EP 227 – Benjamin Twoon – co-Founder and Chief Commercial Officer of Fundnel – How Capital Converges Around Value

by | Sep 4, 2022

The Asia Tech Podcast had such a great conversation with Benjamin Twoon, a co-Founder and Chief Commercial Officer of Fundnel, a platform that is unlocking access and liquidity in the private capital markets.
Some of the topics that Benjamin and I discussed:
  • The sheer challenge of any entrepreneurial journey
  • The importance of capital and access to it to drive change
  • How the JOBS act of 2012 led the way
  • Where Hg Exchange fits in and why getting licensed is so important
  • The role that tokenization plays in capital access and liquidity
  • Some credible alternatives to Ethereum
  • The emergence of market-makers for digital assets
Some other titles we considered for this episode:
  1. I Am the Accidental Entrepreneur
  2. Give Me Four Years…
  3. Entrepreneurship Is a Catalyst for Singapore
  4. We Were All Very Committed to This Mission
  5. Value Is Being Captured In the Private Markets
  6. I Had to Go All-In on Entrepreneurship

Read the best-effort transcript below (This technology is still not as good as they say it is…):

Michael Waitze 0:02
Okay, we’re on. Hi, this is Michael Waitze. And welcome back to the Asia Tech Podcast. Today, we are happy to welcome Benjamin Twoon, a co founder and Chief Commercial Officer of Fundnel. Now that I know the proper wwayord how to pronounce this company, I like it even more and a founder of Hg Exchange. Benjamin, it’s great to have you on the show. How are you doing today?

Benjamin Twoon 0:25
Oh, are you Michael? excited excited to be here with you on the show

Michael Waitze 0:29
We are excited to have you. Before we get into the main part of the conversation. Let’s give our listeners a bit of your background for some context.

Benjamin Twoon 0:36
Well, I’m the accidental entrepreneur. I studied really hard in school so I didn’t expect to embark on this journey. Traditional finance guy like yourself, so did my rounds with city and and I was with pavilion energy, which is a subsidiary of Temasek. So we did investments in oil and gas. And how I ended up in the funnel, right. Back then, was really because, you know, I thought about joining the big investment banks, private equity, oil and gas. And looking back at my journey, it was an evolution right. I started with finance. And then there was obviously your financial crisis. There was Dodd Frank and Volcker. So everyone was getting out of finance. And then I thought, okay, let’s, let’s go to oil and gas, private equity, right. And then in 2014 2015, oil prices came falling down. So I said, you know, three strikes, I’m out, really have to go all in into, well, entrepreneurship. And I’m glad I did that, right. Because so far, it’s been one of the most fulfilling journeys in this life of this short life of my mind so far, and really the impact that we create, right, with the startups that we support, with the technology that supports what we do, and also ultimately with the lives that we impact, right, it’s been extremely fulfilling.

Michael Waitze 1:50
Look, I don’t think you can separate who you are from what you do, right? And you said this earlier, you’re the accidental entrepreneur, and you studied really hard in school. And you kind of hinted at this fact. And again, tell me where I’m wrong. That like the study in school gets you a really great job. I did the same thing, right? I worked at Morgan Stanley and Goldman Sachs. And, you know, I remember once early on in my career at Morgan Stanley, I told my parents, like, I’m just gonna quit my job and go teach English in Japan, because I wanted to live and work in Japan, and they were just like, are you insane? Like, are you insane? And I’m wondering for you, like you did it later on in life, right? So you were less insane. But did your family wonder like, you’re gonna move out of like, a traditional company and go into this unknown? What was that? Like?

Benjamin Twoon 2:37
Wow. Yeah, I think in a nutshell, it was probably one of the toughest decisions I’ve made, because obviously giving up a cushy job with a lot that was given to me, right as opportunity as compensation, and taking this in order to the amount of risk to start a company with with very, very little visibility of what’s going to happen. That was one of the toughest decisions back then. But you know, I’ll say this, I’ll say this. Ultimately, when you truly believe in the purpose of what you’re doing, you truly believe in the value that you will bring with what you’re pursuing right to communities, to people to lives. The people around you, your family members, your loved ones, right, we’ll be able to see that coming through there and the way that you share right with them about that decision, and they will support you. So in a nutshell, for me, I couldn’t have been where I am today without that kind of support from family members and loved ones and friends even. And looking back at that journey, obviously, a roller coaster, I think the one thing that helped me convinced them back then was I remember I said, Give me four years, it’s been eight years, it’s counting.

