We got a chance to interview Saum Noursalehi, CEO of tZERO, the leading blockchain-based marketplace for trading tokenized private securities.
Hi Saum, Thank you so much for this interview. Just to start with, Could you please tell a bit more about yourself and your journey to tZERO?
Having studied Computer Science in college, I have always had an interest in technology, particularly artificial intelligence and blockchain technology. I worked at Overstock for 12 years, holding a number of leadership positions in a variety of functions at the company, including technology, product development, R&D and marketing, and company president my last two years. When the opportunity arose to become the CEO of tZERO, I could not pass it up. While there was some ramp up on the capital markets front, my experience in dealing with public company markets as a senior market facing executive at Overstock and my interest in innovative technology allowed me to transition without too much difficulty.
What exactly is tZERO and could you please explain it in a brief?
tZERO provides a blockchain-based liquidity platform for private companies and digital assets. We offer institutional-grade solutions for issuers looking to digitize their capital table through blockchain technology, and trade on a regulated alternative trading system. tZERO democratizes access to private assets by providing a simple, automated, and efficient trading venue to broker-dealers, institutions, and investors.
We understand tZERO is an SEC-registered Alternative Trading System that facilitates the trading of digital securities. Could you explain more about the tZERO marketplace?
tZERO ATS is a FINRA member broker-dealer that operates an SEC-registered alternative trading system (ATS), which facilitates the secondary trading of digital securities.
In addition to creating liquidity for private securities, we are building a one-of-a-kind consumer-facing product to trade all assets. This user trading interface will include access to digital private securities, the most actively traded cryptocurrencies, and publicly traded stocks. No other offering has the breadth of investment opportunities that this unified experience will provide.
How is tZERO ATS different from other private market platforms and competitors?
- Continuous Trading – In addition to being a blockchain-based ecosystem, it is the only live private market platform that offers continuous and ongoing trading.
- Many Investor Types – It is accessible to all investor types (i.e., retail, accredited, institutional).
- Supports Diverse Assets – The tZERO ATS has the ability to host the majority of asset types, including private companies, funds, and real estate.
- No Minimum Investment – The buyer and seller matching environment on the platform sets the price of the particular asset in a continuous, automated way. We trade assets that may be freely transferable under federal securities laws and do not require minimum investment sizes unlike other venues.
- Lowest Trading Fees – The tZERO ATS has the lowest investor fees in the private markets.
- Fast Settlement – The platform offers same-day settlement, minimizing the challenges posed by the current T+2 settlement cycle. In the coming months, we expect to support even faster near-real time settlement.
What all digital securities are currently available for trading on the tZERO ATS?
The tZERO ATS currently supports the trading of three digital securities: TZROP (tZERO’s preferred equity), OSTKO (Overstock’s Digital Voting Series A-1 Preferred Stock), and ASPD (Aspen Digital Inc.’s equity). We’ve also announced future assets that plan to trade on our platform, including:
- EnergyFunders – $25 Million of Equity Interest in EnergyFunders’ Yield Fund I – EnergyFunders, an energy projects funding platform, signed an agreement to digitize approximately $25 million of equity interest in EnergyFunders’ Yield Fund I, the company’s largest fund to-date that will invest in oil and gas assets throughout the U.S.
- Liquid Mining Funds – $15 Million Equity Interest in Liquid Mining Funds – Liquid Mining Funds intends to enable the trading of $15 million equity interest in Liquid Mining Funds, which are focused on investing in institutional-quality bitcoin mining development and operations.
- ROI Group – $50 Million of Securities in a Landmark Luxury Hotel & Residential Development – ROI Group, a global real estate development company, plans to digitize up to $50 million of preferred equity in a luxury hotel and residential development located in downtown Dubai. The company expects to collaborate with tZERO on future real estate projects.
- Alliance Investments – $640 Million of Assets – Alliance Investments, one the largest developers in Northern UK, intends to digitize at least $25 million of the value of River Plaza, a 180-unit multifamily development located in Manchester, UK. River Plaza is the UK’s first real estate-backed digital security offering and the first project of Alliance Investments’ real estate digitization plan to tokenize approximately $640 million of real estate projects across the UK over the next several years.
We are in discussions with many other prospective issuers, a number of which are in later-stage discussions. We expect to have additional assets trading on the platform in the near future.
Where do you see tZERO’s role in the future of the digital security market?
Since its inception in 2014, tZERO has been a pioneer in the application of blockchain technology in capital markets. We are driving the adoption of digital securities, broadening investor access and enhancing liquidity on the tZERO ATS, and providing a roadmap for additional issuers to access secondary liquidity. This is underscored by the increase in volumes for the year. In 2020, the tZERO ATS saw share volumes increase by 228% YoY and dollar volumes increase by 896% YoY. The assets on the tZERO ATS represent nearly 80% of all digital security value and are responsible for approximately 98% of dollar trading volumes.
Our goal is to continue to lead the pack in revolutionizing digital securities.
What do you think about the future of cryptocurrencies?
I believe we will move towards mass, global adoption as both awareness and acceptance continues to grow and crypto/blockchain technology advances. As we reach this secular shift towards digital, we expect regulators to navigate a supportive regulatory climate for cryptocurrencies and other digital assets. We also believe that traditional and digital — whether it’s money, payments, securities, or other assets — will continue to converge. In many respects, digital securities — particularly the promise of market-wide real-time settlement that we believe is so important for the health of our financial system — is dependent on the move away from traditional banking and towards public or private digital money and instantaneous settlement rails.
How do you see the partnership of tZERO with Eqvista?
We are excited about our partnership with Eqvista to provide its robust network of private companies a secondary liquidity solution through our leading trading platform, the tZERO ATS. This collaboration uniquely positions existing and future Eqvista clients a path forward to having their private equity trade on a continuous basis, enabling investors and employees’ liquidity optionality and accessing a broader set of global investors. Additionally, private companies are able to tailor their continuous liquidity preferences such as transfer or geographic restrictions. Eqvista innovative solutions are well-positioned to support these new dynamic cap tables as the private equity trades on the tZERO ATS.