As excitement around Security Token Offerings (STOs) continues to escalate, TokenMarket, a global investment platform, recently announced that they will be conducting their own STO. The platform, which focuses on raising capital for the most exciting technology startups, has already seen promising blockchain based projects raise over $300 million from more than 30 businesses. Their most recent project, Fetch.AI raising $6m in 22 seconds in the public allocation of their sale.
Founded in 2016 by Ransu Salovaara and Mikko Ohtamaa, TokenMarket has become synonymous for being at the forefront of pioneering blockchain based token sales. Entirely self-funded to date, they have generated over $12m in revenue since 2017.
TokenMarket is now launching their own STO, demonstrating their platform’s effectiveness in raising capital and aiming to set the ‘gold standard’ for tokenized equity offerings. Working within the Financial Conduct Authority’s (FCA) Regulatory Sandbox, TokenMarket will be operating under UK Crowdfunding regulations, the licence they wish to operate under for other clients if granted the full licence.
The crowdfunding element of the offering, which plans to raise up to £2 million will be one of the first regulated tokenized crowdfunding campaigns in the UK. TokenMarket has stated in a recent press release that the funds raised will be used to “capitalise on the $100 billion a year market of startup and growth company financing.”, in doing so; acquiring further legal and regulatory licenses, as well as expanding its presence within the Middle East and Asia.
The STO framework is able to create a fairer investment opportunity for both investors and businesses alike, utilising blockchain in order to do so. Salovaara explained to us that “by democratizing these exciting startup investment opportunities, TokenMarket will be looking to create a new era of fundraising.” They will be looking to tackle this by expanding its platform in which investors can research, invest and trade tomorrow’s next tech “unicorns.” TokenMarket’s platform will give early-stage businesses a new, exciting and more transparent way to gain investment in their project.
Starting with its own equity, TokenMarket is looking to prove that the STO framework can be a success if used properly. Whilst this might seem a risk to some, for Salovaara, it marks the companies dedication to “demonstrating our commitment to this revolutionary financial model.”
One of the main benefits of STOs is ground floor access for all types of investors. Both institutional and smaller investors are able to have access to emerging tech startups and growth companies that are not readily available via traditional fundraising models. The TokenMarket platform is designed to provide investors with the information they require to make informed financial decisions, accessing pre-vetted companies. This includes; detailed financial information, team backgrounds, technology deployed, specific IP advantages and market opportunity amongst other details VCs would evaluate before investing.
Security tokens have the potential to give investors access to 24-hour trading on secondary markets, unlike traditional exchanges like the Alternative Investment Market (AIM) or the New York Stock Exchange. Traditionally investors can be illiquid for an average period of 5-8 years, whereas security tokens have the potential to provide investors liquidity on a shorter time-frame.
TokenMarket has put a high level of importance on this vetting process, applying a high barrier of entry on companies they decide to work with and showcase on their platform. By doing so, TokenMarket will give investors unrivalled access to emerging tech companies within an end-to-end platform designed to bring these opportunities to the masses.
Given TokenMarket’s attention to detail in choosing high calibre clients, their future tokenized equity and debt offerings are set to showcase how this innovative method of financing will lead to mass adoption. It does seem as though the business is looking to change the way in which people are able to access investment opportunities.
By using the STO platform for their own investment round,TokenMarket shows the underlying confidence they have in their platform and pioneering approach to improving the funding landscape for Startups.