Michael Waitze 3:53
But isn’t that the thing, right? If you listen to all of the and I’m gonna put it in quotes, right? But if you listen to all of the startup hype, it’s like a company gets started. They do their Series A, they list on the NASDAQ, and everybody becomes a billionaire. And it all seems to happen in a super compressed amount of time. But you know, this because we talked about it offline. Like I like to say everyone’s an overnight success 10 years later, right? Like, what you were doing is like buying time from the family and friends like going, you know, it’s like when you know, you’re gonna be late, you’re like, I’m just going to be 15 minutes late, and then you call and go, maybe it’s 30. But you just say you’re going to be late, right? So the four years is a period of time to just like establish the base, knowing it’s probably going to take 10 Is that fair?

Benjamin Twoon 4:37
Well, I mean, you and I both know, that’s the pipe dream. And a lot of conventional media plays up the successes and that’s why you know, a podcast like yours, keeps it real keeps it authentic, right. You know, everyone everyone talks about the successes 99.9% of the failures, those aren’t necessarily covered. Those aren’t necessarily celebrated. So I think the The the suffering and the struggles and the challenges that every entrepreneur goes through, not a single one of them is free and immune from from these challenges. I think these are all real. And those should be surfaced, those should be unpacked a lot more and, and the reality is entrepreneurship, that journey, right? Building your own company, right? It’s probably the single most difficult, hard challenge you’ll ever face. Not just for a day, not just for a year, right. But for your entire journey. And maybe beyond.

Michael Waitze 5:31
Yeah, it’s super hard. I was actually on a call yesterday with a friend of mine, he and I are building some stuff together some stuff separately. And I was like, Dude, don’t you ever feel like, like, everything’s just going pear shaped? And he was like, Yeah, every day. And I said, then don’t you feel? Do you ever feel like things are just amazing. He also said to me, yeah, every day. And I think it’s a little bit of an exaggeration. But the ups and downs, I think are things that people rarely, I wouldn’t say never, but rarely talk about. I like talking about them. Because I want to be the counterbalance to the hype that you talked about earlier. I want to ask you this too, though. You know, one of the things that makes them something so risky is it’s like, like you said, it’s limited visibility. And that’s a concept. I think that’s hard for people to explain. But you also said committed to something? What was the thing that you were committed to right? When you looked at the market, and said, I’m going to do funnel? And I want to get to the founder, the co founders as well, right? Because I think that building, that team is also really important. But what is the thing that you are committed to going? This is going to take some time, but I know things are going this way?

Benjamin Twoon 6:40
That’s a great question. And I think this this resonates right. For me. I think entrepreneurship is a catalyst for Singapore for the country, you know, that I’m based in, and also for Southeast Asia. This was back in 2015. So these were before your waves of unicorns, DECA corns, you know, you’re probably like not even looking at even having like five unicorns back then. Now we have, yeah, we have multiples, right? I always believe that change, right? Positive Change has to be driven with entrepreneurs and entrepreneurs isn’t just someone that you know, wants to start a business, right, but it’s willing to stick his or her neck out, right, and say, I want to create that change, I’m going to stick my reputation, I’m going to stick my everything right to make this work right for the better. And that was really the catalyst for us leaving our jobs saying that look, capital is so important, right? To drive, that change, right capital is important to bring good people together. capital’s important to catalyze right there, their innovative juices, the ideas that they have, and you want to bring to fruition. And that was why we started funnel because we wanted to create infrastructure, right, and give people the platform to reach out to investors to get these great ideas funded, and ultimately bring the change that they hope to see in the world.

Michael Waitze 8:05
So you said we left our jobs, were you all I mean, it’s your words, and all of you, but like, were some of you working together? You know, was it like one of those things where you’re sitting at your desk, and you’re just like, you know, we may be able to have more impact? If we did this thing which we talk about every day at work, like why can’t we do x? Let’s just go build X instead?

Benjamin Twoon 8:24
Yeah, that’s a great question. So my co founders, Calvin and Calvin, they were both ex bankers at JPMorgan. I was obviously in the other US Bank city. But essentially, essentially, this was really off the back of the Jobs Act, right that Obama signed, you know, back early in, in day, right. And we looked at the US as a leading indicator and saying that look at the Jobs Act, right, was going to be a catalyst, right for the early stage companies in the US, and it was going to benefit the economy, in that job creation in that smaller businesses were given funding and could access the funding that they required, then, of course, that would be Southeast Asia, right? That will be the markets that were in, maybe five years later. So that was the bet that we were willing to make. And also that was the change we were hoping that would be realized in the ecosystem.

