The Father of the JOBS Act Is Helping Build a Next-Generation ICO

The Father of the JOBS Act Is Helping Build a Next-Generation ICO

David Weild IV is calling for a Jobs Act 2.0 with blockchain at its core.

While that might not seem surprising coming from any other investor - since the act (formally called Jumpstart Our Business Startups) has yet to generate the growth in initial public offerings (IPOs) it was supposed to - this stance from this particular investor is notable since Weild himself is often called the "Father of the Jobs Act" for his research into the destructive nature of the equity markets on businesses.

"People call me the Father of the Jobs Act, but it's not the act that I would have written if they'd given me the pen," said Weild, who is now head of investment banking firm Weild and Co. Holdings. "That's probably my biggest frustration with a process which is really based on compromise and collaboration."

Yet out of this disappointment and the subsequent research, Weild undertook to look for possible solutions, and he became enamored with blockchain, and more importantly, it's role in offering an alternative to IPOs.

In Weild's original 2010 research paper, credited with helping inspire the creation of the Jobs Act, he blamed the drop in IPOs largely on a lack of support for aftermarket business services that help make going public profitable for the post-trade world at large.

"These small-cap offerings require intermediaries that are adequately compensated to find the other side of the trade, and when you deprive that marketplace of the oxygen that's required to sustain it, you end up with an erosion of the entire ecosystem of support providers," Weild told CoinDesk.

But by tokenizing securities and moving them to a blockchain, he believes the problem can be solved, primarily in that it might, over time, eliminate the need for intermediaries altogether.

He continued:

"Today trusted, third-party intermediaries have provided the requisite credibility in these marketplaces. That gets moved to the blockchain, so the intermediaries, the trusted banks, are no longer needed."

Right to ICOs

With his interest piqued, Weild, who is the former vice-chairman of Nasdaq, has taken on formally advising two blockchain startups, both which deal with crypto tokens created out of initial coin offerings (ICOs).

Firstly, Weild is working with blockchain-based adtech provider Kochava, which he met through one of Weild and Co.'s subsidiaries that specializes in mergers and acquisitions.

Kochava had previously launched an alpha version of its advertising platform, called XCHNG, which a number of venture-backed ad agencies were testing. But now the company is making plans for an ICO, whereby it'll launch a token that enables an advertising exchange.

The second company Weild is formally advising is Templum, which raised $2.3 million in traditional venture capital to build an alternative trading system (ATS) for trading regulated crypto assets. At this early stage, Weild is not only advising Templum on how its future customers might capitalize on blockchain technology but how the company itself might do so.

While Kochava and Templum might seem very different, they have one thing in common that makes Weild the perfect adviser - the Jobs Act.

Reg D ready

Both startups are part of an increasing number of blockchain-based companies looking to take advantage of Reg D 506 (c) of the Jobs Act.

While the securities law restricts investment to accredited investors, it also opens up the world of advertising those token sales to a number of different outlets, what many think is a huge win for ICO issuers.

Kochava plans to implement its token sale through the simple agreement for future tokens (SAFT) framework, which was created to allow issuers to use Reg D, and in turn, stay on the right side of the Securities and Exchange Commission (although its yet to be seen whether the SEC agrees). And already, Templum has entered into a purchase agreement subject to regulatory approval that would let them raise capital in accordance with Reg D.

Going forward, Weild has a pipeline of as many as 10 more blockchain firms he's advising through both the fundraising process and potential mergers and acquisitions.

If he succeeds with any or all of these projects, he thinks the original goal of the Jobs Act could finally be realized using the blockchain-based technology that has allowed entrepreneurs to raise more than $9 billion.

Still, Weild concluded on a measured note, saying:

"The process of taking all this interest in ICOs and moving it into a securities compliant process is going to take a while."

Image via TEDx Talks

05.03.2018 / 18:25 66
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