Crowd for Angels, a London-based crowdfunding platform, recently listed the first STO backed by sports sponsorship assets. The security token issuer, Sports Investor Coin, claims that most of the funds raised via the sale of its tokens will be used to purchase sports sponsorship assets, thus creating token value for investors and providing sports organizations with liquidity borrowed against future sales of their brand assets.
Sports sponsorship assets are used to promote other businesses and their brands. Examples of these assets include the decal space on a race car, the naming rights to a stadium, and team partnership agreements (e.g. ‘official sports drink’).
Sports Investor Coin tokens will be sold through existing sports sponsorship asset networks at first, and through token exchanges later. A percentage of profits will be returned to token holders as dividends issued via smart contracts.
A regulated platform for selling equity, debt, and tokens
Crowd for Angels funded its own launch via a March 2018 ICO to become the UK’s first regulated crowdfunding platform for both private and public companies selling equity, debt, and crypto tokens. Crowd for Angels is authorized and regulated by the UK’s Financial Conduct Authority (FCA). Companies looking to raise capital can create, build, and manage what is termed a “pitch” on the CrowdForAngels.com website.
Investments are made and capital is raised by way of the sale of equity shares, debt bonds, and crypto tokens.
Most share sales on Crowd for Angels offer generous tax deduction benefits provided by the government to help high-risk, early-stage companies raise equity finance. Crowd for Angels does the paperwork to ensure investors can claim the full amount of tax deductions allowed by law.
Founders selling bonds on Crowd for Angels maintain full ownership of their company. A simple obligation to repay the money borrowed is created according to agreed terms, after which the relationship with the lenders ends. Lenders enjoy high interest rates, while founders benefit from easy to forecast expensing on loan payments that do not fluctuate.
Bonds sold on Crowd for Angels are “high-yield” debt securities issued by companies with no credit rating. Though the convertible loan notes are secured against company assets, this does not guarantee repayment of interest or principal. Bonds listed for sale on Crowd for Angels also carry an illiquidity premium because there is no right to early cash-in as there is no secondary market on which to sell them.
Token sale pitches
Crowd for Angels enables founders and investors to participate in an ICO on a UK-regulated crowdfunding platform. Startups can try to jumpstart and scale their project while paying fees only if their ICO is successful.
How to invest
Individuals and institutions must first register and be authorized as investors on Crowd for Angels. They can then browse pitches, click the pitch summary box to see the minimum and maximum funding targets, the funds raised to date, the pitch’s remaining days, company financials, and team bios.
With equity pitches, the investor can view share price, the number of shares offered, and tax relief eligibility. With debt pitches, investors can view the interest rate, conversion date (repayment schedule), and term.
Once an investor chooses a product, they click “Invest in this pitch” and link a bank account. This procedure acts as only a commitment until the pitch reaches its minimum target.
Investors use their Crowd for Angels dashboard to follow company updates, ask questions of the company and fellow investors on the pitch’s discussion board, and gain private access to the company once fundraising is complete. Investors can monitor their investment performance through the “My Portfolio” tab on their dashboard, including conversion, dividends, and interest payments notices.
How to list
Creating a pitch on Crowd for Angels is a fully online process with no upfront fees. The company creating the pitch fills out an application form with company details, the desired raise amount or range, and details on how the funds will be used. Crowd for Angels reviews the application and replies within two business days.
An approved company the writes the pitch, embeds a video, adds team bios, and uploads investors documents. Once a pitch reaches its target raise, Crowd for Angels creates the subscription agreement and then collects and delivers the funds.
Crowd for Angels has so far raised several million euros for pitch companies with a combination of equity and debt offerings. It now aims to leverage its regulated status to offer tokenized shares and bonds as a UK-sanctioned STO platform.
BlockState Gains Clarity on STO Taxation Within Switzerland
No Tax. No Vat.
BlockState, a Swiss digital securities issuance platform, has recently closed their very own STO. Upon doing so, multiple questions were raised with regard to how capital, brought in during this event, would be taxed.