Michael Waitze 9:16
And, again, this is really more just for me than for anything else. I once coordinated leaving my job with somebody else. And I’ll never forget the day it was back then there were no cell phones. You can see you can imagine how long ago was really. And I remember calling each other and going okay, I’m just about to go do this. I’m just about to walk, you know, I mean, was it like that? Or was it more public at the office where like, people kind of knew what you guys were thinking or you know what I mean?

Benjamin Twoon 9:45
Yeah, I know. It’s interesting because Calvin was in Hong Kong. Kellyanne was in Singapore. I was in Singapore. I knew cut into Kelvin from common friends. So we kind of all left our jobs at separate points in time. Got it. And you know what I squeezed in a month Uh, in the US for holiday, we

Michael Waitze 10:02
did the same thing. But anyway, I didn’t say that.

Benjamin Twoon 10:07
But yeah, but yeah, I needed I needed some some headspace right some time before I knew that this was going to be a long journey. And yes, no, this is not like, Sprint, right, this is a marathon and and so yeah, it wasn’t as well coordinated as you’d see in the movies, right. But we all were very committed to this mission, right that we were hoping to achieve right with the company back then when we started.

Michael Waitze 10:30
So what’s happened between what did you say was founded in 2015? What’s happened in the interim? It’s almost seven years later now, right? Like, what has the growth been like? And has your like, did the jobs impacted the jobs that have the impact that you thought it was going to have? Because I think it kind of did. And even if it did, like, what’s changed in the interim years?

Benjamin Twoon 10:52
Well, we started working out of a car workshop in 2015.

Michael Waitze 10:56
What does that mean, now? In Singapore?

Benjamin Twoon 10:59
In Singapore. So we were bootstrapping started out in a car workshop, second floor of a car workshop. And back then we were a team of six people. Okay. Today, we’re almost 10 times in terms of headcount. And back then we only we only had the Singapore office. Now, today, we have four offices, Singapore, Malaysia, Indonesia, India, right. In back then there was no regulatory framework or regime. Right back then we had no licenses. Today, we have two licenses in Singapore, potentially another two more that we’re adding on? What are the licenses that you have in Singapore? We have two licenses. So the first license is capital market services license? Yep. That’s for dealing in securities. We also have the recognized market operator license is under a sheep’s change, right for the digital exchange, right. And we’re adding on a digital custody license, adding one fund management license, there’s a lot going on for us, right, even in a couple of months ahead. In Malaysia, we have a recognized market operator license as well. So as you can imagine, the kind of business that we do is one that is highly regulated, right, and the track record the trust that the regulators must have in you to give you that extremely high.

Michael Waitze 12:13
Sure. What’s the goal here though, right? I mean, you’ve got a capital markets license, which is really interesting, but then the RMO license as well, right? How do all these things fit together? And how does the HG exchange fit into the funnel group? Like what’s really going on here? Give me an example. Like, I’m a private company. What do I do with funnel?

Benjamin Twoon 12:35
Yeah, I think that is the holy grail, right? of private markets, right? How do you facilitate access into private markets? And then how do you help the investors? Right? Recycle capital? So to your question, Michael, if you’re a private company today, and you’re looking to raise capital, right, under the capital markets services license, we’re able to support the company in the capital raising process, right, so we can put the company on our platform, and we can facilitate smaller ticket investors or early stage investors, or it could be you know, even high net worth individuals, family offices, who might want to participate, right? In your early stage fundraising endeavors, right? Subsequently, as these investors make those investments they might ask, right? After three, after five years, how do I find liquidity? Right? So there are two ways in which we can also support that liquidity mechanism. Firstly, under the fund management business, I was talking just now about what I alluded to write there are several strategies, what we call secondary strategies, right? Where the fun can buy secondary shares. So it’s not buying new shares, right? It’s not subscribing to new shares. I beg your pardon. But it’s purchasing existing shares from shareholders, founders, early employees, right. So that’s one potential avenue for liquidity. Now, the second avenue for liquidity is obviously on the exchange, right? And as you’d imagine, that would mean tokenization of those shares, or what’s going on in having that being traded? Right. So I think that’s extremely complimentary. And that’s how the phenyl group comes together. It’s not just raising capital, which is one off, it is also about thinking what happens right beyond that, to transfer risk to investors that may be willing to take on that risk, three to five years from the first time the company raise capital. So I think that’s extremely important.

