over a hundred paid companies on the chain doing this. You have, I was looking at how many, how many investors do you guys have as a part of this kind of blockchain?

This isn't just like an idea that you came up with. You have over a billion dollars. Why don't you give us some of the stats? Because someone might go, Hey, this is great for the future. No, this is this is happening right now. Give us some stats. Yeah. 

Joris Delanoue: Yeah. I, not only, I will give you some stats, but I will also talk about how.

This category of unchain capital formation is now a huge category. Last week, a company called Echo just got acquired by Coinbase. Echo is a bit, like the tokenized version, like currency style of Fairmint. And when you think about it, like pouring 400 million into such a company. When I compare the stats, we are basically 10 x everything.

And Fairmint has been operating for seven years. We've been processing over a billion 1.4 billion to date. We have about 700 users. That are using Fairmint in any capacity, whether it's a small fundraising to the full capital being managed by the transfer agent. And yes, it, it has been accelerating a lot over the last 12 months. Because to be honest, we processed 25 million for the first six years of the company, and over the last 12 months we went over 1.4 billion. Why? I think it's because people don't care anymore. Whether you are using that chain or that chain, they're not scared anymore going on chain because they see that there is a real value under the hood that will offer them better rails that would potentially offer them smoother paths to IPO or to tender offers that would potentially also tomorrow make their shares.

More valuable than their competitors because the moment that you consider your asset as an investor as slightly more liquid than another one you want to invest in this company. And if you think about it, you are an angel. I. You invest in company A or you invest in company B, but company B has all our share on chain with the ability potentially to use those shares as collateral or to participate to a pool of liquidity so that after six months or a year, I can start selling and get some form of liquidity.

As an angel myself, I can tell you I will definitely go and invest in company B because in company A. The chance is to get an illiquidity over the next five or 10 years is close to zero. 

Joshua Wilson: I was a wrestler in high school. Okay. Long time ago. Long time ago. Let's wrestle for a second. 

Joris Delanoue: Yeah.

Joshua Wilson: Let's just say I'm a hedge fund.

Part of my strategies are short strategies, right? So what would stop with public companies? You have a lot of regulations. You have, a lot of transparency in the public markets. You have press releases, you have audited financials, you have all these things. What's to protect these private companies who are selling their shares?

What's to protect them from being. Having some type of leveraged buyout or some type of short strategy based on, a hedge fund's mission. 

Joris Delanoue: Yeah.

Joshua Wilson: Not all hedge funds do this. I'm just saying, let's play 1980s LBO model. 

Joris Delanoue: Yeah. So you just point to one of the biggest problem that Carta had a couple of years ago, right?

When they started to create a marketplace and they were literally offering and fueling. All the data of their customers that are supposed to be private companies to predators institutional. And this is exactly why we don't want to do that. We know for years that doing this is the recip for disaster.

That's why they stopped. On our end, we build two things. One, we use blockchain with privacy. Which mean that when a board come to us at the beginning, they were scared of us using base of or Solana. They were like, oh my God, like information about the company won't remain private because you guys will simply release that to the public through your smart contract.

So we decided to use the Canton Network after testing most of the. FHG and ZK solution on the market to pro, to protect investors, to protect companies, and to offer like a clear privacy to the private businesses. But on top of that, we also make sure that everything is set up by the board.

Okay? We are not the ones selling or deciding on the destiny of the company. We offer rails. Then all the decision remain in the end of the board. So your data are going to a specific market only if you accept it and if you don't, we enforce the restriction at smart contract level and the compliance.

That's exactly when I say compliance by automation, it's precisely how it is working today. We let them set up the rules and that will be enforced. At smart contract level, preventing and restricting anyone to sell. And I give you a very clear example of why it is so important. A few months ago, everyone started to talk about tokenized stocks and we started to see popping up over the world.

Basics are open, AI and all those companies are private today, right? It became national sport almost to say, Hey, let's build a SPV. Let's pool money and let's buy some shares on the private market of those companies. And then we will create rap token out of that. But the reality is that it create two major issue, one fragmentation of liquidity because you leave a unified market for a very fragmented one.

If tomorrow everyone is doing that. It will be a nightmare because all those assets that would be issued are wrappers that are not communicating, that are not fungible with others. So if you buy basic share through SPV of company A, and if you buy then the same share supposed to be, but from another SPV at another provider, you can't merge them.

The price won't be the same. Which is the second issue, you end up with a market that is a nightmare, and that's why the Nasdaq three weeks ago started to say, Hey, SEC, we need to find a solution. To have both traditional way and tokenized way of dealing with our securities. With Ferin, we wanna make sure that this doesn't happen on the private market, 

Joshua Wilson: right?

