Hi everyone. Ian here Now I just finished our podcast today with Max Cunningham. Now he's been in the show before. When he was with the ESX, he was the head of listings over there and was on the show a couple of years ago is now with FCX, which is a pretty amazing business. Probably haven't heard of it because it's kind of just out the box. Max joined in January 23rd, so about 6 or 7 months ago is
at the time of recording. It's 100% owned by Fin Clear, which is a, I guess, an unsung Aussie fintech startup success story. Pretty amazing journey there, which we get into a little bit. In the essence of FCX, owning shares is complicated. I mean, Max came from the public markets, you know, very much a stockbroker and you know, at the ASX for a chunk of his career, FCX focused on the private markets. So if you most of us in this show are either founders or investors in private companies,
and it's a complicated process. So FCX really exists to make that process of owning and even transacting longer term shares within those private companies a little easier. It's an amazing story. I love Max. He's got the best voice for a podcast of any of the guests I think I've ever had. And he's just an awesome guy, you know, a real pillar of the ecosystem. Great to see the career journey go from the corporate world into the startup world. And, you know, I think he's having a great time and
lots of upside for us in the ecosystem. So yeah, enjoy this. Stick it through to the end because the Nirvana, which I think we talk about, is is a pretty amazing place that I think we'll we'll hopefully get to. All right. Let's jump over it and hear my conversation with Max Cunningham. All right. Welcome, everyone. I am sitting here. We're in the heart of Bondi Junction and Juliet's new office, and we have our first podcast guest. We bought a little meeting booth, which turns out to be a pretty
good podcast studio, I think. But joined by Max Cunningham. Now Max is a CEO of FK, which we will talk about shortly. Those of you with good memories will recall Max was on the show about two years ago and when you were still head of listings at the ESX, which was a pretty great job from what I understood. I knew you for quite a lot at the time that you were there and you'd had almost ten years there. So Max, maybe I'll ask the obvious question Why the change?
Well, firstly, Ian, thanks again for having me back. You're welcome. And one interesting little bit of trivia. I love your new offices, love your new studio, But this is the exact address that my grandmother's first home in Sydney was when they moved from Longreach in around about 1910, believe it or not. And this street was actually there's a terrace house here and I've got all this stuff at home. And when I walked up it just reminded me this is the building. And, and it was, it was actually
called Woollahra back then. Yeah, but welcome to Bondi Junction.
So yeah, we're in Grafton Street, just near the station. And just beside that big expressway that they must have demolished many homes to build.
Yeah. Yeah, that's.
Right. Including probably your grandmother's.
Yes. Sorry.
Sorry. Yeah. So why the change?
And great to be here. Look, the change I'm, I think nine years firstly at ASX was a great run. We basically doubled the size of the capital markets, did a whole lot of really interesting things with foreign listings, particularly tech and Kiwi listings, and it felt like time
for a change. But I think in the back of my mind and certainly through some of the things we'd been doing with Innovation Bay and stuff that we'd been doing in Silicon Valley, you know, I also was really beginning to see a strong development in private markets in Australia and certainly probably my last year or two at ASX. That was where I was sort of having an increased focused on what those opportunities look like. Yeah.
Look, I mean private markets is an expression that we'll probably talk about a bit here. So maybe let's take a step back. Yes. What is private markets and how does it differentiate from the public markets?
Good question. And I think public markets are pretty defined. We could say them. You know, if you think about ASX and you think about BHP, that's as good as you need to understand private markets I think is how long is a is a piece of string. But it's basically, you know, at one end of the spectrum, you know, I think we read recently about Canva and I think they've got 4000 staff with equity and I think they were recently they suspended a sale process that they do
sort of annually. But that is one form of private market, which is a sort of like, if you say an opening up of shares for investors to come. In. The other end of the spectrum, I think is for for those private company shares to trade periodically or regularly, um, in the same way that shares trade on ASX, but without maybe some of the full restrictions and obligations that go with being a public company.
Yeah, no, that's something that doesn't happen too much right now and I think this is what we're going to get into because that's really kind of the guts of what is up to me. We want to split. We're going to spend most of the discussion around FCX and what it's doing, but let's just go back a little bit and just hear about your career journey. Um, and in some ways it's one of the most more simple ones.
I mean, like you have one of the shortest LinkedIn profiles of anyone average that I think I've ever seen, and it's essentially ten years at Macquarie, ten years at Goldman Sachs and then roughly ten years. So I mean, do you want to I don't know how much of that you want to touch on, but you've been global. Most of it was the public markets side. But I mean, give us a little bit of an arc of that career trajectory.
Well, it has all been public markets up until the end of ASX and you right. It basically every every decade feels like time for a new start or a new opportunity. Maybe I just get a little bit bored, I don't know. But, um, there's a nice symmetry there too, I think. Um, yeah, look, I mean, I started, I started in as a retail stockbroker at Macquarie when they were setting up going into retail stockbroking. Up until then
they'd just been wholesale and so that was fun. I think one of the common themes is setting up or being in businesses when they have redirection and new opportunities.
So and this was the 90s. I mean, this is this was in.
1994.
Right? So this is free, the Internet. And I mean, you were the Wolf of Wall Street probably without the cocaine and.
Oh, no, my Macquarie. I wouldn't say that. You know I would. It's a macquarie was pretty rigorous and pretty, you know, strong. I mean the closest you know but but the I do remember my first email address was at Macquarie. So you know.
