Claus Skaaning, CEO and founder of DigiShares worked on Bayesian networks for his PhD. What are Bayesian networks? I asked. I googled it after and found this definition: Bayesian networks are a type of probabilistic graphical model that can be used to build models from data or expert opinion. They can be used for a wide range of tasks including diagnostics, reasoning, casual modeling, decision making under uncertainty, anomaly detection, automated insight and prediction.
Skaaning described it as an AI technology from the old days – which still has some good features – and pointed out that unlike AI, the models derived from this technology were transparent. To which I asked if the transparency of Bayesian networks was what led Skaaning to the transparency of blockchain? No, was the answer. Shame I thought, as it would have been a nice thread to pull.
Skaaning did buy a single bitcoin back in 2014 when it cost around $500 but he didn’t get the technology until much later, around 2017.
While finishing his PhD, he worked for Hewlett Packard (HP) in 2000, living through the dot.com bubble and subsequent crash. As part of that work, he traveled between his native Denmark and Silicon Valley. Turns out, that experience and exposure to startup culture really excited Skaaning and shaped his desire to become an entrepreneur. He got the chance to take HP technology into a spinoff and spent the next ten years growing a company that used AI technology to conduct troubleshooting and diagnostics of complex technical equipment.
“Sounds pretty boring but it is also very necessary technology. And I learnt a lot during the time running the company as CEO.”
As mentioned, Skaaning got into blockchain in 2017. Although we have promised not to mention Vikings, he thinks he inherited an activist, slightly anarchartistic trait from his forebears.
“I liked the fact that you can democratize access to a sort of financial infrastructure, disintermediate middle men, and basically avoid working with existing financial institutions. On a practical level, you can avoid fees, delays and be much more efficient. With a couple of friends we decided this was the space we wanted to work in – we made a conscious career decision to work with blockchain.”
The first project they started was a bootstrapped incubator on chain, allowing anyone to start their own project within hours on their platform. They could then tokenise virtual equity in these projects but it proved a hard project to sell.
“We also learnt that developing a business idea to sell to startups is foolish as they have no money. It didn’t work out but we did learn about tokenization, so we pivoted into that instead.”
DigiShares was the result, a chain agnostic tokenization platform founded in 2018. Currently it supports seven different chains allowing the customer to choose their preferred technology. The business model behind DigiShares is to provide white label solutions, as Skaaning says, DigiShares is a pure tech provider.
“We allow tech companies to tokenize their own assets, and we make it as easy for them as possible, providing all the necessary services for them to get off the ground. Our platform is highly customisable, configurable, user friendly and efficient. We want to make this technology into a mass market platform so that even if you didn’t know about crypto or blockchain, you could still easily use it.”
As part of those services, DigiShares has inhouse legal counsel that helps projects choose the most appropriate locations for their business. Skaaning stresses they are not a legal firm, they cannot provide legal advice, but they can provide high level advice, even as far as working with local legal firms.
DigiShares has more than 150 customers with an emphasis in real estate. One such customer is Equito, a company that tokenises properties in Spain. Equito has a community of more than 100,000 investors and has successfully tokenized 14 different properties. Equito creates a SPV for each property which is a legal entity that owns the property. It then offers each house for sale using its app which is built on top of DigiShares.
“I understand that each property sells out in a couple of hours. They offer shares for as little as $100 which really democratizes access to property investment and provides liquidity to the market. Long term, the company plans to pay out dividends based on rental income and also plan to facilitate trading of these shares. It’s a great use case.”
Skaaning points out that trust is core to such a project but also advises that people should do their own due diligence as with any investment opportunity.
“Tokenization does give transparency but it will not protect against old fashioned fraud.”
One project called InvestBay is based in the Czech Republic and operates on similar lines, while another project called MarketShare in the US is targeting injection of liquidity for their community. MarketSpace tokenized a large multifamily property that already had funding but the company wanted to provide liquidity for its investor base.
Today, DigiShares employs 20 people across software development, marketing, sales, legal and admin.
“We are a very typical software company, with some pretty amazing developers. And while everyone talks about tokenization, we only see between two and three serious competitors in this space. We know we are the biggest in terms of client numbers – we have 150 clients in more than 40 countries.”
Skaaning has learnt in his entrepreneur journey to solve problems for customers who have money to spend. In that regard, he and his team have spotted a gap in products available for tokenized projects – a exchange for the trading of real estate assets.
“So we are building that now and will launch in Q2 of this year. We had hoped someone else might do it but we can’t see anything in the marketplace. Since we have the skills, and identified the need, we decided to build it ourselves. It’s definitely something that all our clients need.”
All these tokenized shares are securities and exist in highly regulated environments. DigiShares is building a normal exchange, except the underlying technology is blockchain. Initially, they plan to partner with a US licenced company called TextureCapital but in time they will obtain their own licenses – this is something they know quite a lot about.
“We are also looking at Dubai which is booming in this space – both in terms of real estate and crypto.”
Also on Skaaning’s roadmap is the development of a decentralized ID standard.
“This is really needed in this space. If you want tokenization and you want it to work in an interoperable ecosystem, then we all need an open standard in ID. It needs to be totally available and not controlled by any central party.”
Looks like Skaaning has really got into entrepreneurial mode – if products are needed and don’t exist then he and his team will build it. Only this time they are building in a market where the customers have money to spend on their products.
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