Joris Delanoue: And the best way to do that is to offer to the market a protocol so that any player. Them to build their own stuff on their end. No, they just use the same protocol, the same source of truth. And that's coming from the result of hard work that was done completely off chain by most of the industry players, cap vendors like Fairmint, like Carta like Angelist plus all the US securities laws that wanted to participate.

Cooley, latam Gunderson. We did and build a startup for Cap Table. So now everyone is talking the same language in the industry. And if we go on chain with the same protocol, then we get a unique opportunity to say whether you are on Coinbase, on Kraken, on Binance the share of the same company will always be.

Pointing to the same source of truth, the same cap table. And then we are able to see Josh, to see Chris even if they bought the share of the same company on two different cannel on two different channels, sorry. You will have access to the same source of truth and the issuer will be able to see both of you on the same source ofs.

I think that's fundamental. 

Joshua Wilson: So fantastic. Like I love the way you described things. You mentioned the SEC, right? So they, it seems to me as though if we went this route in terms of tokenization and blockchain, what would the SEC's job be in the future, or even the IRS. Like, how would, how could tokenization, digitalization, blockchain, democrat, all of these awesome words, how could they affect the SEC and the IRS?

Joris Delanoue: I think it's a unique opportunity. Let me explain to you what I see when I see the blockchain as a. Technology that everyone will start using in the capital market in the next five, 10 years. The first thing that, that I see is a risk. Okay. A risk of losing your privacy and a risk of losing, like some form of self control.

But at the same time the balance that I see is that. This new big browser for the regulators is a unique opportunity to flag things way faster. And that, and I'll get, I'll look back to the compliance by automation. Why? When before we were doing reporting as a regulated agent, for example, as a transfer agent, every year the, at the end of the year, you have three months to prepare the form TA two, where you literally expose all the things that was done as activity during the year.

Thanks to the blockchain and the liveness effect, we get a chance to switch from a work of reporting to an immediate and liveness work of adjusting. We offer a clear path for a new player to potentially serve better both us, the regulated agent, the issuers, and the regulator with a better form of reporting live dashboard.

Every day flagging violation with immediate ability to correct that. So all the things that happened in the past that are, the huge scandal in the capital market can be flagged much faster if we start to think and design the blockchain as a way to observe, as a way to sniff and analyze. Like I said earlier, like on one end you risk the privacy.

But on the other end, you strengthens the market themself. And so I think we need to find the right threshold where your privacy remain. Something very important, making sure that you don't release all your information to the public. Would you like your bank account to be on chain?

If you know that anyone, including your neighbor, can monitor all your transaction? Probably not. So we need to maintain the privacy layer, but we need to make sure that the regulators have an access to this private layer without falling into a complete transparency for everyone. So the transfer agent, the broker dealers, the older, the regulated agent are here to maintain that and make sure that if something goes wrong.

The SEC will come and find them. So the SEC is here today to redesign entirely how things are working on change. The same way 50 years ago they worked on redesigning things for to move from the paper to the computer.

Joshua Wilson: So let's go back on the playing field of business and let's see if I understand this correctly, the value proposition of ferment. To the company is access to capital. So you could go on chain, you could have better, easier management of your cap table, your shareholder investor relations access to, you essentially, you write up a link and you send it to someone.

As long as they're an accredited investor, they can, is that right? Assumption credit investors only. 

Joris Delanoue: That's correct. 

Joshua Wilson: Okay. So as long as they prove themselves to be a credit investor, they can invest in this company. Can you say yes or no? Of who they invest in? So let's just say I have a company that I wanna sell to, but I'd rather this person get shares because I think that they'd be a good shareholder.

Joris Delanoue: Yeah.

Joshua Wilson: But I don't think that I'd like this person to invest because I don't think they, they would bring smart capital three ws of smart capital, wealth, wisdom, and work. This person just wants to sit on the cap table and one day cash out when I go public. How will, how could we do that as a company at this level?

Joris Delanoue: So as I said earlier the identity is key in this equity securities market, and so we offer you an access to who. He is operating, who is trying to invest? So some insurers will let anyone invest on stay past identity verification and a set of rules that they want. Some will decide that they want to review every single investor.

Some will set the restriction only to transfer okay. I wanna make sure that if someone want to sell. I know who is the buyer. And we offer all this flexibility through smart contract and an admin where the board can set things directly. So the identity being core to the entire flow, we get this opportunity to literally say, okay, this person, I want to take the money from her.