I mean I don't mean Wolf Wall Street in the sense that you're partying like that, but it was all phone based and.
Phone based.
Estimates. I mean, it was very.
Phone and fax, right? Yes. Yeah. Yeah. We did a lot of faxing of reports. There you go to people and certainly email really. I mean, I think the interesting email was just internal. There was I don't think we were sending emails externally for for a few years. And anyway, I was very lucky and got plucked to move to London on the institutional desk. So that was a big
step up and a big opportunity. And I think that's sort of a, funnily enough, you know, the probably the reason I got picked up was I was a retail broker and I managed to be the broker that managed all the ESOPs for listed companies on Australia. So, you know, a lot of not all, but there was a there was a few and you'd get these, you know, these big orders of sort of $50 million for a retail broker. That was a big order and you had to go and buy those shares in the market over over a
couple of weeks. So that was, you know, having built that program, I think they saw that sort of I always had a even though I was dealing with retail, I always had a very strong predisposition to people like family offices and corporates and people with large pots of money. Yeah. And and institutional mindset. So I went to London and as I mentioned to you before, saw a little, little area called Scotland that was getting a bit under serviced
and anyway built a franchise, build a franchise. And one of the great things, you know, I also think, um, trying to find connectivity with people, you know is the interesting is the hard thing, you know, and all I did was educated people in Scotland about Lachlan Macquarie. No one had heard of Lachlan Macquarie, no one knew how important he was to the Australian company. You didn't know him. Yeah, but you know.
The name is not.
The name. Lachlan is not a popular name in Scotland, even though it's a Scottish name and the name Macquarie isn't known at all. I mean, so I just did a lot of education and ran a macquarie annual Macquarie dinner. Yeah, and all the Scots are great patriots and I loved it, loved it. So we were able to build a franchise out of the back of that. And then Goldman called and it was the dream, you know, we were sort of,
should we move back to Australia? We've been in the UK for seven, eight years now, and and then Goldman Sachs in New York called. So what a what a dream, you know, so and I do remember getting off the subway many days and our office was just off Wall Street. And you're going, it's quite amazing, you know, to be here, you know, coming from the suburbs of Sydney, because that is.
The Premier League. I mean, I've got a friend.
That's the premier about to.
Head over to the UK from here. You know, again, he's, he's part of the Aussie ecosystem. Yeah. Uh, and I asked him why he was going because, you know, the weather is shitty in London and, you know, sometimes it can be a bit miserable. He says, Look, it's about playing in the Premier League. Yes. Now I kind of, you know, I was a little bit I don't know if it's offended or hurt or, you know, wanted to defend our our tradition and reputation as the Aussies. But
I mean, do you want to comment on that? I mean, like Sydney and Australia is not the Premier League in some ways. Oh, it's not.
It's not. No, no, no. I mean, I think if you're looking I mean just London's a step up on Australia by any measure, and the US is a step up on the UK. I mean it's all about it's all about best of best isn't it? I mean it's about where critical mass of capital is and the more money that's pooling around, the more expertise that will sort of hover around that. And the bar to get in will be higher and higher and higher. So I think absolutely I mean, just like the best companies attract the
best people, you know, they've got that ability. I think it is similar with with capital markets and the size of those economies. Yeah.
But it was, you know, you were still drawn back to Sydney. So, I mean, maybe you're not playing in the Premier League. I mean, maybe talk about that decision making to go from the Premier League back to Devon.
Well, I think it was again, it was a bit of a I'd been a stockbroker and this was an opportunity to go back to Australia, but to step up and move into capital markets. So I would say that not many stockbrokers make the transition into investment banking. I mean, these are usually the elite graduates from law and from accounting and from engineering. They also work ridiculously long hours. So I didn't really fit either of those criteria. But
what I was very good at was relationships. Yeah. And in capital markets, it's a it's it's as much about relationships as it is about the sort of know how. So I think the knowledge of the companies was good and the relationships was very, very solid. And so that was a promotion and an opportunity to move back to Australia. And I think when.
This was still with Goldman or this.
Was the. Goldman Yeah. So coming back to basically head up the capital markets distribution franchise and help with a little bit of origination and right in the middle of the GFC were actually right at the start of the GFC. We I remember Goldman had this phenomenally new novel idea called Paternity Leave, and we had our third son about six months after we arrived to Australia and paternity leave looked good, but paternity leave in parentheses or quotation marks
because you weren't taking it in one stretch. It was a day then deal, then a day, you know, so the Goldman way, you know. But yeah, yeah, yeah, that's good.
And maybe just quickly the trajectory. So you obviously had ten years there. I mean, why the move and then when you ended up as head of listings, But was that a natural evolution for you?
Yeah, well, I started as head of listings and grew that franchise. And I think, look, the real appeal at ASX was the CEO at the time, a guy called Elmer Funke Cooper and Elmer.
Yeah, Industry.
And Elmer had been CEO of Tabcorp and ASX had just had a failed merger with SGX. So and I think the board and the management felt that ASX needed to be a lot more customer focused. So ASX, I think had a not only a great CEO but a great chairman, Rick Holiday Smith And obviously Elmer hired me with the Goldman background to sort of have that stronger customer engagement and I got to know Rick and his board very, very well. And look, timing is important to
the IPO market was reopening then. So we had a little bit of sort of wind beneath our sails. But we were, I think, able to very, very successfully attack new opportunities primarily through Tech and and New Zealand and a few other geographies. Biotech, ET cetera. ET cetera. Um, and it was a good run. Look, I mean, unfortunately, Elmer's time was cut short, but, you know, the business continued.
