One possible way to widen the crowdfunding model is that radical design changes in the model of delivery. For example, asset management. We should be looking to abolish the old fund management style governance and replace it with software. If we replace accountants, transfer agents, auditors and fund administration with software, many of the complexities asset management system creates — limited number of investors with access to wealth, hight administration and compliance costs, restricted asset liquidity, and many more — will disappear.
The real estate funds have been usually limited to a small number of sophisticated investors with tons of money or people who know the right people. Digitization of the real estate fund on a global base by holding property that is a tangible asset by giving access for a significant income to tens of thousands of people, especially on emerging markets, that will go with ten-dollar investment into such a vehicle may be a good deal for such people.
Investment into solar infrastructure which is long term lease projects by lending to medium size businesses and schools on a crowdfunding base with a return on the installed solars panels and energy consumption within the alternative energy market is exciting
The next generation of asset management which is not about investing in the crypto space, but a simplified way to invest into assets and earn profits via blockchain itself — it what it makes so cool and differentiates an individual asset management way to manage it. The blockchain-based platform is:
– not spending checks on administration at all which is usually very high with traditional funds;
– has a direct market;
– governed automatically on smart contracts from customer onboarding to asset management and there are no lots of intermediaries between the fund and end-investors;
– has access to people on emerging markets who don’t have access to investment vehicles;
– usually, provide a couple of hours assets liquidity; you can invest and then redeem within 1 or 2 hours via smart contract;
– has immediate access to p2p trading on a secondary market;
– use Medium article to raise funds;
– self audited publicly by merely clicking a button in a cryptographic way where everything is in order, and you don’t need to rely on a trust base institution or a company.
The next generation of asset management uses Medium article to raise funds via crowdfunding. Create a community that tells you what they would like you to jump in. Listen to them and offer the perspectives — spending most of the time on user experience. Use financial education for prospective users to educate them on blockchain tech and financial industries. It all the backer is deserved.
The asset management or any other industry — is an industry, not a sacred cow — is not exempt from the perennial gale of creative destruction.
SaaS companies are replacing the back offices, which is the most significant model up to this time. The modern-day investor — individual with access to a broad range of information — is not expected to give away a benefit of earning to VC or even retail at an early IPO stage, but rather is likely to benefit in a most efficient, accessible way over them.
I suspect this mode of living — wealth that is shared, not administered, and self-directed, rather than imposed — will grant investors more flexibility in choosing what they want to scale or invest in, will allow them to benefit earlier, and will allow for more transparent governance. What is now spent on — client onboarding, KYC/AML procedures, custody or bank account to keep the cash, cash settlement and in return issuance of shares, accounting and cash administration, on someone who keeps records of who owns what (shares, units), administration and reconciliation staff behind all of that, transfer agents and auditors — could be redirected to save up to 80% cost savings on management in general in comparison to the traditional alternative and manage around 4000 retail and institutional investors market globally compared to a conventional fund with just 20 and limited market.
In the fullness of time, the scalable qualities of the next generation of asset management program which is mostly blockchain tech that simplify the way to invest into assets and earn profits will eradicate traditional fund industry, just as Amazon eradicates retail, additive manufacturing eradicates long global supply lines and cryptocurrency eradicates central banks.
Digitization and decentralization are our future, and nothing will escape.
By @morganhousel — a minority of things drive the majority of outcomes. It’s one of the most essential concepts in investing, where a few positions may account for most of anyone lifetime returns. World War II, World War I, and the Great Depression influenced nearly every significant event of the 20th century. Industrialisation and the Civil War did the same in the 19th. Demographics, inequality, and information access will have a massive impact on the coming decades.