Michael Waitze 14:28
I think it’s super important. And can you talk about this, just again, so people can understand just dig a bit deeper for me hear? You said the word liquidity like three or four times, right, and, you know, I come from a stock trading background and listed so let’s call them public markets, right? And there were entire strategies around trading illiquid, so infrequently traded stocks that didn’t trade a lot of volume on any particular day, frankly, in any particular month. Why is liquidity so important for price discovery for ownership trends? For like, why does it matter so much? And how do you facilitate it in a tokenized? Secondary Market? Because that’s the real interesting part of this. Yeah.

Benjamin Twoon 15:08
Absolutely. And I’ll tell you why liquidity is so important, right? Because first and foremost, private equity, venture capital, investing in private companies. Yeah. Whether it be through funds or direct into company, it is becoming so accessible, and the many platforms that would enable you to do so. Right with fractional tickets, right. Okay, everyone’s about lowering ticket size, right? The one thing that people may not realize or may not have experience, especially investors that are new to this asset class, is illiquidity. Right, it’s been locked up for 10 years, right. And a lot of times when they do need capital urgently, for whatever reason, right? In the stock markets in a public markets, you call your broker or you put it through a platform, and more often than not, right, you should be able to get that order to sell filled, right, whether in a couple of hours, on several days, some depending on yourself, at some price at some price. And also, because there are a lot more market makers in the public markets, okay, in the private markets, that is underdeveloped. And that scares me, right, that were touting massive growth in AUM for the private markets. But there is an absolute lack of infrastructure of ecosystem participants, right, like the market makers, I spoke about right to drive a liquid private market. And that’s why it’s so important, right to solve this, because that’s the only way the private markets can grow at this sustainable rate. Right, as opposed to everyone coming in getting invested. Right, because of the excess because of everyone’s desire to make the 5x 10x. Right, yeah. But then after, and then after they make those gains, or rather they make those paper gains. The question is, oh, how do I sell this? How do I how do I realize those gains? Right? It is not your

Michael Waitze 17:04
cut my losses? Either one, right? Absolutely. Absolutely.

Benjamin Twoon 17:07
Yeah, we’re seeing an all time high, like an all time high interest in privates. Right, because of how value now is being captured. Before IPO, post IPO, if you’d looked at a lot of the top tech companies, especially in this part of the world, Asia and Southeast Asia, right, you looked at the performance of those share prices, right? They’ve come off significantly, right. 70, even 80% of those share price has fallen right from the IPO price, right? So value is being captured in the private side of the mark? And

Michael Waitze 17:39
can we just understand as well, what tokenization? Like, what’s the benefit of tokenizing? This as opposed to just having it be? Right? Because the thing about the public markets is if you want to list on the Singapore exchange, if you want to list on the Tokyo Stock Exchange, if you want to list on the NASDAQ, you have to meet certain listing requirements, right. And that’s why you have faith in it. It’s so and it’s blind trading, right? So if I buy a share of Apple Computer, I don’t know from whom I’m buying it. And if I sell it, I don’t know who the buyer is. Right? So that’s one of the benefits too, but I trust the fact that the exchange is going to settle with me. That’s why the exchanges exists really, right. That’s the idea of centralized exchanges. We can talk about decentralization later. But what’s the benefit in the private markets of tokenization? Is it is it just to make sure that the listing requirements are okay, is the line blurring? You think between public markets and private markets as well? I know there’s a lot in there. But