We continue with our strategy and successfully executed. Um, but funnily enough, the timing was, was fortunate to I had probably the most important guy, a guy called Eddie Grieve who was working with me through that whole period. He decided to retire and that gave me pause for thought. And so I thought have a little bit of a break around about the same time. And the IPO market shut about three months after Eddie and I left. Yeah. So not saying anything other than timing, but we were
a bit lucky as well. All right.
Let's talk about FCX. Yes, I really want to dig into this. I mean, maybe let's start with the basics. I mean, what's your elevator pitch or the barbecue pitch? You know, if you're trying to summarize it in a couple of sentences.
The elevator pitch is as simple as we, um, we want to make the ownership of private companies as easy and simple as the ownership of public companies, as the ownership of BHP and Woolworths. It's as simple as that. And we are the only, uh, operator in Australia that has got end to end platform, which is share registry,
the ability to settle trades. And we firmly believe by the end of the year that we have a very strong likelihood of having a market operator license as well from ASIC, which will enable periodic secondary market trading of those shares. Yeah.
Okay. So let's maybe just break that down. So right now if you want to own shares in a private company is complicated. You need a lawyer. A shareholders agreement is, is pretty hard to transact. I mean, a transaction is is fiddly. I mean, you go to linen and lawyers and I mean, as as a founder, founder myself, it's still a phone to, I suppose, myself. I never loved it.
I mean, it's like you feel like you've got to pretend you're a lawyer and read these, you know, tens of pages of legal documentation just to get to the point where you're transacting on a on a share. So. FCX Kind of I mean, it is simplify. Is it simplifying the right word? Democratize a point.
Both of those are appropriate. I wouldn't want to oversimplify it. I think you still need lawyers. And and we are we are not a substitute for a lawyer. We're not a substitute for an adviser. What we are is a piece of infrastructure that enables the storing of information and the transacting of shares a lot more simple than are currently done today. So and the storage of those documents. So I think. Look 80% of the people that are. So if we think about the first step of the
journey and that's the share registry. 80% of the companies that we're bringing on to platform are coming from Excel spreadsheets. Now, what has surprised me is the number of large companies that are still running their registries on Excel. You know, we've got one company generating $1 billion in revenue, actually two that are generating close to $1 billion in revenue that are running their registry on Excel. We've got obviously a lot of startups and if you've got 5 or
10 shareholders, that's understandable. But we have spent the last few months ingesting three companies with shareholders, two 300 shareholders of Excel. You know, and it's a it's a big job. And so that's the first thing. You know, it's an absolute source of truth from a shared registry perspective and a storage of documents.
So so the technology behind this is obviously going to be robust and well constituted and thought out. So let's. Can you maybe tell us about the genesis of FCX and you know, who built this software? And because the architecture behind this, the infrastructure behind it is obviously complicated. So, yes. Where did it come from?
Well, look. Well, the generation, funnily enough, the idea of it came. So our parent company, Sinclair, did a capital raise and a secondary transaction nearly two years ago. So it was 20 million primary and about 40 million secondary. And Goldman, funnily enough, was involved in that transaction. And the lining up of the buyers and the sellers and the agreeing of the price that took a few weeks, that's the usual negotiation. But the settlement took ten weeks.
And our group, CEO of Finchley, David Farrell, just could not believe the amount of settlement meetings he was getting dragged into and qualifications of this on the spreadsheet or that and, and good lever, bad lever entitlement to sell. And he said, well, there's just got to be a better way. There's this got to be a better way.
And so I think he cast his eye, funnily enough, towards ASX and looked at what they were building with the chess project, which has since been scrapped and looked at the technology that they were using, which is daml, and that's basically built off by digital asset holdings in New York. And he thought, well, hey, there's a few stock exchanges looking at that, including ASX. That looks like a great private that's a private ledger. Who knows in the future that might be able to integrate with other
stock exchanges and running off Daml. And so that's that was how the decision making for that was was built and there was.
A tech built by FCX or did you license some of.
It? Well, no, the Daml is open source and and DA sorry, FCX built some of it internally. And then there's a group in Perth called Mechanical Rock who also help with some of that with some of that build as well. So that was from spec to go live probably 18 months I think. And the registry big project. Yeah, the registry and the settlement platform went live and around about November last year and last week our Esop module
went live and is now in beta testing. And the next mountain we have to climb is the trading platform to coincide with the market license, right? Yeah.
And so how big is the technology team?
The tech team at Fin Claire is probably around about 30. FCX has got a couple of dedicated techies. There's a couple of others that come on board when we need when there's something going on. So yeah, and we've also got outsource that we for some of the specialty stuff. Yeah.
Yeah. Look, it's probably worth jumping back just for a second to fin clear because I mean it's a, I think in my view an unsung Aussie fintech technology success story. I mean, do you want to give us a bit more background to. Finkler Yeah, it is.
And I think probably the reason it's a little bit unsung is it's a little bit unsexy, you know, and some of the best businesses are exactly unsexy. So Finkler in layperson's terms is basically the, the biggest it's a,
it's a back office aggregator for Australian stockbrokers. So if you think about Shaw's and Wilsons and Ords and a lot of those household stockbroking names that are retail, we basically managing their entire back office, which is the when this trades that come in and have to get settled, we run that whole process and that was basically born again. David Farrell is the is the founder of that and
he built that. Business. It's probably around about nine years old as a little bit of a sort of start up disruptor using a bit of technology that brokers aren't renowned for investing heavily in. And and one big thing that I think changed the business was the biggest competitor came up for sale a company called Pershing and they were able to buy that about three years ago. And that really transformed the business both in terms of customers and and and cash on platform. So.
