Chaim Schiff is the Founder and Co-CEO of The Elephant, a tokenized platform in the private secondary market. The platform opens the door to investments in shares of privately held Unicorns and other attractive pre-IPO companies prior to their IPO.
We interviewed Chaim to learn more about The Elephant platform and the emerging secondary market.
The secondary market connects between shareholders of private shares who have enjoyed from an increase in the value of their assets and investments and investors looking to tap into these opportunities and enjoy the further rise in value expected before the target company has its own liquidity event (IPO, M&A). By tokenizing the secondary market and having the equity rights reflected through security tokens this adds another layer of liquidity along the way for this investment class, so these investments are liquid even before the target company has its own liquidity event. This is obviously on top of the other benefits that everyone talks about such as fractionization, liquidity 24/7 worldwide etc.
What is the market opportunity for private secondary transactions?
Huge. Just as an example from the world of unicorns (private companies valued at over $1 billion): there are almost 1,000 private companies that are unicorns (some of which are decacorns worth over $10 billion such as UBER, Airbnb, Wework etc.) so we are talking a market of over $1 trillion only for these companies and when you add the private companies that are below the $1 billion valuation but are still very successful, you reach a much higher number (some say even 5X this figure).
What is the criteria for companies to be listed on The Elephant platform?
Private companies that have raised over $50 million in equity and have had at least 2 rounds of financing including institutional investors or strategic investors from their line of business.
How many companies are on the platform right now and what is their total approximate value?
Shares of more than 20 companies are listed, but we have access to many more shares through our cooperation with secondary market players and joint ventures.
What differentiates The Elephant from its competitors?
We focus on the quality of the content that we wish to introduce to the security token world. We understand that once security token exchanges will be up and running, the name of the game will be quality assets that investors will want to buy. Just because a security is represented through a digital token doesn’t mean that an investor will be interested in it, the investors are interested in the underlying asset and want to enjoy the technological advancements that provide liquidity solutions for this investment.
Can you share what’s planned for the road ahead?
We believe that 2019 will be the year that the ecosystem completes its shift from utility tokens to security tokens. We see that this is in the making for the last 6–8 months but this is a process that will take some more time, especially as we are waiting for the regulators to provide more clarity from their end, and they are taking their time.
From our personal perspective, we hope to raise funds through our STO to kickstart our tokenized platform, to set up the initial tokenized SPVs and their dedicated security tokens (backed by shares of Pre-IPO private companies such as Palantir, GETT) and we intend to use 40% of our STO funds to buy these shares, and we hope to remain a major player in this developing ecosystem as it grows in the next few years to hopefully what we think is the world of securities.