Benjamin Twoon 18:32
ya know, I think I think great question, right. tokenization is a means to an end. Okay. And and we can always talk about the benefits of tokenization in relation to, you know, fractional ownership, right, you’re breaking down meme tickets, because obviously, liquidity is a function of that as well. Right? The smaller, the smaller, you can break up, right, that chunk, it’s almost like imagine if today, share in a public markets was 10,000 per share, as opposed to like 100 per share, obviously, at 100 per share, you’re gonna see a lot more retail participation and, and as a function of that liquidity. Now, for me, to your point on governance, I think that’s extremely important. Yeah, at the end of the day, liquidity will be there, when there is a good company that people are interested in, that has good growth prospects, and that people want to get into right there will be demand. And hopefully, as the company grows, right, there should be a very healthy and sustainable uptick in terms of pricing to reflect that growth. So for us, right at a history exchange, whatever we list on the exchange, right, which today includes asset backed security. So it’s it’s tokens tied to real world assets, real assets that that we believe will grow in value. It’s also private companies, private shares of companies, right now. We do a serious serious amount of due diligence on every single offering before we can listen on the exchange. So there is a listing committee right and before any of these listings are approved for for tokenization. And then subsequently listing of token on the exchange, there is an independent committee that sits down and goes through all this all these documents, right? So Well, it isn’t as onerous. It isn’t as long drawn as a public market listing. But there is some work that goes into it. And that work is substantial to bring us to a point that we say we’re comfortable with the issuer, we’re comfortable with corporate governance, we’re comfortable with the asset, or we’re comfortable with the company that we’re going to put onto the exchange. So I think in a nutshell, governance, and that process of due diligence is also important in private markets. So great even,

Michael Waitze 20:42
yeah, maybe more. So Right. And I want to talk a little bit more about this asset backed securities, again, just so people that aren’t familiar with them can get a better understanding, because I think what something like the HDX exchange is doing is actually two sided. The first is it’s changing the nature of the people. So who can invest, but it’s also changing the things into which they can invest. In other words, because you can fractionalize it using tokenization, which may sound confusing to some people, it means that I can invest in hard assets that were not accessible for investment before, not just the things that people think about when they think about investing. Does that make sense?

Benjamin Twoon 21:21
Absolutely. And that’s exactly what we did. Can you give me an example? Yeah, so one of the fun examples that I like to talk a lot about is whiskey casts. Right. And we were the first platform, I would say, at least to my knowledge in the world to list the whiskey cask right on a digital exchange now, because there was obviously a lot of interest. And I think if you read something like Frank reports, this extensive literature about how whiskey is probably one of the top alternative luxury assets in terms of a 10 year performance. Yeah, but 500%.

Michael Waitze 21:57
But this is really interesting, right? Because whiskey trades in a way like Berkshire Hathaway stock trades. And you mentioned this before, right? Berkshire Hathaway trades at $462,000, give or take a share, which means that it’s not investable for regular people. Even if I want to invest with Warren Buffett, I can’t do it because I can’t afford to buy one share. But whiskey itself is also expensive. Even if I have a view on whiskey, I can’t put 10 bucks into it, I have to put 1000s of dollars into it. So if you’re suggesting that the tokenization allows me to put my I’m putting in quotes 10 bucks into it? Well, then it and I hate to use this terminology, but then it democratizes not just like I said, Who can invest but into what it can be invested. Does that make sense?

Benjamin Twoon 22:41
Absolutely. And if we could do that for whiskey, we’re doing that for wine, we’re doing that for art, we’re doing that for a lot of other non traditional assets. And as you mentioned just now, right? Like, really, these are all the assets that have grown in value, right tremendously over the last 10 years. And people want access to these assets, we get inquiries from people all over the world, we get even inquiries from private banks, because their clients are asking them for exposure to such assets. And many times it goes through a fund structure, right? We don’t have a fund manager that looks after all of this. But you know, investors are getting more and more sophisticated. Yeah, they want to be able to pick the artwork that they get to get exposure to they want to be able to pick the whiskey costs that they have partial ownership in. And with the exchange with fractionalization, they’re able to do so. And they’re not only able to express their view, uncertain distilleries, they’re able to express the views on certain vintages. And they’re able to customize that exposure in terms of the different costs, right? So certain costs, they can buy more tokens and express a more bullish view and the other cast where they can buy less as well. So a lot of customizability when it comes to putting it on exchange and where people can trade it. So it’s still actively trading on exchange these these whiskey tokens,

Michael Waitze 24:01
how has the low interest rate environment impacted the things into which people invest?

Benjamin Twoon 24:08
Yeah, you know, when interest rates were low, basically, everyone was taking a lot of risk right? In the private markets as well, because you could essentially borrow money at near 00 and deploy it. Yeah, near zero and deploy it. Right. And to high risk type investments. And on a risk adjusted basis, especially in the boom years. Over the past, I would say even true COVID. Right. until just recently when the stock markets corrected. Right, and even crypto markets corrected. You could basically make a lot of money just by ETFs even. Yeah, so I think I think low interest rate environments, people would would take a lot of risk. And because people weren’t able to travel, people will spending money on luxury assets, luxury watches, like cars, buying houses, buy whiskies, buy wines are right. So I think it’s not just investment I think he was consumerism As a whole benefiting from the low interest rate environment,

