Beninvest FO makes innovative blockchain push with DiamHolding

  • Why this is important: Blockchain is an increasingly important area of interest in PE
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Inserting a unique nano-sized identifier in a diamond may seem to the layman like an unusual project, but for Benoit J.P. Flammang, a longtime private investor and one of the partners at Beninvest, his single-family office, it made perfect sense.

“I’m personally linked, not active, but linked to the jewelry industry,” Flammang told Buyouts.

His wife owns a family jewelry manufacturing business, and Flammang himself authored a buyers’ guide for prestigious wristwatches in the 1990s. He has also been an adviser to Antwerp Diamond Bank in Belgium for a private equity fund.

Flammang’s friend, Bruno Scarselli, who operates the third-generation company Scarselli Diamonds, recently asked him to help create a financial vehicle for the color diamond industry, Scarselli Diamond Fund.

During that process, they came up with a novel idea for how to revitalize the diamond industry: physically inserting a tag below the surface of a diamond, which a smartphone can scan by for access to a blockchain record verifying its authenticity and providing all the diamond’s relevant information.

That became DiamHolding, which Flammang and Scarselli co-founded in 2018.

Flammang compares the internal tag to a VIN number for a car.

“If you have a unique identifier in an asset, then you can monetize that asset. If you can monetize that asset, then create financial instruments around it, then you can create a marketplace, in this particular case a zero-trust marketplace, which is the future,” he said.

“People don’t trust each other, buyers or sellers, but because it is blockchain registered and immutable, the information is immutable, people start trusting one another. That is the goal.”

By marking the diamond and patenting a way to read the tag with a smartphone, Flammang hopes to create a technological link between the phone and the diamond. That could make the diamond market more attractive to millennials, who he said tend to prefer experiences over assets.

“In general, millennials will prefer to go on an adventure cruise in Antarctica and look at penguins than to buy a diamond,” he said.

Flammang said the smartphone element is what sets DiamHolding apart from similar businesses like Everledger, another company with its own diamond-centered blockchain project.

“We are the only ones that are focusing on the consumer experience,” he said.

Born in Belgium, Flammang originally moved to the U.S. in the 1980s to help restructure a U.S.-based subsidiary of a tech company called Telindus, based in North Carolina.

He revived it, then moved to New York to open a branch of it. There, he got involved in investment, originally in IPOs and stock trading.

In 1992, he opened Beninvest, which he and a friend still based in Belgium now use to manage their own wealth, while depending on external accountants and lawyers.

When Flammang looks at possible investments, his biggest focus is return drivers. “We need to clearly identify repeatable, consistent return drivers that are scalable,” he said.

Recently, other family offices have begun noticing Flammang’s success and following him on some investments in real estate and late-stage tech.

“It’s personal relations; it’s not in a formal way,” he said.

Flammang strongly recommends taking a data-driven approach to investing.

“It’s all about big data and how you handle the data. It’s about the algorithms that handle data. Any investment you make, I would look at that angle more than anything else,” he said.

To keep informed, Flammang regularly attends conferences and reviews a constant stream of new proposals.

“You want to know everything that is going on out there; you don’t want to miss out on anything,” he said. “It’s a permanent learning curve.”

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