The evolution of primary market technology

A significant story broke in our space this week. Nivaura, a competitor/peer of ours entered into an asset purchase agreement with another DCM-focused fintech NowCM, who will acquire all digital and IP assets. 

Nivaura started life slightly more towards the DLT-end of the digitisation spectrum, but there were many areas of overlap. I of course was aware of their presence, but in general I preferred, like with everything in my life, to not spend too much time focusing on competitors, keeping my “eyes forward, no distractions.” 

That being said, news of this consolidation marks a significant milestone in our space and goes to show how far primary market technology has come in less than decade. 

In the beginning

Since 2015 when we got going as a business, primary markets technology has gone through almost an entire “lifecycle”. By hook or by crook, we’ve managed to hang around and witness the entirety of that evolution from our front row seats, having started Origin nearly 8 years ago. 

In the beginning, through our first 3 or 4 years of operations, our challenge was to convince people that we were fixing a problem that was worth solving. In the early days, most market practitioners didn’t see anything wrong with how they did business. One reason why was because there was much less understanding of the workflows outside of specific job descriptions. 

For example, front office professionals often had no idea what went on in the middle and back offices, let alone what CSDs and paying agents did. This is kind of hilarious, given how many front office bankers now claim to be tokenisation and settlement experts! But the point is that the siloing of roles meant that very few realized how tech could optimize processes and make their work lives exponentially easier. 

An evolution 

Around 2019, things started to change across the industry. I have to give at least a little bit of credit to the team at Nivaura as they announced their blockbuster $20m seed round in early 2019. This grabbed attention across the street, putting wheels in motion and shining a light upon what had been a dark, off-road part of the ecosystem. Primary market tech was on the map.

By 2021, the “ecosystem” of primary markets tech solutions had mushroomed, with new initiatives and startups launched every month. ICMA maintain a directory of tech solutions for primary markets. In the beginning, it contained, maybe, 10 entries. Now there are about 50. There are auction platforms, blockchain/tokenisation projects, SaaS solutions, marketplaces, legal-tech solutions, and everything in between. No sector too small – no problem too niche. 

There are true startups, like Origin, sitting alongside initiatives spun out of financial market infrastructure like exchanges and CSDs, bank-consortium led efforts, and also initiatives from existing “larger” software providers. The ecosystem was evolving. And fast. 

A different conversation 

And, as a result of this evolution, things have flipped 180 degrees…from us having to convince clients that the market needed changing…to us speaking to prospects who were suddenly very excited about what we were building and telling us that our ambitions weren’t big enough.

In recent years, on the (rare) occasion I’ve been invited to join one of those “talking heads” panels, as everyone pontificates about what changes there will be in the primary markets and how quickly this change will come about, I’ve generally found myself on the more cautious end of the spectrum.

For someone who (if you know me, you’ll know) is an optimist and trained as an engineer, this caution felt strange. Perhaps it’s because I started my career trading credit in 2008? As a result, maybe I’m more aware of the seductive pull of bubbles and irrational exuberance? Either way, as things got crazy in recent years, this scepticism has stood us, I think, in good stead. 

A time for focus 

In general, the explosion of tech solutions in capital markets has been great for Origin and the industry as a whole. To make progress, we need the license to experiment and fail, and we will never begrudge anyone for trying something that might seem a little outlandish. The best innovation ecosystems out there (particularly in my home state of California) continue to celebrate honourable failure (key word being, honourable), in a way that Europe can learn from.

But, just as ecosystems ebb and flow in nature, the business and innovation cycle is no different. After a heady few years in the world of DCM-focused fintech (and, of course, tech in general), I believe we are coming down to earth a bit. Of the 50-odd initiatives in that ICMA directory, the truth is that many of them will not reach escape velocity. Post-mortems will include a combination of “poor timing”, “fumbled execution”, and a more fundamental “lack of product market fit” (or “the market didn’t want what we were selling”). Some entities will merge. Some will be shuttered for good.

At Origin, our focus and ambition remains the same. Amidst the flashing lights and loud noises, we try to keep our heads down and headphones in, building great products and taking guidance and inspiration from the growing client base that we have the pleasure to serve. As we enter leaner times, we believe our focus on our customers, their experience, and the value we bring them will ultimately serve us in good stead, just as it has over the last 8 extraordinary years.