Last week we wrote about liquidity, which is one of the challenges of real estate and crowdfunding investing. Historically, liquidity was not attainable in private markets, and investors did not have the freedom to move in and out of their investment positions. This was especially true of equity crowdfunding. Investors risked getting stuck in equity positions with no hope for any form of liquidity in the future.
Today, we’re excited to announce that all of that has changed. We’ve been working to address this problem, and we’re thrilled to announce the arrival of the first and only secondary market for crowdfunding assets: CrowdFunding CrossMarkets (CFX). CFX brings the ultimate freedom and flexibility to a formerly illiquid marketplace. It puts crowdfunding investors in the driver’s seat and allows them to take control and make investment decisions that best fit their needs and their lifestyles.
For current CFX network users, the mechanics of the secondary market are simple. Shares of crowdfunding offerings purchased on one of our network portal can be resold on CFX, subject only to SEC resale restrictions. The secondary market acts as a stock exchange for private investments, allowing investors to buy and sell shares from other participants in the market.
We’re also pleased to announce that we have a patent pending on the back-end technology and process supporting the secondary market. Without going into too much technical detail, CFX acts as a centralized asset exchange system, managing the registration of listed assets and the ownership of participating investors. The internal transaction engine manages incoming orders to buy and sell, and processes these orders using a matching algorithm with price-time priority. The CFX system handles the complete lifecycle of an investment purchase or transfer, including the clearing of investor funds and settlement process of the private assets.
We’ve built the CFX Network to be open and available to the public. Our client portal technology is offered to select partners to increase the number of high quality investment offerings and participants within the global CFX Network. We’ve already signed several premier partners onto the CFX network, and are in discussions with many more to expand the reach of CFX.
Creating a secondary market has been one of our primary goals for the industry, and we’re thrilled to announce the arrival of this secondary market to the marketplace. In many ways, we feel that the skillsets of our team offer us with a unique opportunity to introduce liquidity to the private securities market. Our leadership team has a rich blend of investment and legal experience, which allows us to offer the highest-quality deals without losing our focus on compliance. Our engineering team has a deep background in financial markets and trading technology, and have prior experience building electronic communication networks and alternative financial exchanges.
Our Chicago location is also vital. As the home of the CBOE and the CME, and the birthplace of the futures contract in 1864, Chicago has long revolutionized the financial markets. Chicago obviously is also a huge real estate market, and has a burgeoning tech scene. The FinTech sector in Chicago is growing particularly rapidly, and we’re excited to be a key part of it.
The CFX Network was built from the ground up with the key principles of bringing access, transparency, and flexibility to a closed, opaque, and illiquid marketplace. We’re excited to define the standard for the equity crowdfunding industry, and we look forward to continuing to bring institutional-quality investments to our users!