The STO hosted by BlockState represented the first of its kind in the region, making the young company a trailblazer within the digital securities sector.
As stated by BlockState, confusion remains on the taxation of capital raised through STOs…until now.
In an effort to gain clarity on the situation, and set a precedent moving forward, BlockState turned to PST Legal. This law firm was tasked with gaining clarity from Swiss regulators. Their efforts were successful, with recent rulings being doled out.
It was ruled that capital raised through such means would NOT be subjected to either profit tax, nor value-added-tax (VAT). Rather, much like traditional capital raises, funds garnered through STOs structured in such as manner would only be subjected to ‘security issue tax’.
By achieving this, BlockState has not only made their own path easier moving forward, but for others as well. This ruling provides future STOs with precedent and clarity on how their actions will be received by regulators.
In their release, BlockState comments on the development. They state that it was concluded that the,
“…issuance and the profit on the sale of own shares through a security token offering in this specific case does not trigger profit tax and added-value tax, but security issue tax. This is a unique tax clarification for the BlockState’s security token offering model and marks the first time that a Swiss tax authority has issued a ruling on the tax classification of an equity STO.”
With this development, BlockState commented on what it means to them. It was stated,
“We are excited to be part of the progress in this space, not only developing leading technology and legal frameworks, but being able to play an active role in the regulatory conversation around security tokenisation.”
BlockState is a Switzerland based company, which was founded in 2018. Above all, Blockstate acts as an issuance platform for companies looking to tokenize assets. The company operates with a mission of unlocking trapped wealth, through the use of blockchain technologies.
CEO, Paul Claudius, currently oversees company operations.
With their progressive approach to blockchain, and companies taking part within the industry, Switzerland is fast becoming a hub for the technology. This has led to the town of Zug being dubbed ‘Crypto Valley’.
Companies involved with blockchain have been drawn to the area, as the Swiss government has taken the initiative to provide clarity on law and regulations governing the sector. Being afforded this clarity allows for these companies to operate efficiently, and without fear of repercussions for actions taken.
In Other News
In months past, we have detailed development pertaining to BlockState multiple times. From their migration of ERC tokens, to hosting STOs on behalf of others, BlockState has remained busy. The following articles dive deeper into each of these events
Prime Trust to Utilize Various Services Provided by Vertalo
On-Chain Cap Table
Building off of a relationship first established in 2018, Prime Trust and Vertalo have announced new growth in this partnership.
This development will see Prime Trust utilize, and benefit, from services provided by Vertalo, including cap-table management.
For a company to be successful, it is of great importance to have a thorough knowledge of its equity breakdown – including values, dilution, ownership, etc. This tedious process is made simple through services provided by companies such as Vertalo.
In their announcement, this paring of companies notes various areas in which they will find themselves cooperating. The following points were provided in their press release, describing how they will be working together.
- The creation and support of on-chain cap tables for thousands of Prime Trust crowdfunding issuers through the Vertalo Registry, a service which is directly connected to Prime Trust’s Custody, KYC/AML, escrow, and onboarding services
- Preferential pricing for Prime Trust clients who choose to utilize Vertalo’s B2B SaaS cap table platform, and simple opt-out for those who wish to use a spreadsheet or other platform to manage their investor file
- The option for participating issuers (Prime Trust clients) to tokenize their cap tables from within their branded Vertalo interface at any time in the future, using any issuance platform or smart contract that is supported by an exchange and partnered with Vertalo
Representatives from each company took the time to elaborate on this partnership, and what it means moving forward. The following is what each had to say on the matter.
Kevin Lehtiniitty, CPO for Prime Trust, states,
“Vertalo has come to the realization that mass adoption of asset tokenization requires that blockchain specific concepts such as wallets and addresses be black-boxed from the typical retail user. We at Prime Trust share the belief with the Vertalo team that crossing the chasm requires abstraction and simplicity, which makes us excited to announce this partnership. Using Vertalo’s very intuitive tools, any issuers from our crowdfunding business will be able to manage and tokenize their securities as well as provide their investors with UI access to view their investment. We’re very excited to continue working with the team at Vertalo on expanding our partnership and offering this tokenization potential to all our issuers. There’s much more to come with Vertalo which we’ll share with the world when the time is right.”
