When Marc Bhagava set out to build Tagomi in 2018, he was thrilled by the amount of interest coming from the Wall Street crowd; big investors were interested in allocating a percentage of their funds under management to crypto.
Indeed, th...
When Marc Bhagava set out to build Tagomi in 2018, he was thrilled by the amount of interest coming from the Wall Street crowd; big investors were interested in allocating a percentage of their funds under management to crypto.
Indeed, the firm counted Peter Thiel's Founder's Fund as one of its main backers when it emerged from stealth mode. And at the time, the firm had a number of larger family offices and asset managers lined up to use its platform. Through a sleek interface, Tagomi enables traders to tap into several different pools of liquidity, including market-making firms like Jane Street, and crypto-native exchanges.
Similarly to broker-dealers in traditional markets, Tagomi leverages smart-order routing technology to execute a trade at the best possible price, known as best-execution or best-ex.
In a sense, one could argue that Tagomi was a first mover in setting the foundation for crypto best-ex.
Tagomi's efforts are taking place within a wider context in the industry. On Thursday, Chicago-based crypto exchange ErisX announced that it would link up to Etale, an institutional trading platform that offers best execution via "machine-learning-based quantitative models." Elsewhere, cryptocurrency exchange Kraken recently acquired Australia-based Bit Trade, which claims to offer "best prices" to its clients, as per its website. Crypto firm FalconX, a San Francisco-based company, is another crypto broker aimed at institutions.
Indeed, CMT Digital head Colleen Sullivan told this reporter in 2018 that a crypto prime broker and the lack of prime services were holding back institutional capital.
"Without a prime broker, trading firms are directly subject to events that an exchange may suffer like hacks, regulatory issues, operational issues, technology issues (and many more) — all of which may lead to loss of the trading firm's cash and coin," Sullivan noted.
Still, as cofounder Marc Bhargava noted in a recent episode of The Scoop, large investors have largely remained on the sidelines.
"And I think a lot of them were in it for the hype, but also, to be fair to them, a lot of them are looking for real use cases and are not finding all that many," Bhargava said. "The groups that have become more active are more the crypto funds, which is where the family offices tend to invest."
Yet the firm said that it's been able to continue to grow its user base, onboarding the larger institutional clients in the crypto space.
"They look to us as a way to give them that institutional trading system that can let them focus on whatever their core business is," COO Kevin Johnson noted. "So we're basically all about taking this group of technology that we've built for execution, for settlement, for financing and finding different use cases for different types of institutional clients, whether it's a trading firm, or quant fund, or an index fund."
With a staff of 22 and having raised more than $28 million, Tagomi is pushing forward despite the lack of big investors in the market, expanding its product offering and new opportunities.
Despite a lack of interest from large investors, Tagomi sees a new opportunity in Silicon Valley firms wading into the crypto world.
On one hand you have the Facebooks of the world developing their own digital assets. Bhargava told The Block that Tagomi could leverage its existing technology to offer treasury services to large technology companies that are creating tokens. On the other hand, financial technology companies from Square to Robinhood have launched crypto offerings, to which Tagomi could provide its liquidity services.
"And, you know, you see a lot of tech companies starting to talk about that and making steps, or anyone who wants to have their own independent token, they can use us for Treasury management as well," he said. "So, you know, in 2020, definitely kind of this institutional class of tech is one we're keeping our eyes on."
source https://www.tokentalk.co/The Block/tagomi-pioneered-bestexecution-in-crypto-now-its-setting-its-sights-on-big-tech-5e2a1fd152cc1cff492189a2
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