Who wouldn’t want to manage their wealth by doing some investment? Indeed, asset management had always been a thing of the wealthy.
Despite the increasing importance of asset management, doubled with longer longevity for every individual, asset management is one of the very few areas that had not been ‘disrupted’ with technology yet. That is, asset management market, as big as $33.5 trillion investable assets in the United States alone, is still run mainly through the traditional face-to-face and network-based transaction deals.
It was after more than six years of work experience in the investment banking sector that Sang Lee, the founder of DarcMatter, realized the inefficiencies brought by this close-off nature of the market. “For individual investors whose capital is not enough to be qualified as ‘accredited investor’, there is literally not a single way to expand their assets by investing in high-end investment vehicles for which at least hundreds of million dollars are required to close.” This alienates a great deal of potential investors from participating in private deals.
We need a ‘platform’
When the market is significantly big but access is not fairly open to all, it is a calling for a ‘platform.’ Founded in 2014 in New York, DarcMatter is a technological financial services platform that contracts a gap between retail investors and private investment opportunities. By having this transparent platform in the middle, issuer and investor take advantage.
On the issuer side, the capital raising process becomes much more streamlined and reliance on personal network to seek for the potential investor would be much smaller. On the investor side, they have a more direct access to funds. Simply put, both sides benefit by eliminating the intermediaries.
Global market and China market
“We see China as an independent region, separate from the rest of Asia. China has its own rules and systems,” Sang mentioned. For any foreign startup, China is a tricky market, particularly for relatively more sensitive sectors such as finance. However, for a team who believes, that products (investment opportunities) are everywhere, consumers are also everywhere and therefore, try to create a global network, the China market is a must.
In fact, DarcMatter was one of the Top 15 in TechCrunch Beijing 2016 Startup Competition. “Metaphorically speaking, New York office is where we extract worthy investment products, Seoul and Shanghai office are where potential investors are.”
For them, the China market is more than just another region to conquer. “Right now, China is going through a formative phase where new financial services are released every now and then, forming the market’s rules along the way,” Sang emphasized. So, startups aimed at creating innovations in the finance sectors are basically actively engaging in drawing the blueprint of one of the most significant industries.
Value Added to the Platform
Platforms have already evolved from simply connecting services’ suppliers and consumers to adding plus alpha to establish bigger demand or enhance convenience. For fin-tech platforms, one way to do that is by implementing the algorithm that recommends the optimal choice of investment products based on investor behavior and fund profile. “A lot of banks have made efforts to implement technological improvement. But, for those who put financial services first and then comes technology, the second, it’s not looking so optimistic. For those startups like us who put technology in the first place, innovation is much more plausible,” Sang Lee said with confidence.
Although for the general public, managing their assets on online platform can be quite unfamiliar, but at least in China, some of fintech platforms such as 36kr where individuals can invest in startups through crowdfunding had already proven the potential of this market. It is reasonable to forecast that online investing will naturally evolve to meet the needs of wealth managers, advisors, and accredited investors seeking to directly invest in portfolio-enhancing alternatives.