London Stock Exchange Leads $20 Million Fundraise for Blockchain Startup Nivaura
Capital markets blockchain start-up Nivaura has raised a total of $20 million with the closing of its second seed extension round led by the London Stock Exchange Group (LSEG). Reported today, other investors in the latest round include Santander InnoVentures, the Spanish bank’s VC arm; law practice Linklaters and Orrick; Transamerica Ventures, part of pensions and asset management giant Aegon; MiddleGame Ventures; Digital Currency Group; and Spencer Lake, previously head of international markets at HSBC.
Nivaura closed the initial seed round in October 2017 and the very first extension round in January 2018. The company did not provide a breakdown of the 3 rounds but stated the one that recently closed was “substantially bigger than the preceding two,” suggesting most of the $20 million is freshly raised. The profits will be utilized to increase headcount “substantially across all areas” (consisting of hires in artificial intelligence and natural language processing) expand into the U.S. and Asia, and buy further R&D, Nivaura stated.
The company’s big idea is using public blockchains to automate the entire life cycle for the issuance of financial instruments – bonds, equities, derivatives, and leveraging public blockchains for registration and settlement so that people don’t need to touch anything and business can do a self-service issuance.
Nivaura CEO Dr. Avtar Sehra said that this year, Nivaura prepares “a series of prominent, large-scale projects with superior partners to show our platform as a valuable service across the complete spectrum of capital markets primary issuance activities,” adding:
“We’re seeing growing appetite from major financial institutions for practical innovation that goes beyond buzzwords and conceptual PoCs in ‘digital investment banking.”
Nivaura is likewise intensifying its board, adding Nikhil Rathi, the CEO of the London Stock Exchange, and Lake, who is also joining as a consultant. “The financial investment reinforces our existing relationship with Nivaura and highlights the Group’s partnership approach in innovating to support our clients in accessing worldwide financial investment pools,” Rathi, who is also head of international development for the exchange’s parent business LSEG, stated in a press release.
The investment also represents a deepening of Nivaura’s ties with LSEG. Formerly, the exchange operator dealt with Nivaura on the issuance of tokenized securities as part of the regulatory sandbox program of the U.K. Financial Conduct Authority (FCA). Through this work, Nivaura has actually obtained expertise in arcane but essential policies such as the European Union’s Markets in Financial Instruments Directive (MiFID) and the FCA Client Assets Sourcebook (CASS), which apply both to traditional market infrastructure as well as utilizing tokenized instruments and blockchains.
Sehra Told CoinDesk:
“What we are doing is not magical. We are technologists and financial engineers, but we also understand regulation very deeply. We work within the existing regulation rather than try to drive change in regulation because that’s very hard. To change legislation takes decades.”
Finding out how tokenized securities can be sold in Europe under the Central Securities Depositories Regulation (CDSR) has indicated Nivaura required to also increase its legal firepower. To that end, it’s made a senior hire: Richard Cohen, an experienced financial obligation capital markets legal representative, is moving from Allen & Overy to end up being Nivaura’s basic counsel and head of strategy.
Sehra described that working with CSDR and MiFID is really complex in and of itself and the firm required to bolster particular expertise in compliance, along with monetary instruments, to complement what it makes with innovation and engineering.
“We re-engineered some of our key workflows to make tokenized instruments compliant under CSDR. Then it doesn’t matter which blockchain you use – a private or public one – ultimately the token created on that chain will comply under CSDR and can be traded on a regulated trading venue, ”
The work Nivaura has advertised up until now with tokenized securities has actually all been done on public blockchains, first the bitcoin blockchain and after that later utilizing ethereum. Sehra mentioned the main position of the business is blockchain-agnostic, simply as traditional market individuals are not beholden to any single clearing house. “Like, we don’t say you can’t go into Clearstream if you use Euroclear,” stated Sehra, adding that customers can utilize a software application development package (SDK) to plug into any clearing system they like, blockchain-based or otherwise.
Currently, the business that’s producing income for Nivaura is its workflow management and automation platform for main capital markets, couched in traditional market infrastructure, kept in mind Sehra. However while that work pays the bills, the business is getting ready for the monetary industry’s change, he stated, concluding:
“The blockchain aspect we are considering, it’s not something banks and other firms will want to use right now. But ultimately we think that’s where the future is and that’s why clients are working with us.”
London Stock Exchange image via Shutterstock