Rory Rawlings was able to see around a corner when he launched tax compliance software giant Avalara. Now the Seattle-area entrepreneur thinks he’s at the outset of another big trend.
Rawlings is CEO of Blu Canary Capital, a Bainbridge Island, Wash.-based advisory company that is helping brands use regulated digital assets to capitalize on their products and projects. It offers crowdfunding advisory services, SEC registration with regulated partners, and more.
Rawlings is betting that sports teams, music stars, and other established entities will jump into the “metaverse” and sell SEC-registered digital securities, or “tokens” — with Blu Canary facilitating the process.
“We’re at the tip of the spear in the beginning of what we believe is a massive, a massive industry,” Rawlings said, referring to regulated security tokens and immersive entertainment platforms.
The “metaverse” has been described as the next iteration of the internet; McKinsey said last year that it could generate up to $5 trillion in value by 2030.
But some believe the “metaverse” is dead, given how the hype around virtual worlds from companies such as Meta and Microsoft has quickly been replaced by generative AI and other trends.
“The term ‘metaverse’ has generated a lot of confusion and accumulated some baggage from the failed launch of Meta’s Horizon Worlds and other attempts to build virtual reality retail sites with no online ‘foot traffic,'” Rawlings said.
Rawlings thinks of the “metaverse” as immersive and interactive entertainment. Blu Canary wants to help entertainment brands build customer loyalty via digital assets.
“Instead of trying to create an all-encompassing virtual world, immersive entertainment platforms focus on enhancing people’s experiences in areas where they already spend their time, such as attending concerts, sporting events, and playing games,” he said.
Rawlings envisions a new type of investor class called “Insumer,” which describes a retail investor who can participate in the success of companies they support and get special access to loyalty programs or other perks.
Blu Canary is getting off the ground amid a recent decline in the NFT and crypto markets, and as regulatory differentiation between crypto, Bitcoin, digital securities, and security tokens remains murky. The SEC has increasingly targeted crypto firms it deems illegal.
Rawlings stressed that Blu Canary is “not a crypto company” and partners with companies that are compliant with existing regulations.
Blu Canary has agreements in place with 24 clients, including XMANNA, a gaming company that recently began a security token offering.
Blu Canary makes money off advisory fees, a portion of which can be paid in a client’s tokens.
The company has five employees and expect to more than double headcount this year via acquisitions. It is self-funded but plans to raise money via crowdfunding.
Rawlings, who left Avalara in 2015 and later ran a hemp seed production startup, is joined by co-founder Douglas Borthwick, a fintech expert and former exec at digital asset trading platform INX, as well as President Berto Torres, a cannabis industry veteran.
There is “no question” that Blu Canary will be bigger than Avalara, Rawlings said. The company launched in 2004, helping online retailers and others better adhere to complex tax regulations. It went public in 2018 and sold to a private equity firm last year for $8.4 billion.