Michael Waitze 25:03
I think times have changed. Yes. Can we talk about the technology side of this as well, again, just because it’s something that I’m curious and I’m curious about, we can look at the tokenization of everything. And I think if I’m if my memory serves me correctly, we were looking at tokenization. Initially through the ERC 20 or 21. I think it’s ERC 20 tokens, right, yeah, but the tokens themselves. And then we moved into these non fungible tokens, which to me are really just like a legal framework around the ownership of an individual asset, having nothing to do in particular with apes and art and stuff like that. Right. Let’s just put that aside. But that is an Aetherium based thing, right? I mean, think people just take for granted that there’s only one platform that has smart contracts where things can get, you know, tokenized, is there a movement away? Or is there at least a diversification from the theory, which tends to be a little bit expensive, right, to process stuff? Gas gets expensive as people start buying and selling and doing more transactions into something like polygon, or is all of this going to stay ERC? 721? You know what I mean?

Benjamin Twoon 26:12
Got it. Short answer is, I think it really depends on the outcomes, right, that that you’re looking to achieve. A lot of people pick Aetherium back in the day, because basically, that was the easiest way for them to get funding. Yeah. Right to get funding. Right. And, and it was a very widely accepted protocol. And as you said, back in the day ERC 20 This was widely accepted as a gold standard. Right. I think the competitors are what we call the L one, the layer one protocols. A lot of them have also upped the game. Like today, if you look at open sea, right largest platform for NF Ts. Yep. It’s not it’s not just theorem based offerings. It’s Alana as well. You have to Solana has come a long way. Right. So you mentioned polygon and a whole bunch of other protocols a Vax. Right, that we look at. Right? Polka Dot, right? I think, if you look at the amount of technology out there that’s being developed from a protocol perspective, from an L one perspective, layer one perspective, it was definitely facing very stiff competition. And well, obviously, gas prices have come off on $1 from $1. Perspective significantly. So. For me, it’s 50%. off right from 4000. Right now. Yeah, down 3000. So it’s 50% off, right. But again, it’s still not cheap, because I’m sure Michael, remember back in the day wasn’t even $600 not as cheap. As $600 Everyone’s saying it to him was expensive, I think even at $200. Right. But But I think the point is this, I think a theorem definitely has the benefit of having the investor base, right people that will back projects, right that are on the Ethereum blockchain. Right. But I do see a lot of credible alternatives coming up. And I’ll give you give you a case in point. So for each exchange, right, right, we’re working to it’s also Aetherium. Right? listings, right. But today, we’re using silica. Right, Silica is our protocol. Right? And because silica is a shareholder, and as well as strategic partner of our exchange, nice, right, that allows for high level of customizability. And, and really allows us to launch anything, right? Whether it’s whiskey, wine, art, idiosyncratic, idiosyncratic offerings, I call it right. Right enables us to bring that from cradle to grave, right, in a matter of weeks, if we if we work with silica, because they are like a dedicated kind of protocol, and also a dedicated development capability that we can write. So that’s important. That’s important for us.

Michael Waitze 28:45
Can we get back to this idea of taking risks, right? So your co founders worked at JP Morgan, you worked at Citibank, I worked at Citibank, I never worked at JP Morgan, I worked at Morgan Stanley, but close. Right. But is there an excitement about what you’re working on? I think I can hear it in your voice. Do you know what I mean? Because it’s kind of like on the cutting edge. But, but again, you know where it’s going, right? You said limited visibility. But I feel like there’s a visibility funnel. And again, tell me if I’m wrong, where like maybe five years ago or six years ago, you’re like, I don’t know. But I think and now, aren’t you more like, I’m pretty sure, let’s execute. Do you know what I mean? And isn’t there an excitement around? God? We can’t move fast enough, but not because you’re in a hurry, but because it’s just so exciting. Does that make sense?

Benjamin Twoon 29:33
Absolutely. I mean, you know, a lot of people asked me what keeps me up at night. Yeah. And I can tell you it is exactly that fear and excitement. And it is it almost sounds like it’s polarized, right? Like yeah, it’s Yeah, but the truth is, it’s the same, right? On one hand, I’m so excited about all the opportunities that we have and and you know what we’ve and for everyone, right on podcasts, listen to podcasts, like web three, right? And this revolution, right? This decentralized economy will bring so much change, yet so much opportunity. So the excitement of the opportunity, but the fear of the change. So even funnels seven years, we’ve grown so much, right? But every single day, we’re asking ourselves, How is this economy going to evolve? How is our business going to evolve? Who are the new competitors, right? And the new entrants? How are they going to change the lay of the land? How are the rules of the game going to change? And and I tell you, with web three with Blockchain, that change is only going to be accelerated massive catalysts for that change. And that’s what gets us so excited, but also gets scared at night, right? Thinking around what we need to do next. Do you see?

