Recently, Cryptoniam had an opportunity to speak with ‘Shane Brett’, who co-founded Gecko Governance to establish processes, bring transparency and ensure 100% compliance in the financial world. Shane is a serial Entrepreneur, Author and Specialist in hedge funds. Shane Brett is recognized very well in the Hedge Fund circles and is mentor to many in the industry.
Vision of Gecko Governance
Speaking about the reason for starting Gecko Governance, Shane elaborated that while working in the Hedge Fund industry for more than 20 years, he has seen many ups and downs in the financial markets. 2008 financial crisis was one of them, post which their charter of helping hedge funds in implementing compliance became very complex.
New Rules & Regulations were brought in by regulators to protect investors & general public, which made life of hedge funds really difficult. At this time, Shane’s consultancy was managing multiple funds across the globe. It became really difficult for Shane & team to manage compliance of these huge hedge funds. Therefore, they started looking for software which would help them manage compliance across 15 countries for more than 30 different work streams.
However, even after rigorous search for the software in the market, they could not find one and therefore decided to build the software all by themselves. Three (3) years back, Shane moved to Ireland from London along with his technology cofounder and this is when Gecko Governance was founded.
Rising from the Ashes
Gecko Governance was a bootstrap startup and therefore Shane & team had to watch their finances very closely. In spite of financial limitations, Gecko Governance followed a simple strategy.
They planned meticulously and spent first year in building the software prototype which went through multiple iterations to get ready for the larger rollout in the market. After a year when Gecko was ready with a good version of Enterprise software product, they on-boarded a very big fund management company called as ‘DMS’ in 2016.
This was a major milestone for Gecko’s growth because DMS has presence in 8 countries across the world and manages more than $35 billion funds with more than 30 work streams. Post that, a year ago Gecko Governance reached another milestone by winning the Europe’s largest Seed Fund competition for startups.
In addition to prize money of 50,000 Euros, Gecko Governance attracted the attention from multiple venture capital companies. Finally, last year in October 2017 Gecko Governance received a seed fund of $1 million from a Boston based Venture capitalists.
With that money, Gecko governance was able to open office in New York and is now doing some interesting work for the US based clients. Post New York, Gecko invested to open an office in Sydney, Australia. The reason for having offices in Ireland, New York and Sydney is simple; provide service to clients on global basis on all key time zones. Today Gecko has a team size of eleven (11) and is looking forward to expand its operations in Asia Pacific.
Gecko governance has climbed up the ladder step-by-step from the bottom and is a learning Use-case for modern day startups.
Gecko’s Products & Solutions
Gecko has three categories of Products which are very flexible and can be adapted to different business requirements:
1) Centralized View: This module provides Users the Live and Central view of all the funds and the compliance process in a single dashboard. Fund managers can easily have a view of 100+ funds across 50 countries in a single dashboard. New funds as well as new regulations/ rules can be easily added in the module and monitored
2) Module for every single fund: People in the industry hold all the key information and important data of funds, products, milestones, tasks, calendar of activities, documentation, detailed audit trail and integrate it indirectly with Microsoft Office or Google docs. Gecko’s module can enable people all their documentations pertaining to regulations in a single place. This is very useful for users in terms of reporting to regulators and providing information to investors
3) Blockchain Module: Gecko has linked all the task managers and audit trails into a Hyperledger platform of Blockchain technology. As a result, all the compliance docs get time stamped and all the transactions will get recorded for each fund and are irreversible. This makes it very secure and transparent. Therefore, the banks/ funds can easily prove compliance to the regulators by showing the time stamped transactions
Pain Points of the Industry
Pension funds were always been tightly regulated around the world but hedge funds in particular had limited regulations. This was because regulators across the globe were of the belief that hedge fund industry comprised of high net worth investors and would not get affected. However, post the financial crisis of 2008; the hedge fund industry in particular had an avalanche of all regulations. Europe too witnessed huge piece of regulations under “AIFM”.
For the first time hedge funds had to be managed very tightly, reporting became a mandate, a lot more data had to be managed and if anything goes wrong it would mean heavy fines & larger sanctions.
This became a pain point and was one of the reasons why Shane set up a consultancy. Similar kinds of pain points are expected to cripple the crypto industry and therefore Gecko Governance have developed products & solutions to counter them.