And there's a adventure story behind this like how did David fund it.
A little bit himself. King River. I have been probably an early stage investor. David Hancock, who was one of the original investors in Afterpay, who's our chairman there, probably three of the big guys, and then Thorney Regal Marina.
These are not well known venture funds.
Yeah, yeah, yeah. No, So they're probably more sort of, I guess, what you would call crossover funds. Yeah, yeah, yeah, yeah. No.
It is an amazing story. And I mean, I haven't met David, but he seems like a, you know, force of nature. Yes.
Well, if you're reading what he's doing in the press at the moment, I hadn't seen that he was in there. Oh, look, I think he was he was a chief supporter of the ASX in the chess project and now he's become chief prosecutor. Right. And the chief supporter, I think gets overlooked. But he's been very, very vocal because I think we represent so many brokers in Australia that are effectively beholden
to the underlying infrastructure of the the ASX. And so he's really been taking up the baton to to sort of like say what's going on here. Now this system's been paused or shelved or what's happening. You know, we and our clients need a lot of visibility because we've got to invest capital.
And just quickly.
Rebuild.
What was the chess project?
Well, this was the chess project is ASX as clearing and settlement system that is currently 20, 30 years old. I know because I was involved with it at Macquarie as a retail broker when we were getting dematerialized share certificates and like any 30 year old technology, it needs to be it needs to be replaced. But it's not as easy as buying something off the shelf because Australia and to ASX credit, ASX was the first stock exchange
in the world to digitize share ownership in 1994. The problem is between 1994 and 2024, the world's changed a lot. The systems have had a lot of add ons and the market is a lot more complicated than it was in 1994. But there's no off the shelf product because, believe it or not, most markets in the world still have their shares traded with paper. There's only around about. There's only people you can count them on two hands, the countries that actually have fully dematerialized stock ownership.
Interesting.
Yeah.
All right. Let's jump back to FCX. I mean, what I'm interested in is the opportunity and the potential market size and who you're selling to because yes, for Max Cunningham, you know, Macquarie, Goldman Sachs, ASX to jump out and spend probably the prime time of your career and something new, it's going to be a big opportunity. Yeah. So who's it for?
Well, I think it's I think it's a limitless and unlimited opportunity, you know, because we're really creating something very new. And I think that there's a few macro driving forces as well that that help us. In terms of the timing. You know, if you look at what's happened in the US around about the turn of the century, there's been a massive take up and growth in companies staying private for longer. And that's right. And I think that's partly
regulatory and partly of the available. We've obviously had 20 years of loosening monetary policy, which has helped as well. Now, at the moment, obviously, we're in a tightening of monetary policy phase, but I still think in Australia there's a deeper and tighter regulatory environment for companies going public. The other thing that gets overlooked I think is the huge
impact and advent of index funds. And so I think the public markets are increasingly the haves and the have nots and the haves are the companies that are in the index and the have nots are the companies that are not in the index. And what we've seen during this sort of recent economic turmoil is the companies that are listed and have not been in the index have just seen their liquidity dry up completely to the point where they often trade on appointment. So what's the opportunity?
I think the opportunity is to service the companies that have already decided that they're going to stay private for longer. And quite frankly, we seek to service everyone from the company that's starting today to the company that's got $1 billion in revenue and 2 or 3. Hundred employees in their Esop. And I think we're going to see more of those companies at every point in the in the spectrum.
So for the listeners here, so they're likely to be startup founders, VCs, other investors, people interested. I mean, what what should they be doing, like to become a customer? I mean, can they do it right now? And what are they signing up to? I mean, just. Yeah.
Well, look, one of the great one of the one of the things we've done is for companies with shareholders of five or less because we want it's, it's actually quite cheap for us to ingest them and get them on is we're we're not charging for them to come onto the platform and I guess it encourages good habits early, you know, in terms of digitizing your platform. I think if you're going to be a company with one shareholder or two shareholders and you're never going to change, then
FCX isn't for you. But if you're going to have funding requirements and you've got four shareholders today and that might become eight in the future and that might become
16 after that. FCX is a great place for you to basically start your life, have your share register, raise capital on platform, settle atomically, which is instant settlement and and potentially roll out ESOPs and and eventually potentially if you if you're if you're super successful like a Canva or a company like that you know and you don't want to go public there's the opportunity to have your shares trade on on FCX in the future. Right.
Interesting.
And so and they can contact me at max@fcx.com or you to discuss it further.
I was going to ask that at the end, but you got in there early. That's great. So, I mean, maybe just breaking some of them down. So raise capital on the platform. So what does that look like? So you're a early stage startup. You've had your idea, you've got a couple of customers, software business, maybe a team of sub ten. Yes, shareholders are probably I don't know if you haven't got any funders on it might be 3 or 4. Yep. And you're about to go out
and raise capital. So maybe just talk through the journey of this fictitious startup as it goes from there to, you know, the size of Canva.
