Nowadays private credit is the fastest-growing asset class in private capital markets. According to AIMA (Alternative Investment Management Association), it is forecast to surpass $1 trillion, which demonstrates the power of this industry, but also shows an obvious increase in investors’ demand.
Cadence is a company that already made a definitive impact on the digital finance scenario, using blockchain as the main background to build a private credit platform with a unique approach.
All companies need constant cash-flowing inside them, as they use the money to sustain the processes. Here we can include costs like shipping, products that ran out of stock, payments, services, maintenance, and others.
Sometimes it takes 30, 60, or even 90 days for a company to get paid, so how is it going to find money to survive and sustain the business in the meanwhile? The answer is short-term loans.
Short-term loans are an essential tool to help businesses cover payroll, inventory, and other unexpected costs.
Cadence helps to facilitate lending, but its’ investors do not necessarily have to understand about crypto or even know Cadence is using blockchain as the administration piece.
How Does It Work:
The company works as a technology-driven securitization platform connecting retailers and institutional investors with short term structured private credit investment and opportunities.
Cadence is using blockchain technology to open up this private credit market to smaller investors using the technology to automate share fractionalization and distribution, also simplifying the origination process while reducing costs.
The process is quite simple: credit investors go on their website and can invest in various private credit opportunities.
Let us say an Amazon merchant is projected to do 1 million dollars in sales next year; an investor can go on the site, buy a structured product that extends a portion of that projected $1 million to the merchant in financing.
The deal then gets tokenized, investors get tokens in their wallets and, once the deal matures, they get payback with their principal plus interest.
This type of opportunity was only available via banking or traditional financial institutions, so Cadence is a revolutionary idea on its’ own, having the guts to face the big players in the market using blockchain technology.
What Is the General Impact of Cadence?
Cadence is a perfect example of how to use innovation to bring in more liquidity and credit available to solve a specific problem.
The company uses blockchain to expand access to securitized products while lowering costs and increasing the transaction’s velocity for originators.
The main role of the company is to bring transparency and security to the market, as well as efficiency, working similarly to real state and startup crowdsourcing platforms that started to allow democratic access to alternative investments in these areas.
The platform is growing fast, and last year (2019) it became the first digital asset company to launch a digital asset ticket on Bloomberg Terminal, also joining the Bloomberg App Portal.
Who Is Behind the Idea?
Founder and CEO Nelson Chu, who has a B.A in Economics and Political Science from Rudgers University, is the main character behind the idea.
With years of experience in the market (including participations in companies like Apple, Bank of America, Recharge Capital and BlockFi), Chu established the company in mid-2018.
Located in the Greater New York City Area, the most important financial and economic center worldwide, the company became a hit very quickly and has already hit several financial milestones.
In December 2020, it closed a financial seed round led by Revel VC, earning $4 million in the process.
Other investors included Morgan Creek Digital, Tuesday Capital, Nimble Ventures, Argo, Recharge Capital, Manatt, and R&R Venture Partners.
A revolutionary idea to bring commercial debt markets to the blockchain, Cadence work as a digital securitization and investment platform for private credit.
The main idea here is to empower small to medium-sized enterprises by providing them market-driven cost efficiencies, using an Ethereum-based marketplace. It also allows investors to have their share in the market, earning interest transparently and securely.
Cadence has already secured a place on the Bloomberg terminal for its commercial loans’ pools, which is a remarkable feature for any financial company.
The company so far is open to all institutional and accredited investors, which can contribute to packages structured for short-term loans, allowing businesses to cover expenses/costs while reducing costs and growing their capital.