This person, no, I don't know her. Or maybe I don't want to allow. Someone from this country. So we have a whole set of restriction to make sure that the board the funding team is always managing that. The second thing that is also very important is the ability to, what I call un unlock liquidity.

'cause I think that's where the value is. Fairmint. If you think of the cap, if you think of the the, what everyone sees today, it's like the visible part of the iceberg. But the whole world under is where there is depth, where there is a lot of things that are unheard. 

That today people barely scratch the surface of that.

It's defy. And we saw what happened in Defi. When people start to think and design smart contract, we see it with Morpho, for example, that is offering absolutely amazing stuff with collateral collateralizing your own crypto to get a loan, right? So you go on Coinbase today and in a few clicks.

You just use your Bitcoins as collateral and you receive money in USDC. If you think about that 10 years ago, no one would've even imagined that possible. We are a few months away of having that with shares. So imagine the numbers of employees that all today, stock options. We need to offer them and serve this market with defi, with the better rail that we've been testing and working with for years in the currency style.

So we need now to bring that to the equity, security, and the world is changing, like I said, because tomorrow as an. If you know that your money is illiquid for seven years in a company and you have the exact same company that will offer you an asset that might be liquid in a year, there is a whole new world and you will invest in this company.

So that's why I think in term of adoption, the moment that we'll start seeing angels and employees understanding how they can leverage that, it is game changer. 

Joshua Wilson: When, I learned early on going with my grandmother garage sharing, I learned this lesson. Something is only worth what someone is willing to pay for.

Joris Delanoue: Yeah.

Joshua Wilson: How do we know the valuation of these private company stock? Let's just say I'm looking to put my company on chain with you, with Fairmint. How do I even start at valuation? And could this go wrong at setting a valuation that's incorrect? Later on, if I want to go public? 

Joris Delanoue: Yeah so don't forget, there is always a market.

So it can be the first investors. So you raise capital and the market will literally say what's valuation. If you have zero investor at 20 million valuation, but you have 10 at five. You know that you will raise at five, or maybe you won't take that money opening four more, but your company will stuck, will be stuck at a lower valuation because there is no buyer.

We are not here to solve the liquidity. If you don't have any traction, you don't have traction and no traction means no liquidity. But what's very important is that if you have traction, can you find the right rails? To offer liquidity, and that's what we solve at Ferment. The traction remain the main driver of liquidity on the market.

And of course, if you raised a huge amount of money. That signal the valuation of the market today. You can always work on the four nine evaluation reports. You can work on plenty of other form valuation, but at the end, the main question will be where is the market? Do I have a buyer at that? Valuation?

Yes. No. If you want to go public. The second thing is. Going public means fundraising. So in a way, if you are not able to underwrite a minimum to get enough traction, you won't do it because the cost is prohibitive. Even if we decrease it by 90% tomorrow, and that's what we work on right now. Like how can we build.

An effort as an industry to coordinate this effort and bring a lot of liquidity to specific companies, but that won't be for everyone. Only a FUSE will be able to get that fund I think I believe a lot in the market. What we see today also in cryptocurrencies, like you have a list of, thousands of cryptocurrencies, but only a hundred of them are actively trading.

And a lot of them started to get listed on exchanges. At a super high valuation, and then the price dropped 90% and now they are completely forgotten because there is no more traction until traction is coming, until a project is emerging for this cryptocurrency to justify its utility.

Pretty much similar for the private companies as well, 

Joshua Wilson: for sure. But what if. The marketplace is not there for the investor. Let's just say it's a strong company, right? Really strong company, but they're, they don't have great investor relations, right? So it doesn't have the trading volume. If we're looking at a public company, we're looking at trading volume like the, that I work with and they're looking at how much does this thing trade that will let me know the traction or popularity if I can get my money back in the future.

The liquidity is based on this. How? How could a good company with maybe. Not very strong investor relations or public relations. How does that manage with traction in the marketplace? 

Joris Delanoue: I think going on chain or unlocking liquidity is always connected with distraction and not everyone will be able to effectively IPO.

But the tender offer in that case is one of the best answer. If you want to do a deal or if you want to inject new cash, or if you want to exit some early investor and early employees, you need at one point to find a way to do that. And today it's very shy. It's very opaque. You do that on specific platforms.

It's a lot of phone call between multiple intermediaries and you know how it happened at the end, after three, four months of work. You have a folder that arrived to the desk of the board. And the board is oh, actually, you know what? We'll exec, we will exercise our right of first refusal and we say no to the deal and all the work that was done is falling like a house of card.

And you don't want that. You want something that is more sustainable. This is why at Fairmint we've been working to precisely work on smart contracts that are effectively designed. By the board that already set and frames the rule where you set the transfer. Basically you set the situation where if something happened in this realm, then.

