Private Equity
Investment Highlights
Private Markets are Ripe for Disruption
The US private capital markets are massive, with almost $2 trillion of new issuances every year - significantly more than is raised in public offerings. Yet there is scant technology infrastructure underpinning these markets. Liquidity in the secondary market is severely restricted by the lack of transparency and complex regulations. What trading does occur is characterized by high costs, wide spreads and settlement uncertainty. Texture Capital is approaching this as a tremendous opportunity to create a market structure from scratch, leveraging the most advanced technology available. Texture Capital will utilize blockchain to facilitate the issuance and trading of digital securities.
Large Primary Issuance Opportunity
Texture estimates the annual commissions paid to brokers for new issuances to be $1.5 billion per year despite only 12% of operating companies using a broker to help them raise capital – representing a significant market opportunity for an improved process of capital raising.
Significant Opportunity in Secondary Trading
Texture calculates current annual revenue derived from trading private securities to be approximately $0.6 billion. There are currently many inefficiencies in the trading of private securities and Texture believes that a more efficient market such as we are building has the potential to significantly increase opportunities for secondary trading of private securities. A liquid secondary market benefits investors – who are able to allocate capital more efficiently – and issuers – who are able to attract more investors and better incent employees and stakeholders.
Texture is in a market with significant barriers to entry
Regulatory attitudes are evolving quickly, becoming cautiously more-welcoming to digital securities. In October 2020, then-SEC Chairman Jay Clayton suggested that one day every security may be tokenized. In December, the SEC issued a Statement of No Enforcement as unique guidance for those broker dealers focused on Digital Securities. Texture Capital is one of the few broker-dealers currently approved to issue, tokenize and trade Digital Securities.