We don't I think I can talk openly. We don't need to do fictitious. We can we might have to be fictitious beyond the success of Canva. But look, I think we've got 40 companies today on the share registry and that's sort of like going to be 50 in the next month or two. We're onboarding solidly. We've done just before I went away recently, we completed our fifth
capital raise on the platform. The companies that are on the platform typically are a little bit on the smaller side, but the ones we're growing on are a little bit bigger. But we've got a great little company down in Rose Bay that have been with us very early on, a company called Happily. They're basically a company that do removal. They're basically help you move home with utilities and locate a what is it, a removalists, etcetera, etcetera. So they
fit exactly what you described. And they had around 6 or 7 shareholders. They'd gone on to the platform and they they needed to do a capital raise. So they did all of the finding, the potential shareholder in this case it was one investor. We set that investor up on the platform. They put their money into an account which is an ANZ, we've got ANZ custody accounts and
it's as simple as that. The money's there now really, you know, what happens is as soon as that money's in the account and they're happy to settle, we do this thing called atomic settlement, which is instant and they get the shareholder, they get the share certificate immediately. The company immediately recognises that with issuance of shares and the company gets access to that capital. So that's what we're doing for a lot of the smaller companies.
But this is an advisory. It's not that it's.
Not advisory at.
All. So you're not going out and selling this company to. Right?
No, it's infrastructure. It's just a settlement tool. But what that means is they don't have to go to the effort of creating the share certificate. Now, for one investor, that might not be a huge amount of effort, but we've been involved in transactions. We're doing one at the moment where there's there's there's potentially going to be 30 or 40 investors involved. So there's a huge amount of
admin on that. And ultimately what we're doing is ensuring that that the settlement, the transaction, the issuance of the shares happens at the touch of a button.
And then later is going to be the trading correct? Is this a good time? Should we talk about that? Yeah. So what does that look like? Because that's it feels to me that's it. It's it's more complicated perhaps, and maybe more regulated. I mean, how do you go from more regulated to that? Yeah.
We've got 40 companies on the platform today. Not all of those would be appropriate. In fact, most of them would not be appropriate to come on to the trading platform. But again, to use the fin clear example. So Finkel has got 400 shareholders. A lot of those are early stage investors, a lot of them are staff, a lot of them are ex staff. And what do they all want? Periodic liquidity on their shares. At the moment we have no capital needs, so there is no planned liquidity event.
But what Finkler would like to do is have its shares trade in a secondary market without having to go onto the ASX. And so what the what what what FCX is, is basically doing is we are creating the ASX light framework, for want of a better word, we'll have a rule book which will basically focus very much on disclosures that you have to make, which is cleansing the market. And once you've done that, you can have your shares trade, the shares will trade. I would say
periodically when the company wanted to trade. So, you know, most companies to begin with will probably have their shares trade once or twice a year. After their results. They'll have a batch number of shares that they'll release for staff to trade. They'll do an investor relations program, and then then there'll be an auction that'll open and those investors will put in, put bids and offers into that auction, and then a price will be struck. As simple as that.
I mean, this feels like a bit of a game changer. I mean, if again, bringing it back to Australia and, you know, maybe even innovation being. And I think our Roro group has got almost 100 VCs as members. I mean, there's 120 individual members almost. So that's let's call that the whole market. It's not it's probably, I don't know, two thirds of the market if that's the whole market. And then we ran the numbers. So those 100 VCs
or thereabouts have got about 1500 portfolio companies. I mean, the world in which all 1500 of those portfolio companies are using, quote, marks here listed and tradable on the platform. That's a game changer because you've got liquidity for staff, for the early investors, for the early shareholders. Is that am I putting this right?
Oh, I think it is, absolutely. And I think the engagement we've got with the VC community, the engagement we've got with their portfolio companies and and start up companies that haven't had VC funding is exactly that. You know, I think if there's any avenue that we can have to delay listing as long as possible, and that's something that I advocated when I was at ASX, you know, put off your listing as long as possible, be as big, make as big an impact. And the other thing is,
the bigger you get, the more optionality you've got. Right? Sorry to use the Canva expression again, but I mean, they're in a beautiful space. You know, they're self funding. They can decide when they can decide where. And not every company is going to be a Canva. But certainly it gives the the bigger you are, the more options you get. And I think a private market is going to be be a game changer and a partner in that process.
And who sets the price?
Investors, right? Yeah. Look, the company that's going under the platform, if they've got some price sensitivity, they've got the ability to influence certain things, like how many shares can be sold by staff, They might be able to put a floor, for example, on that. But ultimately, the only people that ever set prices are investors. You know, I mean, a share is only what someone's it's only worth what someone's prepared to pay for it. Nothing more. Nothing less.
Yeah. I mean, going back to it, I mean, if there is a world where all the privately listed amazing tech companies across Australia to start with, and then maybe the world are listed on a platform like this, then that is super interesting. I mean, I can see now why you wanted to join. I mean, this is the. Yeah, that's amazing.
It's a massive opportunity. It's a massive opportunity. Yeah.
Yeah. Wow. All right, let's. What else do we need to talk about? Yeah, the go to market. I mean, it's all very well having a massive opportunity, but, you know, as I spend a lot of time talking to, you know, portfolio companies and people ask me for advice, you know, you go to Target, you know, just because the world is your oyster doesn't mean you sell to the world. Who initially are you going to be targeting?