Michael Waitze 30:45
And do you think that there has to be a dedicated place for this? Or do you think that things that exist in the metaverse are also going to be tradable? Through some plot, whether it’s, what did you call it zilliqa, or polygon or Ethereum, or whatever it is, but that there are also end game assets as well. We can talk about that too. But they’re also that they’re going to sit on exchange to that the ones that really have value, right? And that people really want to buy and trade and that are interoperable, will actually trade on exchange and not just in one place. Do you know what I mean? And that the market making those will kind of grow too. And we can argue about whether the metaverse is real or not real, but we’re moving in that direction. I feel like it’s one of those things where like, we’re going there, you can say we’re not gonna go there. But when we get there, you’re gonna be the only person out in the cold without a jacket for the metaverse kind of thing.

Benjamin Twoon 31:38
Yeah, no, I fully agree with you. And I you don’t want at the end of the day, right. What you mentioned, will it trade on an exchange with every market making? I believe that capital and the infrastructure that facilities capital will converge right around? Value, right. And when I say value, it could be assets in the real world. It could also be assets in the digital world. Right. And it will be assets in the metaverse. So at some point, that will be a big enough demand, right from obviously, the crypto investing community and as well, the traditional investing community to want to gain access right to such assets. So it’s no different from the case in point of funnel when we were looking at private companies back in the day seven years ago, right? What I’m seeing now seven years later, is basically Metaverse, right. And yeah, assets in the metaverse. Yeah, digital private assets, if you think about it, right. So your digital jacket, right? Maybe today, there may not be as many buyers are interested in that jacket. But seven years later, people might want to buy a jacket that Michael owns in the metaverse and there will be there will be infrastructure that will be also capital, right? That is speculating, also taking a longer term view on those assets. And they will they will appear, right? Once the value has grown to a point where it’s basically a hit scale, right or hits a critical mass.

Michael Waitze 33:06
Yeah, and look, the ability to buy and sell assets up until web three, and the decentralization of these assets in a digital format was in some way extremely local. Right? Like you had a Sotheby’s auction in Manhattan that sold art from Monet. And you literally you almost had to be in that room or have somebody in that room, kind of communicating with you over a cell phone to be able to make bids and offers on these things, mostly bits, yeah, because they’re selling them. But what this has given us is the ability to then distribute this globally and instantaneously for all types of assets. And I want to ask you about this. And to be fair, you know, we saw this in the stock market, there was a time where stocks actually traded through digital platforms, and on the floor of the stock exchange at the same time, and there was an arbitrage, right. So on the floor, maybe was trading at a higher lower price than it was on the digital exchange, you could trade against them make no sense. So they just digitized everything because it made it more immediate. The same thing is gonna happen, I think across all asset classes, and tokenization is going to make that available globally. But you did mention before that there simply aren’t enough market makers. Right? How does that change? I don’t like I’m thinking in my head. Is it like winner take all in the market making space? Because that’s not good, either. But if it’s not, how do we expand the number of market makers so that price discovery is more efficient?

Benjamin Twoon 34:38
Great, great, great question. So I mean, to your point just now about, you know why this is such an exciting space. I think, firstly, we’ve seen at least in the past 12 months, right? Yep. Massive uptick in terms of institutional participation in this space. When I talk about institutional capital. I don’t just mean your traditional financial institutions, right. I mean private equity venture capital, everyone is taking a view on or taking a position in. right blockchain web three cryptocurrency, right there is they have a view whether they deploy capital or not. That’s a separate question. But everyone has a view. Yeah. So with that in place, right, not only will we see massive innovation, massive developments and improvements, right, in technology, and also in the developments in the space, I think you’ll also see massive opportunity for market makers to come and intermediate right now, market makers would not take positions, or they would not market make in a situation where liquidity is extremely thin, or on very, very volatile on extremely volatile prices. Right, whether it’s cryptocurrencies or digital assets.

