Editor's Note: See all our Excelerate Labs coverage here.
WHAT: E*Trade-like platform that can be used to create new commodities markets in anything from virtual currency to locally grown food in about a month, instead of the six to 12 months it could normally take. In the process of getting U.S. Commodity Futures Trading Commission (CFTC) certification for the platform. Those seeking to set up a commodities market can get advice from Exchangery on whether a new market is viable, how to operate that market, as well as the relationships needed with banks and clearinghouses to cover counterparty risks.
Just like E*Trade, anyone can set up an account and begin trading in these new markets.
LAUNCHERS: Chris Duesing, CEO; Kellee James, business development.
WHY: Traditional exchanges only deal with large volumes of goods like corn or iron ore. Technology has lowered operating costs and made it possible for new markets to emerge. Many markets could benefit from the opening of new exchanges, but it's too time consuming, expensive and difficult to set up.
WHEN/WHERE: 2011 / Chicago.
BACKSTORY: Chris and Kellee both worked at the Chicago Climate Exchange, which showed them the difficulty of forming a new exchange first hand [ that exchange has since closed in part because federal "cap-and-trade" legistlation did not pass ].
"The whole process, just to try a new market idea is just too big a burden," Chris says.
"We decided to solve that problem by going through CFTC certification once, building a technology platform once, and leveraging that platform across multiple startup exchanges."
BUSINESS MODEL: Upfront fee, annual fees plus a percentage of every transaction.
PHILOSOPHY OR GOAL: "Our goal is really to help innovation and help people hedge risk in new industries and help new markets grow," Chris says. "Not a whole lot of people are starting completely new contracts in new areas. There are markets that fit the criteria in online ad inventory, they just don’t have the expertise to know how to start a futures exchange."
COMPETITION: Chicago Mercantile Exchange and other commodities exchanges worldwide.
CUSTOMERS/GROWTH: Not disclosed.
ON EXCELERATE LABS: "We walked into this with three leads, now we have 20," Chris says. "People have given us great advice and it has just been fantastic. It’s interesting, before I came here they made the distinction that they were an accelerator and not an incubator and they have just fast-forwarded our business by about a year. It was fast paced, but it's been fantastic."
RAISING: $500K in initial round to complete the technology.
NUMBER OF EMPLOYEES: 2
The demo of the trading platform isn't pretty, but Chris says that the actual design will be completed in early September. Click on a symbol to expand order history with quantities and bids. You can also make your own offer at the bottom of the screen including quantity and price.
1. Commodities to Overtake Equities in India (Commodity Online, Aug. 30, 2011)
2. ICE to Shutter Chicago Climate Futures Exchange Next Year (San Francisco Chronicle, Aug. 8, 2011)
CONTACTS & LINKS
Email: Chris.Duesing at theexchangery dot com
Email: Kellee.James at theexchangery dot com
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