A good question. We are kind of targeting everybody, but it's kind of where we where our economics are skewed towards people who are doing capital raises or secondaries, because that's the big solution. That's the big nightmare that we're making. Go away. So I guess in the ideal, companies are companies that we hear about that are planning to do a capital raise in the next 12 months for us. The ingesting of the shareholders into the register, that can
take days. That can take weeks. Our guys do a huge amount. We've got actually some of the best people that have come across from share registries like Lincoln or Tomic. So they're actually familiar with the public registry world and and truth of name on register. So the scrubbing takes a huge amount of effort. And so what we're trying to do is get companies on and and help them be be match fit for when they raise capital or
when they have a secondary. And yeah, so look, companies that we're we're having huge amount of engagement with the companies with valuations between 50 and $500 million is the sweet spot but we don't want to put off companies that are smaller than that or larger than that. And we've got some great engagement with some of the smaller companies as well.
And how how do you charge I mean, what is the pricing structure like?
The share look, the sheer registry business is is is pretty minimal. You know, it's it costs nothing up to five shareholders and then 5 to 20 shareholders is $50 a month. 20 to 50 shareholders is $150 a month. And then it's $250 a month after that.
Okay. So it's nice and clear and.
Yeah, yeah, yeah. We don't charge per number of shareholders or anything like that. Look, I think beyond that, we for the capital raise is we're taking a we're still finding our way. We're taking a percentage of capital raised. I wouldn't want to sort of lock in anything at the moment on on what we're charging there because we're still working that through. Look, I think if we're doing larger raises, there'll be some caps in place and then it depends on how much work we do. Some of
them we're handholding all the way. Others are using advisers. And so there's a probably a variance in fees there if they're if they're using advisers a little bit lower as well. And the Esop module, that's going to be the real game changer. I think that's where people have lots of headaches and we're working through the process.
Let's dig into that a little bit because, you know, Esop can be a challenging thing, especially if there's not one place. I mean, you know, often when as an investor you're coming in, you don't see an Esop in place, like you should have an SOP in place and then put it in. But it's quite complicated to do that. So do you want to talk a bit more about that?
I think the common problem with ESOPs that we see firstly are using cheap lawyers to get it set up. So there's actually reduces a lot of optionality or pushes costs down the back end in terms of sorting these things out, in terms of agreements. Secondly, it's just depending on how many people are in the Esop, I haven't managed one myself, but when I speak to founders, it's just a very, very messy. If you've got a lot of people in there, you've always got people leaving, you've
always got people coming in. Let's say you've got 5% of the company available in a given year. You've always got to be managing levers coming in, new hires. How do you roll that out? And so the vesting and vesting and the vesting calculator. Absolutely. And one of the things is people always want to know, how many shares do I have? What's vested? Yeah, actually worth. Yeah. We've got one company coming on at the moment that has Daly vesting. We've never come across that before. So more
commonly is quarterly or twice yearly. But this tool that we've built and is now we've got about five of our clients in the beta test, it really enables you to just be able to manage that on screen. You know, most people, even on other share registry platforms, are managing their Esop effectively on, on, on Excel. Yeah. And this will automate the entire vesting process.
And how, how much human labor is involved in onboarding a customer. I mean it's maybe different now to how it might be in a few years time, but some of this stuff is fiddly. Like, you know, you're vesting and your, you know, your ESOPs and blah blah, blah. I mean, it's there's going to be humans. You must have a team that's looking after the onboarding.
It's extraordinary how time consuming it is because what we really want to do is give a truth in register. So we don't only want to show that Ian Gardner owns a thousand shares in company XYZ today. We want to show that he owned 500 shares two years ago and 250 shares before that. And the. Timing. And so this thing called scrubbing the register is the most time consuming things because, one, they'll often spell, you know, they might spell gardener the wrong way. You know, they might
you might have changed addresses. You might have different emails in which you've subscribed to one. And so what we're trying to do is make sure that whole register is complete. So it's surprising and so and expensive.
I mean, you need good people like lawyers, probably.
Oh, no, no, no. We've got the guy that heads up. The team is a lawyer, Dean Jagger, and he's worked at Lincoln Atomic. And there's a couple of other great people on the team that have also sort of got great registry and technical skill background. But no, look, I, I think it's eye to detail. I think it's eye to detail and, and just being technically proficient. Yeah.
Yeah. Again, let's think about that Nirvana in a few years time when you've got all the private companies listing and trading. Yeah. Does that do away with the requirement for the like how do you play in the sandpit with ASX.
Oh I think at the Fringe there's, there's the prospect that people might see as an alternative. But I think I like to see it as incredibly complementary to ASX. I think that this will produce companies that are much more aware of their listed company obligations, i.e. in terms of reporting, in terms of board structure and governance. They'll all be appropriate on an FCX but in a lighter touch. Secondly, as I said earlier, when I was at ASX, I
frequently said to companies don't list too early. My view was wait till you've got a critical mass of institutional investors, wait till you can potentially get into the index because they're going to be your key sources of liquidity. And I think this fulfils that actually. And I think if FCX is doing its job, one of the things is it should be seen by ASX as a funnel for high quality companies that know what being listed looks like
more than the company. So I think one of the problems is there's a lot of a lot of advisers out there that peddle dreams that, you know, being being listed is a bit like, you know, being on Wall Street stars in your eyes. But, you know, the counter to that is the bell ringing is the bell ringing is a bit like your wedding day. You know, it's a there's a lot of champagne, a lot of excitement. But there's a long, long, long journey ahead as a listed company after you've rung that bell. Yeah.
Second quarter. I mean, so there are I mean, the secondary market is is a thing. I mean, second quarter is a fund. Yes. That invests in, you know, late stage companies that may be about to to IPO doesn't even strike me that they're going to be competitive. They're going to be complementary and potentially our investor on the platform. Is that right? Oh, I would hope so.
