A vibrant innovation market requires regulatory rails

In recent weeks unregulated platforms have come under severe scrutiny from the UK regulator which has caused great concern for the private market investment space. From day one, Floww has been building regulated rails for this market to ensure both companies and investors have the appropriate protection and support. At a time where investor confidence in this space is eroding, we believe it is very important to highlight that appropriately regulated and safe solutions do exist in this market. Floww’s mission is to create a professionalised infrastructure that strives to raise industry standards and better reflect regulatory compliance and investor protections.

Private markets have grown to a total of $13trn but still lack infrastructure, with transactions still taking place on email and pdf predominantly. As the industry professionalises, we envisage a future with more intuitive infrastructure akin to investing in listed securities. But we also believe that private markets are private. In light of recent commentary that no party holds the necessary license to facilitate certain types of investments into private companies, we want to reiterate our vision.

Our journey has led us to building a patented data solution, a network infrastructure built on state-of-the-art tech stack with the latest AI integrations – securing data privacy, and ease of use technology where compliance is a seamless part of every client journey.

The road to building regulatory compliant technology is materially more complex. However, in a market where historically investors have felt less protected and safe, it was important for us to take this longer and more difficult road. Backed by the London Stock Exchange and working in collaboration with Latham & Watkins and Kroll, we successfully sought the necessary and relevant permissions, which included going through a thorough assessment as part of the FCA authorisation process, to facilitate private company capital raising and investments.

Yes, it is the case that very few firms in the UK have the necessary permissions to conduct this activity – and we cannot comment on how others are managing their activities without the necessary approvals. At Floww, we have a suite of regulated solutions that allow us to serve companies and investors, starting with the UK market and soon to launch in the US (FINRA application in progress). We provide services to eligible counterparties, professional investors and retail investors that meet eligibility criteria in order to view our regulated financial promotions for our issuer companies.  We also hold the relevant client money permission to be able to offer custody services through our regulated Jersey solution.

Regulation is often deemed a necessary evil, but regulated rails are the foundations of our vision as they ultimately instil confidence of those providing capital and those seeking capital. If allocation to this asset class from institutional and non-institutional investors is to increase, we have to build trust – and that only comes from the right level of transparency and appropriate industry and investor safeguards through regulatory checks. But we need to balance this with the control and privacy required by private markets. It is this balance that continues to shape Floww’s activity and strategy into the future.