Despite the industry completing over $200B in diamond transactions annually, the diamond trade market is filled with opacity and a lack of liquidity. Much of the trade has been centered around a few key participants with a host of middlemen in between. Liquid Diamonds is a data-driven B2B diamond sourcing platform for the wholesale diamond market that connects finished diamond suppliers with diamond traders and jewelry retailers. The platform uses a double auction system that allows both suppliers and buyers to get price visibility for each diamond, ensuring that each transaction is completed at an optimal price for both sides. Given the move towards increased transparency in the diamond industry, all suppliers and buyers are vetted through an extensive AML and KYC process and all diamonds are certified to be compliant with the Kimberly Process, which means they are not sourced from conflict zones or with unknown provenance. Suppliers from India, Belgium, UAE, and Hong Kong have already transacted in over $50M in diamonds since the company’s founding in 2017.
AlleyWatch caught up with Liquid Diamonds CEO Kashyap Mehta to learn more about the business, the company’s strategic plans, latest round of funding, and much, much more…
Who were your investors and how much did you raise?
This is a $1.1M Seed round. Key investors include:
- New York Angels – Donna Redel, Larry Ng, Seth Masters
- Techstars
- Unpopular Ventures
- Family office of US Oil Inc. / US Ventures Inc.
- Rob Mihalko – Prof. at Stanford – teaches Digital Marketplaces
- Joe Magyer – Seaplane Ventures
- Varun Alagh – founder of unicorn MamaEarth – recently IPO’ed
Tell us about the product or service that Liquid Diamonds offers.
Liquid Diamonds is a New York-based technology startup in the diamond industry that has built a B2B sourcing platform for diamond and jewelry businesses. The platform is powered by a patented Reverse Auction system that enables diamond and jewelry businesses to get the best prices on diamonds by having hundreds of suppliers compete for their demands.
What inspired the start of Liquid Diamonds?
There is a lack of price transparency and liquidity in diamonds due to which diamond buyers don’t know what price to buy a diamond at and diamond suppliers wait for months to sell their inventory.
Our mission is to bring price transparency and liquidity to diamonds to enable diamond buyers to buy quickly and easily at fair market value and suppliers to liquidate their inventory instantly. Our vision is to democratize the diamond market!
How is Liquid Diamonds different?
Liquid Diamonds is powered by a revolutionary patented Universal Double Auction System (Patent US7792723B2) where users can see a real-time view of both the competing supply of sellers and the competing demand of buyers, allowing for price discovery and liquidity in diamonds for the first time.
What market does Liquid Diamonds target and how big is it?
Liquid Diamonds helps diamond and jewelry businesses to buy diamonds from diamond suppliers across the world. Currently, buyers are jewelry retailers and diamond traders in the United States. Sellers on the platform are diamond-cutting and polishing companies in India, Antwerp, Hong Kong, and Dubai.
There are over $200B of diamonds traded globally every year. The United States constitutes over 40% of global diamond consumption.
What’s your business model?
Suppliers pay a transaction fee to Liquid Diamonds for every diamond sold on the platform. Also, Liquid Diamonds provides SaaS tools that enable diamond businesses to price their diamonds using market data. This is on a monthly subscription model.
How are you preparing for a potential economic slowdown?
Liquid Diamonds has already facilitated over $50M in diamond transactions between diamond wholesalers in NYC and diamond suppliers in India. With the new raise, Liquid Diamonds plans to expand its offerings to jewelry retailers across the United States.
What was the funding process like?
Donna Redel and Seth Masters of the New York Angels have been mentoring us for a couple of years. They decided to lead the round along with Larry Ng and the rest of the investors helped close the round in 60 days.
What are the biggest challenges that you faced while raising capital?
Historically venture capital players have shied away from investments in the diamond and jewelry sectors as it has been an industry that is resistant to change. However, the investors have experience in investing in technology startups that have transformed multiple traditional industries.
What factors about your business led your investors to write the check?
The investors believe the diamond and jewelry industry has been left behind compared to other industries, such as auto, finance, and pharmaceuticals. Their goal of investing is to propel it into the modern age, attracting substantial financial capital into the trade.
The investors believe the diamond and jewelry industry has been left behind compared to other industries, such as auto, finance, and pharmaceuticals. Their goal of investing is to propel it into the modern age, attracting substantial financial capital into the trade.
Donna Redel, a member of New York Angels, as well as an early investor and mentor to Liquid Diamonds, now serves as a new member of the company’s board of directors. She shared that she “is optimistic about the future of the diamond industry, as modern technology is slowly being accepted by a dated industry that is not currently data-rich.” She continued that the “application of technology and access to data can benefit every part of the value chain. Liquid Diamonds is on the forefront of this revolution and will continue to establish themselves as a great asset to the jewelry industry at large.”
Where do you see the company going now over the near term? / What are the milestones you plan to achieve in the next six months?
Liquid Diamonds is focusing on expanding its offering to jewelry retailers across the United States. The United States constitutes over 40% of global diamond consumption in a market that does over $200B in trading volume per year.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Focus on building a product that your customers love. Keep at it. There is enough capital for good teams to build great products.
What’s your favorite restaurant in the city?
Milk & Roses in Greenpoint and BCD Tofu House in Korea Town.
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- Source: https://www.alleywatch.com/2024/05/liquid-diamonds-b2b-diamond-sourcing-platform-revere-auction-system-liquidity-kashyap-mehta/