Gecko Governance – Future of Blockchain
Gecko Governance believes that today’s market of token sales, ICOs & cryptos is similar to the hedge fund industry 10 years ago or the derivatives & futures market 20 years ago. As per Shane, Crypto industry is an interesting financial innovation and will become more attractive after proper level of risk and compliance is in place. With more governance, main stream fund managers and big financial companies will start investing in the space.
Currently, market doesn’t have anything of that sort except for few countries which have rules for managing token sales, ICOs and it is very much in the open area. It is a known fact that Industry is witnessing lots of scams because of bad actors; as a result people are getting ripped off financially. To avoid this Gecko Governance, decided to use Blockchain technology for their solution which will govern the whole process of token sales.
The idea was to manage every step of the token sale, right from pre-planning, dealing with legal, planning stages, liaising with different agencies, KYC, dealing with exchanges, post project governance and much more. Also by using Blockchain technology, Gecko Governance wants to monitor the performance of ICO projects and bring in assurance and due diligence in terms of whether these projects are managed properly.
Currently, there is no correct level of assurance & due diligence in token sale or the ICO process. Therefore, it is very difficult for investors to get information about them. Gecko governance with their solution is going to place 35-40 key steps that have to be included in the token sales project to manage transparency and regulatory compliance. And if the company follows those key steps, Gecko Governance will give them a “Gecko Stamp of Attestation” and this stamp will give investors confidence that proper governance is in place.
Gecko Governance will allow the regulators to access the solution if they ask for specific compliance reports and data points. Gecko will also provide access of its platform to partner companies like Security, AMS for KYC, Accounting technology companies and many more. Overall Gecko Governance has a vision of providing One Stop Shop to access and manage token sale projects.
Compliance in a Non-Regulated Industry
Crypto industry is an evolving industry, where regulations are coming into place slowly. To keep up with these frequent changes, Gecko Governance has built automated scripts to pull in the funds compliance rules, ICO rules, etc for different countries as they are published. For example, Gecko has pulled in published rules from Switzerland, Malta, Isle of Man and Singapore.
All of these rules will be in Gecko’s system and as the other countries will publish rules in future, scripts will pull all of those rules into their solution and automate them as part of the ICO project process.
Additionally, Gecko Governance will put 35-40 steps for due diligence and transparency. Gecko Governance has prepared these steps meticulously using a white paper "ICO Governance White Paper" prepared by a non-profit organization which publishes recommended best practices and rules for ICO projects.
ICO of Gecko Governance
Shane is absolutely convinced that the best way to learn more and more about the ICO space is by launching an ICO for them. Gecko Governance has kicked-off the process to launch their ICO, proceeds of which will be utilized for the development of crypto products and solutions. Currently, Gecko is seeking regulatory approvals from the Financial Services Authority in the Isle of Man.
Gecko wants to be fully compliant with regulatory authorities before starting the private pre-sale with reputed investors. Gecko Governance is planning to hit the market with its ICO in May’2018.
Not exactly a competitor but there is a company in Luxembourg called “governance.io”. They have a view similar to Gecko Governance but are not much into crypto industry. They focus on rules and compliance of funds with a Top to Bottom approach.
Big difference with respect to Gecko is that they target private equities whereas Gecko Governance focuses on hedge fund & fund administrators. Otherwise most regulatory softwares don’t have the flexibility to give the complete view of a single entity like Gecko Products.
Future of Crypto Industry
While answering this Shane quoted lines of a famous writer Clark,
“When an incredible new piece of invention comes, in short term people always exaggerate its impact and in the long term always under-exaggerate it.”
According to Shane, decentralization is going to have gigantic impact on industries as wide as Finance, IP, Real estate and Consumer products. As crypto industry is in the early stages of development, it will take couple of years for everyone including big financial companies to accept Pilots or Proof of Concepts of Blockchain technology.
It is but obvious that everybody wants to find the benefits and costs it will incur, what would be the risks & inefficiencies, etc. People are going to be hesitant about keeping it in the production environment initially. However, with more governance and regulatory guidelines confidence will increase.
Shane further mentioned about an important development to watch in July 2018 when G20 will publish set of principles to govern and regulate crypto currencies in the future. From this year, regulators and governments are going to chase bad actors rigorously. Shane also mentioned that we can be rest assured that 2019 is going to be the year of trials and the cheaters will be behind bars soon
Message to Investors
Shane advises investors to be vigilant and understand the published data completely before making any investments. Shane also recommends the investors to understand the use of Gecko products which are going to help ICO investors and administrators with better transparency, accountability and compliance for their investments.