Michael Waitze 35:51
Yeah. And that’s true for every asset, I think. Yeah, sorry. Go ahead. Yeah,

Benjamin Twoon 35:55
absolutely. So as institutional capital comes in, as market caps start hitting sort of larger quantums. Right. I think we will see, especially for more established, say, cryptocurrencies or digital assets, a trading bat. And with a sustained ban of price trading within the mean, right range, market makers will start participating market makers will, there’ll be an inflow of market makers, there shouldn’t be no shortage of those market makers. Yeah, especially at the exchanges get larger.

Michael Waitze 36:30
And actually, they’ll drive that band. They’ll make the band and this is what happens in any trading market is, this is I use the word price discovery, like very deliberately, this idea of actually knowing where something trades where we used to say, you know, if you’re, if you’re a 70 bid and a 90 offer, well, you could drive a truck through that spread. And the idea is to have the spreads be as tight as possible, you know, this right, so that it’s a real price. And if you look at the way, and I’m dating myself a little bit, but if you look at the way HSBC used to trade in the Hong Kong market, it was literally like $100 million on the bid and 100 million on the offer your choice, which way do you want to go? Yeah,

Benjamin Twoon 37:06
absolutely. Absolutely. And you see, the thing is this, right? I mean, with more institutional capital coming in, there will also be much stronger support, especially right on counters where people are bullish, and they’re going long on right. Now, obviously, on the flip side, on the flip side, you have a lot more hedge fund participation, you also have more volatility that’s being added by some of these traders. But I would say that for a lot of the capital that we see investing in the space, right, it has been beneficial a net benefit, right, for price stability for most of these more established names, more established assets. So the caveat here is that it may not apply to a lot of the earliest stage tokens, but I love the earlier tokens before they actually hit one of the major exchanges. So we just have to cover it’s a massive caveat. And we have to be careful, right when looking at some of these early stage projects, but with a lot of the guys that are trading, say Bitcoin theory, even to some extent, some of the more establish nfts, right, like board, ape, crypto Park, that is a band where market making can can come in and be a net positive, right for for all participants. Yeah,

Michael Waitze 38:17
I want to get a little geeky for a second, if you don’t know mind. Some liquidity is provided in the markets through prime brokerage businesses that hold stocks in custody, and then allow me to borrow those stocks paying the owners of those stocks, some fair interest rate, which is gets decided by the market, which then allows me to sell them short, because my view on them is different than the view of the owners of those stocks. And in the public markets, that’s relatively straightforward. There are some markets that restrict short selling because they just think it’s evil. But at some level, short selling can be good. If it just provides liquidity. There are some cases where it’s bad, right, particularly in market manipulation situations. But is there a place? And I always go back to the same example like I would have loved to have been able to short we work because it was obviously it was some kind of scam? Is there a way in the HD exchange and other digital marketplaces to create a prime brokerage style business so that there are assets there to provide more liquidity, particularly for market makers, so that those assets can be short sold as well, so that people don’t just have the choice of buying, doing nothing? Or selling?

Benjamin Twoon 39:30
That’s a great question. And today, well, it’s not something that we offer, right as a solution on our exchange. Okay, I would say for most exchanges for that matter, right? But I do see a massive potential for that with synthetics, right. So you don’t necessarily have to lend shares. So with short selling, right, you essentially lending off shares, but to mirror to mirror that essentially is creating, say for example, a contract for difference CFDs and in that way, you don’t necessarily have to limit yourself to lending shares or to number of shares your custody. So I think there are creative ways to get around that. Right. But again, it begs the question, right? Yeah, in order for that to happen, you need someone to take the opposite side. Yeah, true. So that’s on the synthetic, right. But again, short selling, I do agree with you is, to some extent, it is beneficial for the market. We’ve seen, obviously, cases where with market volatility prices have just gone like 50% or more of the of the tops. Right. My personal take is that especially for cryptocurrencies and especially for digital assets, I think the ecosystem needs a little bit more time to mature, right for short selling to become a viable and a net beneficial solution, right for anyone looking to provide liquidity to markets.

Michael Waitze 40:56
Got it. Okay, look, we’ve covered a ton of ground probably more than you expected, but hopefully you had a good time. Yeah, I really want to thank you, Benjamin Twoon a co founder and Chief Commercial Officer of Fundnel and a founder of Hg Exchange. I’ve really enjoyed this. I hope you did too.

Benjamin Twoon 41:12
I did. It was so much fun, Michael. Can’t wait to be on next time.


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