Dave Hendricks, CEO of Vertalo, states,
“Vertalo’s partnership with Prime Trust will provide their thousands of clients with Vertalo’s on-chain cap table, issuer and investor interfaces, enabling Prime Trust’s clients to directly connect with their investors for the goal of improving the investor relations and ownership experience. Prime Trust clients who convert to Vertalo will also be provided with ultra-low cost ‘optional tokenization’ of their cap table in the event that they want to convert their paper shares to digital assets for trading on Vertalo partners such as OpenFinance. This deep integration between Prime Trust and Vertalo builds on more than a year of co-development effort that has sought to simplify the purchase, management and sale of digital assets for both issuers and investors. We’re proud to work with the team at Prime Trust and look forward to announcing more useful innovations together soon.”
Operating out of Las Vegas, Prime Trust was founded in 2016. The team at Prime Trust has developed a variety of offerings serving the digital securities sector. This includes custody, escrow, compliance, and more.
CEO, Scott Purcell, currently oversees company operations.
Operating out of Texas, Vertalo first launched in 2017. The company offers a variety of services tailored towards the blockchain industry – ranging from cap table management, to an issuance platform, and more. To date, they remain one of the most active companies within the digital securities sector.
In our on-going interview series, we have had the pleasure of interviewing CEO, Dave Hendricks. Visit this interview below to learn more about Vertalo and their plans for the future.
In Other News
Each of the companies discussed here today have caught our attention on multiple occasions over the past year. The following articles elaborate on a few of the developments which each have made during this time.
RISE Secures Broker-Dealer in Entoro Capital
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RISE Wealth Technologies has announced that they have secured a broker-dealer for their currently live security token offering. This role has been filled by Entoro Capital, and will see them provide their services immediately.
In their current STO, RISE has set out with a goal of raising $120 million in funding. These funds are being raised, as the company looks to fuel their continued expansion and product development.
For investors that take part in the STO, they will be rewarded with a variety of benefits.
- Regular Dividends garnered from various platform features
- 4% p.a. Extra Payback in addition to Profit Payouts
- Entitlement to Proceeds should RISE undergo an IPO
Upon making their announcement, representatives from each, Entoro Capital and Rise, took the time to comment. The following is what each had to say on the development.
James C. Row, Managing Partner at Entoro Capital, stated,
“RISE is led by serial-entrepreneurs with a strong management team and a proven track record, which was crucial to us…A strong confidence in the team is paired with a shared belief that the future in asset management will be technology-driven. This makes RISE a perfect fit for Entoro.”
Stefan Tittel, CEO of RISE, stated,
“We are excited to be partnering with Entoro who has proven to be an experienced partner for companies within the FinTech industry…Their strong cross-industrial network has for years been a valuable asset to many partnerships. With the Broker-Dealer Agreement for Capital Raise we anticipate a great deal of mutually beneficial opportunities and synergies for both companies – with most of these benefits accruing to our clients.”
RISE Wealth Technologies
RISE has operated since 2012, within Grunwald, Germany. Through the use of AI, the team at RISE have developed a set of trading algorithms. These are built to provide retail investors with access to professional style trading tactics.
CEO, Stefan Tittel, currently oversees company operations.
We recently covered RISE, as they look to raise capital through and STO. Check out the following article to learn more about this event.
Operating out of Houston, Texas, Entoro Capital is an investment bank that has shown great interest in blockchain technologies. This interest has led them to develop services and platforms such as OfferBoard, Entoro Xpress, and more.
Managing Partner, James C. Row, currently oversees company operations.
Strategic Partnerships Abound
This is not the first time that Entoro has played a pivotal role in an STO, or as half of a strategic partnership. The following articles discuss various examples demonstrating their rapid development and adoption as of late.