I don't think there's any competition there at all. I mean, I think, you know, since I came up to Aurora with you guys a few months ago and I second quarter were there, and one of the big themes that came out and some of the breakout sessions was rollover funds and secondary funds growth. And this this has been again, a big theme that's probably been dominant in the US now for ten years, but it's just making its way down here. So I think it's incredibly complementary to what we're trying to do.
Yeah, look, we are sitting here, it is 31st of July. I don't know when this is released, but we've got Venture Down Under coming up, so we're going to have over 100 VCs from our group coming to Queenstown for a conference. What are you going to be seeing? What are you hoping to you'll be hanging out with these people all the time. Is this the time? Are you on sales mode? You want them to sign up? You want the portfolio companies onboarded.
Well into this is two interesting things. I mean, one, we love for them to just introduce us to portfolio companies because we think ultimately if you're, you know, a blackbird or an tree square peg, any of these guys, I mean, what we would love is for them to
have all of their shareholders. There's a benefit for for them, you know, all the shareholdings, which they're probably managing through a different back office will be actually they'll be able to hold their shareholding in one source of truth on FCX. So there's one there's a nice administrative thing for the VCs if we do get what, you know, some form of universal coverage, that'll be great. Secondly, it helps their
companies out. I mean, this is an administrative pain in the ass for founders, so the more the less time they spend on admin, the better and this gives them time back. And thirdly, we are about to test FCX registry for VCs. Okay. Some of your members we've already spoken to some some were in Sanctuary Cove and and some sort of in coffee shops. ET cetera. ET cetera.
But we've got a little sandbox. And when we pitch this to them, they all said, Oh, well, we've actually got a little bit of a problem ourselves with their back office. Do you think you'd be able to put a fund on FCX? So, so a fund.
Like Felix with 182 LPs, is that.
Yeah, absolutely.
Right. So this would help manage that?
Absolutely. Look, I'm not going to pretend I'm the the oracle on this, but I've hired a guy starting tomorrow who can do a deep dive project on this for the next month. The VCs that have already reached out of all said that they'd love to meet him, introduce him to their back office, explain what the problem is and his job. And I've given him a task of 4 to 6 weeks to turn around with a business proposal to start a new business, which would be FCX,
VC registry. And if it's too hard, it's too complicated or the economics aren't there, then we won't do it. But we're going to test that. So that'll the timing on that could be perfect as well.
Yeah, that's amazing. Yeah. And I mean, are you getting progress? I mean, how have your conversations with these either big or small VCs going? Are you getting close to 1 or 2 of them? Seeing like, this is a major problem for us. We need you and your company.
Oh, I think that'll be for what we're building or what we're looking at. I think we'll know the answer to that in a month. Okay. Everybody is. Everybody has said just come in and have a look and we'll explain the problem. And if you can come up with a solution, then we would we would love that because most of those funds have secondary problems. And that's what we're seeking to solve.
Yeah, that's the other issue. I mean, the reality is that many funds now are approaching the end of, you know, the early funds that is approaching the end of their ten year life. So they have to return capital. Yeah. And it's always, you know we haven't we being Felix hasn't been through this you know how you liquidate assets towards the end of the fund. But it's got to be a challenge especially now because the IPO markets are so closed. And yes, M&;A is happening, but it's a
little bit sticky. Yeah. You know, so it's not as quick as they want to be. So this would open up a lot of opportunities for just getting some liquidity from your your your stock assets.
I suppose so, right? I think so. Yeah. Look, I think when it's up and running, when the secondary market tool is there, it will it will enable companies to have alternative on that liquidity for sure. Yeah. Yeah.
Yeah. That's awesome That I mean maybe last question before we move on. I mean that IPO went. Door is is definitely shut. You know, are we seeing the green shoots of a recovery and do you think when's the window going to open? There's a question.
Look, I've always said that anyone who predicts the IPO market beyond three months is either wishful or incentive driven or or delusional. I I'm a bear on the IPO market over the next 6 to 9 months because of interest rates. And I think you need a clear you need a clear signal that interest rates at very least have peaked. We haven't got that signal yet. Do you
think they have? I think we're approaching peak, but I think even after that, you will need to see what the economic full economic impact is, that inflation has genuinely slowed. We could be in a position in six months time where inflation ticks up again and they start tightening again.
So because it's amazing, like there's still full employment, I mean, normally within order to get inflation down, you need employment to go up. Correct. That's historically been the case. And it's just it's not budging.
I think that the earliest that we will see the IPO market reopen will be after Easter next year. Interesting. Yeah, yeah, yeah.
Um, all right, look, I think that's. I mean, that's been great, Max. Thank you. And congrats. I mean, it's a it's an amazing career journey, and I can see why you didn't jump out and do this crazy thing called the startup. And it's nice to see you not in a suit. You're. You're in a t shirt. T shirt, hoodie.
Yeah. Yeah.
And looking a lot more relaxed. I have to say, it wasn't that you were not relaxed at ease, but you seem to be enjoying it.
Having a lot of fun, Having a lot of fun with great people. Yeah, great, great board, great shareholders.
That's great. Well done. Should we jump to the quickfire round? We can do that. No, we. I did send you the answers from the last one. Yes. I don't know. Have you got different answers for. I do. You do?
Okay, I do.
Did you remember the last ones or did you had to be reminded?
I think if you'd asked me, I would have probably remembered half of them when I looked at them. Yeah, I didn't. Yeah. All right, well, listen, there were a few that I wouldn't have remembered.