Let's execute a transaction, and just that is zero to one type of difference that for investors, for employees. It's already a huge step ahead. 

Joshua Wilson: Yeah. Yeah. I think what you're doing is so fascinating and I can't wait to see, you guys have, you guys are already. 1.4 billion ahead of where my brain could even go.

So really good job doing this. Thank you. I've got so many more questions in terms of the investors value proposition. So liquid, early investors, liquidity, so a lot of people that I know, family office, they won't invest in a private company because they're like, when am I ever gonna get my money back?

Yeah. The liquidity question comes up. You may be the option that unlocks that capital from family office to private companies because you may create liquidity options for these private companies. Where could that go wrong and where do you think that the family offices could in the future, like partner well with the company to actually do better when they go public or when they do a spac or when they do fill in the blank?

Joris Delanoue: So I think one of the main aspect of our business is the ability as an industry to work together. 

Joshua Wilson: Okay? 

Joris Delanoue: Like everyone, every player that started a wall garden has been failing. Why? Simply because building a distribution takes so long that today only exchanges are. Really the one able to pull a lot of capital all over the world at any time.

And so I think it's important to bet on the last 10 years of, the industry, like who has been able to build that distribution. Okay. We know we have a clear idea of all those players. Now the main question will be, are those players trying? To compete all together. And at the end to maybe remove some of those players or are they able tomorrow to team up, coordinate efforts to go after bigger shares market shares of the incumbent, and that's probably one of the best challenge ever.

Because if we are able to work all together as builders in the crypto space to offer better rails for liquidity when it comes to equity securities we get a unique opportunity to go and take massive market share to the incumbent. And then if we keep increasing the size of the cake for the crypto players.

I can let you know that I can share right now that yeah it's obvious that we will have a better market, stronger market, more liquidity, and that all the incumbent will jump on chain way faster than ever. And so it's a unique opportunity. I think this is where the market should go. And, but to do that, you need to work in a way that is.

More like protocol base standardization more open, like trying to say, Hey, I'm building that in my own market. I don't talk to anyone. And I try to do that by myself on my own. Won't work. But if you start to bring some form of blueprint where you offer to all these player a clean and clear pass to pull a lot of the capital and liquidity that we need for the best player, the best private players to go more public, we get a huge opportunity here.

And that's what I'm actively working on. 

Joshua Wilson: We're running outta time, so we might, we might connect on a part two, right? Part two. Your contact information will be in the show notes for people listening in who are interested in ferment and connecting with you and saying, Hey, maybe my private company is, would benefit from this.

Or maybe I'm an investor and I want to look at private companies. And I like the idea of being able to see everything on a smart contract. And I'm getting this from, a, the, a dashboard, right? Your contact information will be in the show notes, but there's probably like a main point or a question that I should have asked you during our engagement here that I missed the mark.

What questions should I have asked you? 

Joris Delanoue: What keeps me awake at night? 

Joshua Wilson: Besides the idea of going kite boarding. 'cause you're a very good kite boarder. What do you think that night? 

Joris Delanoue: I could have answered the kiteboard. 

Joshua Wilson: Okay, gotcha. Sorry, I jumped the gun here. 

Joris Delanoue: No. What keeps me awake at night?

Yeah, I think it's seven years now, like reinventing, going public. Literally, I, I. I, I leave for that. I want to make sure that we, I see that happening and I don't know if it will be us or not, to be honest, but I think it's the best way. Like I wanna make sure that, companies like Figma when public super late with a poor market price, market discovery.

I think we can do better. Like we are all users of product that we pay for years, and it's very frustrating when you see that these companies that you pay for, you can never access to the shares of those businesses. Why? Because it is captured by afu. We need to. Make it possible for a broader range of people to access that.

And the second thing that I think is very important, and and I'm precisely writing about that right now is how can we offer a smoother path for people to be considered accredited? Because you exclude so many people, this rule is literally a legacy of the 20, the 1929 crisis. At that time, people had no access to information, no access to data.

Your question about validation today. Like you have internet, you are able to make your own due deal. And if you are, and if you're scared of that, you can always invest in ETF or in indexes. But the moment that you start to invest in a company that is private, you know what risk come with it. But how private is the company when you've been using the product for years, for you, the value.

Maybe you are scared of who are the officers, but they are fiduciary duties. If they do something wrong, they will be sued and you will be able to attack them. But at the same time, preventing you as an investor or potential investor to invest and get the financial upside simply because you're not accredited.

