Cryptovest Exclusive: Q&A With Darren Marble, CEO of Issuance
We contacted Darren Marble, CEO of security token-oriented marketing platform operator Issuance, to ask him about the state of the digital asset market and Issuance’s next plans.
Issuance, which operates a marketing platform that revolves around security tokens and digital assets, is expanding its relationships within the security token space, CEO Darren Marble told us in an exclusive interview. The platform connects tokens issuers with accredited and professional investors who are interested in diversifying their portfolio through digital assets. You’ll find out below how the company is monetizing its business and how it plans to stay competitive.
Last month, we reported that Issuance had reached an agreement with security token issuer Securitize. The partnership will see the two companies reciprocally share their experiences in this emerging industry.
Earlier in October, Issuance partnered with BlockEstate Alpha Fund, a tokenized property fund, to help it reach relevant connections.
On Monday, crypto community management firm AmaZix said that it had signed a deal with Issuance to jointly contribute to a safer digital securities market.
The digital asset-oriented market platform is expanding at a fast pace, thanks to the high demand in the security token industry. Issuance CEO Darren Marble shared with us his stance on the market. You can read the interview below:
CV: Hi Darren! First of all, can you shortly explain what Issuance is and how is it related to the security token space?
Darren: Issuance is developing a marketing platform that will allow security token issuers to market their deals directly to authenticated, interested investors. Our platform will include institutions, hedge funds, family offices, venture capital firms, accredited investors, and retail investors who seek to invest in this exciting new asset class.
While our tech team is heads-down building our platform, our services team has been busy selling streamlined advisory and marketing engagements to some of the industry’s most notable security token issuers.
CV: What’s the strategy behind attracting investors to show interest in security token issuers and how does Issuance monetize its business?
Darren: The first step is to know which digital asset funds are actively investing in security token offerings (STOs). Most broker-dealers fail this test completely, and are taking STOs to their traditional high net worth clients who are confused by the deals and don’t invest.
Issuance has trusted relationships with more than 200 US digital asset funds as well as an increasing number of international digital assets funds that are entering the space.
Ultimately, these funds are looking for the best teams, with the best tech, at the best prices. We help our clients prepare a comprehensive investment package inclusive of marketing materials (i.e., a white paper, lite paper, and deck), financial, and legal docs (i.e., proforma, use of funds, cap table, term sheet, and incorporation docs) before we take their deals to the market.
Issuance has three revenue streams. Currently, we are selling advisory and marketing services in a fee-for-service model. When our platform is live, issuers will be able to market their deals directly to investors using a fee-per-message model. Lastly, Issuance will sell aftermarket support contracts in a monthly recurring revenue model to issuers who raise capital and list their security tokens to a secondary trading platform.
Aftermarket support is rarely talked about, but it will be a critical service for issuers who seek increased visibility, liquidity, and market cap in secondary markets.
CV: You also manage CrowdfundX – does it operate similarly to Issuance? Is there a close relationship between the two?
Darren: Issuance has signed a Letter of Intent to acquire the assets of CrowdfundX, a leading financial marketing firm known for marketing some of the industry’s most notable Reg A+ IPOs. The acquisition, which will be subject to the completion of due diligence and definitive legal documents acceptable to all parties, will give Issuance an end-to-end suite of deal marketing technology and services solutions to security token issuers.
CV: Now back to Issuance, can retail investors take part in Issuance’s ecosystem? What can they get?
Darren: Retail investors will be able to invest in Reg A+ STOs listed on the Issuance platform. Reg A+ is a securities exemption that went into effect in the US in June 2015. It allows privately held companies in the US or Canada to raise up to $50 million annually, generally solicit or market their deal, and permits anyone over the age of 18 globally (aka retail investors) to legally invest.
Our team has more experience marketing Reg A+ deals than probably any other firm in the world. We know that Reg A+ discriminates, in that it favors established, retail business with a built-in audience of paying customers.
No Reg A+ STOs have been qualified yet by the Securities and Exchange Commision (SEC), but inevitably, they will soon. The bigger issue is that most (if not all) of the current batch of Reg A+ STO issuers are not a strong fit for this exemption.
I predict that over the next 12-24 months, larger, more established companies will begin to file Reg A+ STOs, and the best-in-class issuers will be listed on Issuance.
CV: Some say that the security token market is the same ICO industry in disguise – how would you counter these claims?
Darren: I think this is a misguided comparison. Security tokens are digital assets that are compliant with federal securities laws, run on the blockchain. ICO issuers, as we now know, were selling unregistered securities. Whereas token holders in ICOs own (mostly worthless) tokens that provide access to some future product or network, token holders in STOs have economic rights to the underlying asset – i.e., debt, equity, or a portion or future revenues or profits, for instance.
Security tokens are not just a trend in cryptocurrency--they are the next mega-trend in capital markets globally and are here to stay.
CV: Do you expect the security token space to get a significant share of IPOs? Why would companies choose to raise funds through an STO rather than IPO?
Darren: Yes. Over the next 5-10 years, STOs will further erode the US IPO market. Why? As Dara Albright highlighted in a recent Medium post, "Going public is not the issue. Being public is."
While being a publicly traded company used to be an aspirational goal for entrepreneurs, it has become a tremendous burden for most companies. Ongoing disclosure requirements are costly and cumbersome.
Tokenization promises a faster, easier, and more efficient way to achieve liquidity for a company's principals, employees, and investors.
CV: Given that security tokens represent an emerging industry, new players are continually showing up – how does Issuance plan to stay competitive?
Darren: Issuance will continue to exploit our advantages, namely, our technology, deep industry relationships, and years of investor marketing experience.
More than anything else, we are resilient. This isn’t our first rodeo, and we know that growing a successful business is like running a marathon. It’s not about who is the fastest out of the gates--it’s about outlasting everyone else.
Many competitors will fall by the wayside over the months and years to come. Only a handful will survive. We look forward to seeing them at the finish line.
CV: Thank you, Darren!
We are grateful to Darren for his time. Security tokens are a mega-trend indeed, and Issuance is showing great ambition to lead it.
Given that investors might be often confused about the various types of digital assets and the nature of security tokens, they can rely on Issuance’s competence to filter digital security projects so that only the relevant ones get exposure. On the other side, token issuers might use the platform to reach accredited investors, though not before adjusting their security token offering (STOs) according to the highest standards.