EXCLUSIVE: Kevin O'Leary Unpacks Deal Flow, Investments, Perspectives On Disruptive Innovation
A lot has changed since Benzinga last spoke with Kevin O’Leary, businessman, author, "Shark Tank's" Mr. Wonderful.
Most notably, his deal flow is more so concentrated around emerging markets such as DeFi — a finance model that replicates market-making, borrowing, lending and exchanging without expensive institutional middlemen — given a clear change in regulatory leeway.
Let’s further unpack what O’Leary’s focusing on.
First Mover: O’Leary’s foray into blockchain-based technologies happened before 2017 when he added to his portfolio a light exposure to Ethereum (CRYPTO: ETH), Litecoin (CRYPTO: LTC), Bitcoin (CRYPTO: BTC) and a few other tokens.
That’s as far as he went given that regulators weren’t on board with the idea yet.
“If you’re being compliant internally and also with regulators in each jurisdiction you operate in, you don’t have the option to be off-sides,” he said in a discussion on global authorities opening up markets to crypto products and services. “When the facts change, I change.”
O’Leary wanted to solve a problem. After generating a lot of cash from real-estate divestments, he looked for ways to earn yield before redeployment. That’s when he looked to DeFi and writing contracts on products such as USDC, garnering yields sometimes as high as 5%.
The process to do that wasn’t easy; there’s no infrastructure for compliance like in the currency, bond, or stock market. That means institutions running billion-dollar mandates for sovereign funds, for instance, can’t get the mark-to-market reporting necessary for regulatory compliance.
“It took me four months to set up all my compliant infrastructure with FTX,” an institutional-grade cryptocurrency exchange O’Leary proudly endorses. “FTX has the largest infrastructure and best compliant platform an institution’s … internal compliance department can work with and external auditors can audit.”
Given his perception of opportunity in the space, the celebrity investor teamed up with ventures such as NFT.com, led by Jordan Fried, and WonderFi Technologies Inc (NEO: WNDR) — which changed its name from DeFi Ventures Inc, a play on Richard Branson’s Virgin branding. O’Leary believes he and WonderFi can make a complaint DeFi infrastructure available to the masses.
“The potential is massive and we’re going to cut fees,” he said. “I want to be a part of it.”
Importance Of Going Public: Benzinga asked about O’Leary’s thoughts on WonderFi listing on the Neo Exchange and his methods for attracting investors to allocate capital to the space.
He’s no stranger to listing companies. As an early backer, O’Leary was a part of Mind Medicine (MindMed) Inc.’s (NASDAQ:MNMD) decision to list on the Neo Exchange and later up-list to the Nasdaq.
“If you look at what happened with MindMed and the things we did there, we were able to bring psychedelics as medicine and not recreational drugs public,” he explained. “Since then, there have been multiple companies go public, it’s a multi-billion dollar sector.”
Taking an idea and listing it on an exchange like Neo is powerful. What’s more powerful is telling people why this is important through social media.
“Companies need to be able to tell their story and there’s a direct correlation now between social media and market capitalization,” he explained in reference to working alongside names like Josh Richards, a TikTok influencer, investor, entrepreneur, and podcast star, on exposure initiatives.
“I tell my story and I think I can do the same thing in the DeFi,” given that it has the potential to remove the middleman — like banks — which add no value out of the picture. “If I want to buy stocks [elsewhere], you have to buy them in the local currency on the local exchange. Every time I do that, I get clipped multiple basis points and there’s no value there.
“When we get DeFi operating, I’ll cut all those guys out and they’ll be shining their shoes.”
What’s Up With NFTs: How does one actually know whether or not they are not purchasing authentic, real-world assets such as watches?
“The way you do that is with an NFT and smart contract where you get that watch authenticated perhaps at its time of manufacturing.”
This NFT acts as a validation of the watch’s value.
This is a dynamic O’Leary’s looking to own; “I think we’ll bring a lot of value there because every important collector wants to have that NFT on their collection and so I’m going to be the first to do it to mine.”
“The watches you see me wearing on TV with a red band — that’s going to be an NFT.”
MindMed’s Growth After Rahn: MindMed’s co-founder and CEO J.R. Rahn recently stepped down to position the company for growth in its next stages.
“It’s about removing oneself from necessarily what your ego tells you to do,” the founder told Benzinga in an earlier conversation on his commitment to making minds and bodies healthier. “The biggest thing I can do for MindMed, right now, is to realize that it needs a different type of leader, for the long haul. It is really for the best of the mission that is so deeply important to me.”
O’Leary says that the firm is one of the so-called Three Horseman in the space.
“I still have a major position in MindMed and I want to keep it because I think it has more trials than anybody else in important medicines,” he said. “J.R. was the spokesperson for the industry and he was the first to have the vision. He’s a legend but when it comes to managing these clinical trials through Phase 1, 2, and 3, you want a seasoned veteran that’s done it before and that’s what the company is doing.”
Photo: Benzinga, 2017 Benzinga Global Fintech Awards.
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