tZERO CEO Saum Noursalehi has published an update on progress pertaining to the digital security platform.
tZERO is part of Overstock (NASDAQ:OSTK), a company that has recently experienced a solid increase in its share price since the beginning of the year. Overstock is scheduled to release earnings tomorrow (July 30) before the market opens. The company has scheduled a conference call and webcast for 8:30 a.m. ET.
In a “Dear Investors” letter, Noursalehi said the value of their blockchain-based ecosystem is “becoming increasingly relevant as companies remain private longer, while their investors have limited options for secondary liquidity.”
Noursalehi said that tZERO’s Alternative Trading System (ATS) is currently transacting hundreds of thousands of trades each monthe and growing rapidly.
“While this volume may be a fraction of what is transacted in the traditional world, it is a major and positive trend in our growing ecosystem. This platform allows retail investors the ability to invest in these exclusive assets and offers issuers the opportunity to provide valuable liquidity to their existing shareholders. We believe tZERO is the solution to democratize access to private markets,” said Noursalehi.
Noursalehi claims that tZERO facilitates 95% of security token trade volume today.
Noursalehi says that tZERO’s cash burn rate is down as cost reductions have kicked in and the company continues to execute on its roadmap.
Key objectives going forward include trading new issuers on the ATS, integrate more brokers, while integrating primary issuance platforms – and more. He believes that the biggest near term opportunity is in the real estate sector and pre-IPO companies. Noursalehi says that companies looking to raise capital is an opportunity they have shifted their focus to existing digital securities.
“There are over 200 companies and/or assets that have been tokenized to-date. Many of these assets do not meet the criteria for our platform, either in size, quality, or both. There are some, however, that tZERO ATS may be interested in trading, and the business development team has had positive engagement with these issuers. The second category of issuers we are focused on is private companies, particularly those with a large number of investors, and other illiquid assets, such as commercial real estate. This represents the largest category of potential issuers as there are not many liquidity solutions available to these types of assets today. Our competitors in the pre-IPO liquidity space tend to exclusively service unicorn-type companies. Furthermore, they do not offer a live trading platform for their assets. For example, purchasing equity in a company often requires a middleman to facilitate the transaction and a minimum investment of $100,000, which can take months to close. Effectively, it is like buying/selling a home, which is an inefficient and costly process. Our platform, on the other hand, allows investors to trade shares of private companies in a streamlined experience. There are no minimums and, in most cases, non-accredited investors may also participate in investments. This is where we intend to focus the bulk of our business development efforts. Also, given there is no capital raise associated with this cohort, the variables that can impact success and timing are significantly reduced, and often an asset can be live and trading in a matter of weeks from signing.”
Noursalehi says they continue to work with FINRA and the SEC on their retail broker-dealer – tZERO Markets.
Expect additional information to emerge during the Q&A portion of the earnings call tomorrow.