Well, let's rattle through it so quick. Fire around, like your favorite book.
Um, you know, I'm interested in Middle Eastern affairs. There's a few Middle Eastern themes here, but Arafat by Tony Walker and Andrew Gowers, which are made of mind.
Of Palestinian.
Leader PLO leader. And he he might he morphed from terrorist to statesman, but it gave you incredible insights to how corrupt the PLO unfortunately is. And when you look at the dire situation that they face today, there were a lot of missed opportunities that were all driven by overthinking and and factional infighting. Yeah. So great book and and I loved it in particular because Tony Walker is an Australian AFR journalist who was the author. He was the co author. Yeah. Interesting.
Yeah. Like keeping with your theme, I think the last two books were about Benjamin Franklin and Steve Jobs. Yes. So you like your Bios bios?
Yeah, fiction as well. But the bios, the ones where you're you'll learn a lot. That's great.
Yeah. Podcast.
Well, wrapping and continuing On the other side of that theme, one I'm listening to at the moment is called Unholy to Jews on the News, and that's Janet Levy from Israel's Channel 12 and Jonathan Friedman from The Guardian. And look, they opine weekly on what's been what's happening on the
ground in Israel. But at the moment, obviously, with all the challenges that the government's been having in terms of changing the Supreme Court, yeah, all those all the protests that they've been having, it's been it's been very, very insightful to just give you that critical, balanced view. Yeah.
No, they are getting kicked up and down the park and that even America came out and criticized it. Yes. Kind of surprising. Yeah.
News source still, The New York Times.
Still The New York Times.
That's unchanged.
Yeah, that's good. Do you have a favorite app or a different one?
Different one, probably. Again, it's a bit sort of, you know, not not particularly exciting, but RunKeeper, which is just I'm getting back into my running probably since when we did this, I've actually lost a lot of weight, so I'm trying to run only once or once or twice a week. And but so it's just that, you know, not, you know, nice track. Yeah.
Yeah. And RunKeeper over Strava. Yeah.
I don't know. I should try Strava. RunKeeper is just the ASICs one and I run with ASICs, so it's more about the foot track, you know, the foot tracking and all that sort of stuff. Maybe I'll try Strava.
Competitive with yourself and others. Okay.
And I'm not competing with anyone, so. Well, yourself. Yeah, yeah, yeah.
I mean, how's any injuries?
Well, I had a I've got a lower back sort of legacy. I think it's sitting in office chairs for 20. Five years and I put on a bit of weight during Covid. So that's that was what took me off running for a little while.
Yeah, I mean, running is meant to be good for you. I mean, humans are designed to run, but also to balance. Well, it also designed to die at 30. Yeah. Yeah. So now we're in our 50s. It's. It's a tough sport. Yeah. All old guys. Not that you're old of course. Productivity tool.
This is a new one. This is a really interesting watch this space. It's called Empire. Okay, Empire A and this, I think is potentially revolutionary. Little business started up out of Melbourne that I came across through my FCX universe. And this is a great way, a great way of tracking everything that's going on in the office. Sales targets are internal targets, personal targets, all that sort of stuff. So yeah, yeah. Run by a great guy called Ash Brown. So watch this space on that one.
And do you remember your previous answer to this one? I do, yeah. Your wife.
My wife? Maddie.
Yeah. Did she appreciate that? Did she ever hear. I don't think she's.
Listening to the first podcast.
Flag it when we're next year. Um. CEO Who's your favorite?
I don't want to be too sucky here, but I am a little. I'm very, very impressed with the guy that you've all ruse who's the CEO of Digital Asset Holdings, who are our partners in New York. I have known him through ASX, but also through mainly through Israeli connections. And look, he's just one of these guys that is
just go, go, go nonstop. And look, I think some of the things that went through when some of the problems that occurred with the chess project, he never lost his focus, never lost his optimism and is really, I think, built not just a phenomenal business with DA and the Daml software, but he's actually now building a global blockchain called Canton that all of the people that are using Daml will be able to connect to. So I've got to say, I'm pretty impressed by Yuval and his great company.
Uh, last question. TV show. What are you.
Watching? I'm just finished watching succession. So you get that? I'm sure a lot. I do get that a lot. So that's popular.
I still haven't watched it.
Which is great. And the one that the family love. And you know, when you've got like a 18 year old that wants to go out and do his own thing and the other ones are still in school, so they're a bit captured. Yeah, but they all love only murderers in the building which is on Disney Do No. Yeah. With Steve Martin. Yeah. So that's, that's a great one.
Actually it's not the last question because there is the what what would your Ted talk be.
Question tokenization of capital markets. Okay there we go.
That's quite niche, but I guess relevant.
Yeah, probably very niche. But we might, we might, we might fill a small room with that. Yeah. Yeah.
All right, look, that's awesome. We're at time. So Max, thank you and congrats on the progress and I'm excited about what's coming both for you and I guess for the industry because I think this could be a game changer. And I think it's it's well needed. So if anyone wants to find out more, what should they do?
Look, just drop me an email, Max at Mru or the.
Website I suppose.
Yeah, website. There's a contact box there as well. And my colleague Josh Collard as well. Josh at FCX Dot drop Josh and me a line and we'll set you up. Yeah, great. Yeah.
All right. Well, thank you. We'll see you in Queenstown in a few weeks, but I look forward to it. I will let you get on with your day, but thanks for coming in and thanks everyone, for listening.
Thanks And.