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DarcMatter readies ICO to complete $30 million raise

The fintech wants to move its LP-GP marketplace to a blockchain.

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New York-based DarcMatter told DigFin last July that the company was considering a Series A financing to support its push into Asia. Sang Lee, New York-based co-founder and CEO, says now the fundraising will take the form of an initial coin offering (ICO).

Lee says DarcMatter is raising $10 million this year from institutional investors, with $5 million already secured and a second tranche currently being marketed. The ICO will go public on March 7 and the company hopes to generate up to $20 million more from that.

Proceeds will go to developing and launching the company’s blockchain platform, linking institutional investors to alternative asset managers. The launch is meant to take place this summer.

The blockchain will facilitate know-your-customer due diligence as well as allow fund subscriptions. Later features will enable limited partners (LPs) to make direct investments into assets, as well as provide smart contracts for investments. DarcMatter built the blockchain itself using protocols from Nem, a Singapore-based DLT foundation.

A blockchain will make it easier for us to adapt to regulation in China

- Sang Lee, DarcMatter

Lee says the company’s traditional internet infrastructure was necessary because clients were unfamiliar with distributed-ledger technology. Now blockchain is a popular topic. He says DLT can make his platform safer, more transparent and can remove manual processes, and the tech is now at a stage where it should be invisible to users.

DarcMatter continues to market itself to LPs in Asia Pacific, principally to Korean institutions but now also to investors in Australia and China. The firm says 12% of its users are from the region.

“In China, the regulation is complicated,” Lee said. “We hope using a blockchain will make it easier for us.”

For Australia, the startup intends to market its platform via a local partner. “We have signed a deal with an Australian financial advisor,” Lee said, declining to name the firm. DarcMatter operates through securities firms as introducing partners in Korea, but Lee declined to say whether any Korean LPs are active users.

DarcMatter is a technology company that provides global investors with access to alternative asset managers. Lee says they have 1,500 LPs from 24 countries and 160 GPs using the platform.

The next project for us will be A.I.

- Sang Lee, DarcMatter

“The next project for us will be A.I.” Lee said. Artificial intelligence can be deployed to improve due diligence and risk management on the site, as well as make a blockchain platform easier for clients to use.

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DarcMatter readies ICO to complete $30 million raise