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I have recently been on the look-out for technology products in the realm of financial innovation - in fact have been actively seeking them out. A few interesting concepts:

1.Securitization 2.0

Three Goldman Sach’s bankers turned entrepreneurs were covered in a recent WSJ article. A suggestion for a new product from one of them was the creation of a financial platform which would collect financial information from small companies and generate credit ratings. This would imply that the firms can raise loans which could be securitised and sold back to financial markets. Hmmm....sounds familiar??? Who’s developing the credit ratings?

HSX is the first migration from the virtual world to the real world. The platform started life as a virtual trade platform where new joinees were given 2 million Hollywood dollars to start trading on the success of movie releases and actors.  Sometime in 2007 they were at 1.7 million registered traders with about 50,000 trades on a daily basis and I’m sure they have grown since. Cantor Fitzgerald is now taking them live with the launch of a live platform for tradable futures based on box office receipts of motion pictures. The target market is institutional investors, final consumers and industry insiders (not so sure I like the word insider in the same sentence as trading). $1 will equal $1million in box office receipts and trading on a film will start 6 months before its release. Rentrak is the data provider of box office receipts. Of course, competition can’t be far behind and there is already talk of another exchange – Veriana Networks – this one targeted at professional and institutional investors. I wonder if there’s any chance that this develops into new models of film financing.

3.Crowd-sourced investing

Singapore based Grow VC is enabling a crowd-sourced platform to bring entrepreneurs and angel investors together. Startups can be rated by their peer group and also be invested in by community funds. A key feature is that the platform brings together experts, investors and start-ups across geographies. It is a novel concept if they can maintain the momentum and scale plus if entrepreneurs are open to sharing their business information in such an open manner (a huge question). As for pan-geo investments, when it comes to Asian start-ups, during the initial stages, they would invariably be able to raise money only from local sources. Anglo-Saxon and European VCs are certainly getting active in Asian markets but it’s more for SME investments as compared to venture capital investing. Will be watching how this develops.

However while they all do fall into the category of financial innovation, it’s not exactly what I had in mind......more on that later.