To: Key contacts
From: Michael Markowski
Re: Overview and evolution of digital VC industry
Date: May 3, 2019
My research on the SEC’s new regulations and securities laws which came into effect during the Obama Presidency led to the following:
- Development of the first digital venture capital (digital VC) model.
- Discovery of the digital VC industry, a serious disruptor to the traditional VC and investment banking industries.
- Creation of hybrid wealth management products, the first to incorporate venture capital investments in managed portfolios.
A digital VC is a magnet to attract the $88 trillion of capital that is managed by global investment managers. The digital VC’s utilization of algorithms to produce superior returns from the trading of ETFs, index funds and currencies provides it with a steadily growing base of discretionary venture capital. The digital VC has the discretion to utilize a portion of the capital obtained from non-accredited investors and trading profits to fund startups and to provide their shareholders with secondary market liquidity. In developing the model and products for Dynasty Wealth, the first digital VC, I was able to identify several other digital VC niches and variations to the model.
With several digital VCs on the white board and no competitors emerging, my efforts quickly went from that of an entrepreneur building a company to a visionary building an industry. Since the digital VC industry has similar demographics to Social Media, the new industry will rank among the world’s ten most profitable and valuable by 2030.
To lay the foundation for the industry, which had been originally named the Social Investing Communities industry, required the adoption of the strategy used by Alfred Sloan, President of General Motors (GM), during the 1930’s and 40’s to overtake Ford Motor. Under Sloan, GM leveraged its automobile engines and chassis to create and market multiple automobile brands at differing prices to appeal to varying demographic groups. This tactic enabled Sloan to usurp Henry Ford, who was famous for saying “any color as long as it is black”.
This digital VC industry features six digital VCs which address different demographics and niches. The wealth management products for each of the digital VCs are powered by the same engine. Unlike Sloan’s model, each of the digital VCs is a separate legal entity operating autonomously given that the financial services industry is highly regulated.
To build the industry required that a private capital markets eco-system (PCME) be developed. For more information about the PCME and the digital VCs view video of my keynote address at a startups conference.
Below is the outline of the history of the digital VC industry which began to evolve after the SEC released its new regulations and securities laws which pertained to the Dodd Frank and the JOBS Acts.
1. Need for Digital VC (former name social investing communities) industry discovered
2. First six digital VCs identified in 2014
Click here for list
3. Need for Private Capital Markets Eco-system (PCME) emerges
- View 9:06 sec. video
- Also, read article “Dodd Frank: Boon for Large Caps, Bust for Micro-caps”
4. Evolution of Digital Business Development ecosystem (DBDE) which began in 1959
- View 3:27 sec. video
5. Bull & Bear Tracker (BBT) algorithm and its derivatives which power the wealth management products was initially developed in 2016 to predict stock market crashes. BBT predicted the June 2016 Brexit crash and was mothballed after President Trump was elected. It was brought out of retirement and converted to a trend trader in April 2018.
- Read April 9, 2019, “NIRP Crash Indicator Renamed “Bull & Bear Tracker”; Signal Now GREEN” article.
- For the April 9, 2018, through May 31, 2019 period which the signals were published the return was 28% versus a 5.3% return for S&P 500.
6. First four digital VC’s have published startups recommendations Track records which can be used for marketing claims.
7. First Wealth Management product, Wealth Builder (algorithm/startups hybrid) developed in 2018
- Link to Kuvera Wealth Builder product offering page
8. The addition of Robo investment advisor to Digital VC model in 2019 was the most significant breakthrough for the evolution of the industry.
9. White labeling marketing strategy added to Digital VC model in 2019 was second most significant breakthrough.
10. First white labeled version of Wealth Builder product launched by Kuvera in February 2019
11. First white labeled version of Startups product TEST marketed by ICB Trader in May 2019
- View ICB distributor product launch webinar http://icbtradertv.com/iCBt.html
- View ICB product offer video http://www.iwebatool.net/0034x.php?user=trophy
12. Digital VC model perfected with seven Wealth Management products, April 2, 2019
13. BBT algorithm signal strength measurement system developed from March 2019 through May 2019. Based on back testing, the returns for the BBT are projected to increase by 100% to 200%.
Black Rock (NYSE:BLK) is the publicly traded company which the digital VC model can be compared. The investment management firm which recently had a market cap of $65 billion is a developer of ETFs. Black Rock also utilizes publicly traded and private equity investments to manage the assets of its institutional and high net worth individual clients. A digital VC is robo investment manager which utilizes proprietary algorithms to maximize the performance from ETF investments and invests in privately held startups for its primarily non-accredited investor clients.