It's pretty unfair. So I think we need to find a way to switch from wealth based accreditation to knowledge based accreditation. And maybe you don't need to be accredited for everything. Maybe you can just be accredited for one offering. You are able to prove that this company, this product, you've been using it for so long, that the day there is an offering, you are part of this pool of people that are accredited just for that deal.

So yeah, that, that's also one of the things that I I have to share. I spend a lot of time like preparing this written input for the SEC Crypto Task Force. 

Joshua Wilson: Super interesting. Oh, man. Oh, I love talking about the accredited the wealth gap between the accredited and non-accredited, because it was, in the 1929, crash the governments, saw a lot of people investing in private companies, and then they said there should be protections in place for the people that, allows them to not get burnt by private company investing.

Yeah. So they created. Accreditation status. Right now, it's primarily wealth based. You make over two 50 for a single, three 50 for married couple and blah, blah, blah. You have a house, whatever. There's some I gotta go, Chris, I gotta go a few more minutes on this. This is, I think this is vital for us investors.

My, my director's Hey, we're running outta time. We got another meeting coming up. The the knowledge based accreditation. You have your series 65, which means you have to be, you have to be with a a FINRA established bank. You have a series seven and I think 82 or there's a few

Joris Delanoue: yeah,

Joshua Wilson: really tough things.

If you don't have that kind of income or net worth, then you can't invest in these companies. So yeah. Why do you think what could be, we're not gonna say what is, what could be with the, with Fairmint's model in the future to now we're talking democratizing, upside capital. What could be the future of that?

Joris Delanoue: The same way before you get your driving license, you need to learn basic stuff. You do a test. You could have a pretty similar type of experience for the accreditation with a form that you need to prepare the answer for. Overall, the moment that it's knowledge based, they already extended it.

Okay. Some employees of fund, for example, now are qualified. But once again, you are extended to the same group of people that are all working in this industry and that are capturing most of the financial upside on the private market. I think, like I said, you, we can definitely say, hey. I'm qualifying just for this offering because I've been using this product for years.

And I know exactly why I want to support that company. And you check your accreditation status in that case. If you want to have a broader accreditation statues, then you could just yes. Answer some question, and some I'm not saying something new like a lot of people have been.

Pushing for that. Maybe the unique accreditation rule is newer. But I think it's a matter of like time. There is start to be a lot of pressure. The second thing also is that the Jobs Act that was released tenish years ago, a little bit more, it's probably one of the worst piece of legal ever written because it consisted in centralizing completely.

The the accreditation rule and changing, the ability for people to invest if you are not accredited only via those players, but those players incentive is not at all to maximize the return for the investor or to offer a very strong database of investor to the issuer. No. No the new incentive for those players was simply to have to fill their calendar with more offering.

Let's do more offering, let's bring more people. And at the end, they are all advocating for, millions of investors that actually are just an aggregation of multiple communities, of multiple issuers that came, hoping for having millions and millions of people to look at them and invest even $1.

Because that's often the worst part. You will think, oh, I'll go to this platform. They have a billion user. If I have one user giving me $1, multiply by 1 million, we'll have 1 million. The reality is no one cares. 

Joshua Wilson: Yeah. 

Joris Delanoue: If you are. Expecting the community of someone else to look at you and invest.

It's very low. So at the end, you have, what, 150 K? You spend 50 k of that to do marketing and try to promote it. You spend 30, 40 k for all the fees that you pay, the platform and the intermediaries and the escrow account, and you spend four, six months of your life. Promoting something where the only winner is the platform.

They earn all your community when you literally took money from them and they and the platform took you some cash made you spend more on marketing through their partners. But you live with what, six months left? Six months lost of your time and maybe 90 or 70 k in end.

We need to offer a better rail than this. 

Joshua Wilson: So Juris, with that, we've got a wrap up today, man. I, let's 

Joris Delanoue: do it. 

Joshua Wilson: So enjoyed our conversation today. Thank you so much for coming on the show, sharing your passion, your passionate about that. Man, we didn't even get into the companies that you've built and sold prior to this.

We didn't even get into kite surfing. Yeah. But that would be for another day. Ladies and gentlemen, 

Joris Delanoue: absolutely. 

Joshua Wilson: Thanks for tuning into The Deal podcast. As always, reach out to our guests. Their contact information will be in the show notes below, and maybe you have a deal, a company you're looking to sell, or maybe you're a service provider and you could talk about different aspects of.

Buying buildings, selling, scaling companies, and you wanna talk about it here on the Deal Podcast. Head over to the deal podcast.com. Fill out a quick form, maybe get you on the show next till then. Talk to you all on the next episode. Cheers everyone.