Security Token Market Industry Interviews — Jemma Xu Co-founder & Partner of RedBlock Capital
Welcome back to another episode of Security Token Market Industry Interviews! Are you ready Security Token Family!? In case you missed it, the past few weeks we have had the pleasure to interview Darius Liu, the COO & Co-Founder of iSTOX and Viktor Viktorov, the CEO & Co-Founder of REINNO. This week, we had the honor of interviewing Jemma Xu who is the Co-founder & Partner of RedBlock Capital.
Before we go into the interview, we wanted to provide some background on our interviewee. Jemma Xu is the Co-founder and Partner at RedBlock. She has invested in a range of blockchain projects, mostly in Layer 1 solutions and infrastructure providers. Prior to founding RedBlock, Jemma was Chief Strategy Officer at a blockchain infrastructure startup.
Outside of blockchain, Jemma invests in early-stage tech startups with a focus on the Asian, in particular China, market. Jemma is the founder of a cross-border edutech startup with VC funding from Chinese and Australian investors. She is a founding board member at Sydney co-working space Haymarket HQ. In 2016, Jemma was a finalist at the Australia — China Young Alumni of the Year Awards.
Prior to her entrepreneurial endeavors, Jemma worked in investment banking at Macquarie Capital, Australia. Jemma graduated with a Bachelor of Civil Engineering and Bachelor of Commerce from the University of Melbourne, Australia.
So, without further ado, let's dive right in!
What are RedBlock Capital’s key services that it provides to clients?
RedBlock is a digital investment advisory firm and fund that focuses on providing end-to-end services for companies to conduct digital security issuances using blockchain technology. Our advisory services are supported by our blockchain-powered issuance platform which facilitates an end-to-end process, including KYC/AML, asset creation and issuance, cap table management, shareholder updates, distributions, and multiple capital raises. It is integrated with licensed secondary exchanges globally for future liquidity.
Our fund invests in assets and companies with solid business fundamentals and can leverage blockchain to boost their growth potential.
We are markets agnostic — our strength is in APAC and North America. Most recently, we have also entered Africa through a local partner.
Knowing that there are many issuance platforms in the space right now, what competitive advantages do you possess to differentiate yourself from the rest of the pack?
The space is getting crowded with numerous issuance platforms and secondary exchanges. But technology by itself does not solve the core needs of the market, which is either companies looking to raise capital or investors looking for good returns. Consequently, we are focused on maintaining and growing a global ecosystem of investors, broker-dealers, liquidity venues and partners to help us source good assets. The issuance platform is there as a tool to support our ecosystem. We are also preparing for future secondary market liquidity by integrating with various licensed secondary exchanges in key jurisdictions. By building out the capital markets ecosystem and establishing the right end-to-end technology infrastructure, we are positioning ourselves to be at the forefront of the digital securities space.
You mentioned you will be focusing on the Asian and Australian markets, what opportunities are you seeing on this side of the world?
North America is also one of our key markets. But we are seeing a lot more opportunities in the APAC region (including Australia), particularly around tokenizing real estate and SMEs with solid cash flow looking for growth capital. This aligns with the market potential that we see here and also plays to our team’s strength in APAC. In addition, it is interesting to note that whilst the market is in APAC, from a regulatory perspective, many companies prefer to issue out of established jurisdictions such as the US and Europe which already have digital securities offering precedence. As the issuances have to comply with existing financial regulatory requirements, conducting them out of well-respected jurisdictions also boost investor confidence.
What criteria do you look for in an ideal client (fundraise size, jurisdiction, asset type, etc)?
The digital securities space is nascent and the market needs more education before we see a significant influx of capital. We always advise clients to start with a smaller capital raise to build investor traction and then do a bigger raise to build their runway. In the current market environment, solid business fundamentals are key — anything with cash flow or hard tangible assets are easier for investors to value and understand the risks. We are market agnostic but we see higher growth opportunities in APAC and other emerging markets.
How active is your firm in sourcing, onboarding, and managing investors? Do you perform some or all of these services?
We are focused on maintaining and growing our investor base, whether it be through our direct networks or through working with broker-dealers globally. For our clients and portfolio companies, it is important to not just have capital but have smart capital that can help them grow their businesses. Having misaligned investors on the cap table can be disastrous so we always vet investors carefully and make sure expectations are managed on both sides.
How active is the RedBlock Dedicated Tokenized Fund? Are you currently funding new companies? What is the average check size?
We are always on the lookout for quality companies to invest in. They don’t have to be ‘blockchain native’ ventures. Adopting blockchain technology does not change investment fundamentals. We assess companies like any traditional VC: team-market fit, customer/user traction, market size, what are their moats and whether using blockchain makes any sense. We prefer early stage companies so we can help them grow rather than just putting in the capital. Our check size can be anywhere from US$50k to US$1m.
Do you invest in clients using your issuance platform or will you invest in any high quality tokenized project?
We are agnostic when it comes to investments — they certainly don’t have to conduct the issuance on our platform. Our investment assessments are purely based on fundamentals.
Do you have any clients or portfolio companies under the investment banking or venture fund yet?
Yes, we have clients and portfolio companies in APAC and North America. We’ll make announcements when the timing is right for them.
Do you offer post-issuance services for your clients such as dividend distributions, shareholder voting, or reissuance?
Yes, our platform is end-to-end, including everything from KYC/AML, initial issuance, cap table management, shareholder updates, distributions, multiple capital raises etc. The platform is not limited to securities, it is programmed to facilitate all financial instrument issuances such as hybrids, bonds, derivatives, and commodities. I would like to emphasize the platform is just one part, it’s the network of capital markets players who are key to meet the needs of issuers.
How do you advise clients to proceed for secondary market liquidity? Does your technology stack integrate with exchanges? Do you have any relationships with live or upcoming exchanges?
Given the nascency of the digital securities market, there is currently little liquidity on the secondary exchanges. We are plugged into various licensed secondary exchanges or secondary marketplaces in APAC, Europe and North America. In addition, we are always seeking more licensed secondary exchanges.
Who should interested issuers contact for more information on your investment banking business or your venture fund?
They can email myself at jemma@redblockcap.com or our general inbox info@redblockcap.com
Thank you to RedBlock Capital and Jemma for participating in our interview series. We hope you learned a lot, we certainly did!
Be sure to check them out at https://www.redblockcap.com/ and follow them on Twitter!
See you next time! 👋
