Plato Data Intelligence.
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What ideas are Hong Kong fintechs pitching?

Date:

This week, Accenture hosted a fintech demo
day in Hong Kong. Usually the judges are supposed to rate the pitches, but this
event was…nicer? Well, DigFin was there and we’re going to be the hard-nosed decider.

5. Cogo

This is a fintech out of New Zealand that
works with retail banks to embed sustainability measurement tools for apps. The
argument goes that consumers want to see their carbon footprint along with tips
or incentives to reduce it.

The company has raised $11 million of a $20
million ask. It is gaining traction with big banks in seven markets, including
NatWest in the UK. Proceeds will go to supporting a new product for small
businesses, which find it difficult to figure out their carbon footprint.

We profiled Cogo earlier this year, so you can learn all about it.

An SME version is more likely to work
because a business has genuine need to measure their carbon output – because their
anchor corporate customers will start asking more questions about this. Cogo
suggests it will also make it easier for SMEs to obtain credit, but this is an
untested proposition.

But we’re skeptical about voluntary pickup:
the app requires people or SMEs to input a lot of information for intangible
rewards.

4. Asklora

It’s an A.I. coach (aka, a robo-advisor)
for investing in stocks. Apparently too many punters lost money this year
because they didn’t stick to a regimen of sensible investment steps. Or they aren’t
rich enough to have expensive relationship managers provide them with stock tips.

Or – hear us out – maybe it’s just a
bad year to be in stocks?

Asklora’s differentiator is “personalization”,
rather than focusing on portfolio performance or expectations of returns. Not
sure if this means people would rather be understood than rich, because money doesn’t
bring us happiness.

Along with A.I. and quant finance, Asklora adds personality scores. Aha! This is called psychometrics. DigFin wrote the most comprehensive feature on the field you will ever find.

Invented in the US, it is now essentially
illegal there because of a propensity to attribute certain return outcomes with
one’s race or other natural characteristics. This doesn’t make it bad or
useless, but it does suggest caution.

Psychometrics were first developed as credit-scoring
tools for banks, and at its best, it broadens access for people who probably
deserve a loan. Applying this to an app for stock trading? In the era of
Gamestop? Not sure.

Asklora was developed in the US and the
fintech is using Hong Kong as its test center, looking to build a small but
engaged consumer base and seeing if it catches on before attempting to launch
in other Asian markets.

3. Liquid

Disclosure: the presenter’s style was a little jumpy and hard to follow, which colors our understanding of Liquid. That said, Liquid seems like it’s in an interesting space, providing digital verifiable credentials so that a giant company can confirm all the small fry in its supply chains. But it’s a competitive arena, so what’s the differentiator?

Liquid says: a permissioned blockchain, so
that the anchor multinational can view and own the data of its suppliers, but
can’t change it. If the small fry give consent, their data can be used so the
company gets KYCed, onboarded and maybe even lent to by the multinational’s
banks. Liquid has pilots with DBS and Bank of East Asia.

It is also developing a second use case to
validate a company’s employee list, essentially putting the HR director on-chain,
so a counterpart knows that whoever is countersigning documents is authorized; or
so a bank’s CFO knows who’s signing what. Liquid is piloting this in a PoC with
Bank of China (HK).

Some challenges: getting HR to give up the
list of employees. Getting all of a bank’s SME clients to provide consent.
Getting banks to pay the annual SaaS fees. Getting banks to integrate Liquid
into their existing anti-fraud detection systems.

The PoCs are supposed to work out the kinks.
Liquid is asking for a $1m raise.

2. Lumiere

Kinda sorta fintech: a platform to crowdsource
funding for movies, using blockchain and an NFT marketplace to jazz up
excitement. Kickstarter meets Michael Ovitz who appears in the metaverse dressed
like a bored ape.

Or, as Lumiere puts it, “the metamarket
solution for safer entertainment investments”.

Filming movies is generally for people with
more money than sense, but the glam is sometimes worth it, especially if a
movie does well. At the same time, most producers struggle to finance their
projects. So: a digital marketplace. Lumiere seeks to generate revenues before
the firm is produced, by using NFTs and metaversy-type environments to develop
a coterie of enthusiasts.

In theory if the movie starts to do well,
the value of the token rises. And then investors can decide to trade their
token, creating liquidity, as opposed to merely being passive funders on Kickstarter
who get a T-shirt at the end.

The Lumiere team trailed this business
model in pre-Covid Hong Kong to finance a movie, Papicha, that got nominated
for an Oscar. Part of its success was sourcing people interested in the movie’s
environmental themes. It’s now got a small pipeline and is looking to scale.
Animoca Brands and Rolling Stone are among its backers.

The team’s marketing material also features “Block Kong”, the bestselling book (?) co-written by DigFin’s Jame DiBiasio, which included a chapter profiling Lumiere founder Pascal Poujol. So we’re giving them a rankings bump. Hey, that’s show biz.

1. Altive: ADAM Vault

The most interesting pitch was from Altive, which DigFin profiled for its wealth-management business that gives retail investors access to alternative investments and private companies like SpaceX.

Now the company is pitching ADAM Vault, a
decentralized treasury-management system to “reinvent commercial banking”. That’s
quite a claim, but a little chutzpah never hurts. What this Vault looks likely
to do, though, is provide treasury tools for DAOs.

DAOs, decentralized autonomous organizations,
are software-based structures to give blockchain projects some of the skeleton
of a corporation, while still enabling tokenholders to have a say in decision-making.

There are a lot of problems with DAOs or
with any decentralized system being built, such as DeFi protcols. A biggie: somewhere
there must remain a centralized treasury, with the founders or a team of
executives given control over it. Worse: many a keyholder has decided to raid
the treasury, making this a point of vulnerability.

But these treasury setups are also a pain
in the neck, because anything requiring money-in/money-out requires several VIPs
to provide their digital signature, and then someone has to write a check. Members
aren’t always full time or professionals, and chasing them on Discord is not
the most effective way to run a pot of money.

ADAM Vault provides a decentralized team
with a way to manage and control a budget, and it gives that budget its own virtual
credit card.

The problems here are the problems of
crypto. Self-custody is an invitation to mistakes. There’s no insurance in case
the assets get lost. There’s no simple remedy to fat-finger messes.

Altive has built its treasury system on a
no-code design so it’s meant to be intuitive enough for even a bored ape afficionado
to figure out. The vault, and what’s inside, is permanently stored on Ethereum
so the assets don’t vanish or just wander around aimlessly if the project
collapses (see: Constitutional DAO).

And the budget pools start to give a DAO something
like corporate governance.

The Vault can also enable a third-party
investment manager to manage the tokens on a non-custodial basis, which means
they can manage the token without touching or possessing it. In fact, this is
how the Vault began, as a smart contract to handle Altive’s assets without having
to rely on a bank or a custodian.

Therefore Altive believes that, while DAOs
are the first use case for the Vault, it will expand this product to small
businesses lacking a bank account, or to non-incorporated teams like a fan club.
And maybe, one day, to actual companies that, for some reason, decide to
transition to DAOs. Gotta dream.

Over time the idea is to ensure the Vault
can transact across multiple blockchains, which would give it the look and feel
of a multi-currency bank account. Is now a good time to ask about regulation? No?
Then let’s wrap it up here: this is a niche but interesting idea that could bring
some much-needed structure and tooling to the emergent world of DAOs.

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