Entering the world of tokenized investments

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Rochester Institute of Technology has taken an unusual step with its decision to invest in Cosimo X, a blockchain-focused venture fund. The move makes RIT the first university in the United States to directly hold an investment in a tokenized venture fund.

Behind the decision lies Robert Frasca’s track record and experience. An RIT alum and co-founder of Cosimo Ventures, Frasca invests in early-stage companies focused on blockchain, crypto, cybersecurity and artificial intelligence. The Cosimo X fund invests in businesses that use digital assets and blockchain protocols to advance the digital economy.

“The support that we have received from RIT is invaluable,” says Frasca, managing partner at Cosimo Ventures. “This is a massive vote of confidence and demonstrates RIT’s forward thinking. It also shows how RIT supports its alumni. There is an ecosystem at work that encourages genuine support for one another.”

Gregory Van Laeken, managing director for investments at RIT, points to Frasca’s ability to recognize and respond to disruptive technologies.

Gregory Van Laeken

An entrepreneur, Frasca has built three venture-backed startups including Galt Technologies, which was sold to Intuit in 1995. At that time, Galt ran a service, NETworth, that distributed information on mutual fund companies online. The sale to Intuit was valued at more than $9 million.

With his latest venture, Frasca hopes to move beyond bitcoin toward a token approach to building wealth. Tokenized venture funds like Cosimo X allow investors to buy tokens, a digitized security, offering enhanced liquidity and easy transactions. Traditional venture capital funds tend to be illiquid assets—investors have limited ability to exit a fund. With tokens, an investor, depending on the terms, could trade tokens with other investors or wait till proceeds are realized.

The ability to participate in a disruptive way of investing was attractive to RIT. The Rochester Beacon posed a few questions to Van Laeken to learn more about RIT’s decision to enter tokenized venture investing. His answers are below.

ROCHESTER BEACON: What attracted RIT to Cosimo Ventures? 

GREGORY VAN LAEKEN: First and foremost, it was the experience and track record of our alumnus, Rob Frasca, the managing partner of Cosimo Ventures. Rob has built several successful businesses in the past, primarily due to his ability to recognize and respond to disruptive technologies. 

ROCHESTER BEACON: Why did it seem like a good idea? What contributed to your decision?

VAN LAEKEN: Again, Rob’s track record was a key contributor to our decision, but beyond that we understand that the decentralized nature of the blockchain technology has the potential to disrupt many industries, including the investment industry.  

ROCHESTER BEACON: What have you learned about tokenized venture investments? 

VAN LAEKEN: The biggest problem with venture investing is the illiquidity. It can take seven to 10 years from the time a commitment is made until the time that cash is returned to investors. Tokenizing venture investing and allowing the transfer of ownership has the potential to transform the entire industry.

ROCHESTER BEACON: What would you tell other educational investment (directors) who might be considering this? What does this signal for the future in terms of endowments?

VAN LAEKEN: We can’t really speak to the investment strategies of other institutions and we certainly can’t predict the future of endowment investing. But, from our perspective, we know that all incumbents are prone to disruption at some point or another, especially when it comes to new platforms. The internet was a hugely disruptive platform in the mid- to late ’90s and blockchain has the same type of potential. We just strive to position ourselves to contribute to and take advantage of these disruptions. 

Smriti Jacob is Rochester Beacon managing editor.

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