Mikko is the cofounder and CTO of TokenMarket Ltd, one of the leading token sale and blockchain crowdfunding platform at Gibraltar. Mikko has advised dozens of blockchain startups. He is also the former co-founder and CTO of LocalBitcoins, a peer-to-peer cryptocurrency exchange. Mikko holds MSc. in industrial engineering and management from University of Oulu. Mikko actively engages in open source communities and speaks in conferences. He is a cofounder of Pycon Finland, a Python programming conference. Mikko is also a member of Plone Foundation, the oldest of open source non-profit foundations.
AT: You’ve been in the crypto space since 2011. Could you share with us how you first became involved with cryptocurrency and blockchain?
Mikko: Back in my mobile software development days, I was asked to develop the first and original Bitcoin mobile wallet back in 2011 compensated by $10,000 worth of Bitcoin. I rejected it as I thought fiat would suffice at that point in my life. In hindsight, taking this offer might have been the last project I needed to do. Later I got involved in building out LocalBitcoins and from there I moved to establish TokenMarket.
AT: You’re listed as one of the original co-Founders of TokenMarket. What inspired you to launch this marketplace?
Mikko: The original goal of TokenMarket was to tokenise company shares. However, back in 2016, it was way too early for that. The term “token” had just been invented, many referred to tokens as ‘coloured coins’ looking at new digital assets as bitcoin with different ‘flavours’ and ‘colours representing different token attributes and purposes’.
We saw the ICO boom coming a little bit earlier than others in late 2016 when FirstBlood, Gnosis and other Ethereum based ICOs started to roll out. The catalyst was that the Ethereum technology had matured to the point that it was realistic to launch custom tokens with it. And oh boy, a lot of tokens were launched.
TokenMarket had the first tokenisation platform in the world and suddenly there was a spike in customer demand.
AT: When inspired TokenMarket to pivot from ICOs to STOs?
Mikko: I would not use a word pivot here. Security tokens are a natural continuum for unregulated token offerings. It is always better for investors themselves to get something with stronger investor rights. Securities offerings give investors rights which utility tokens never legally could, such as receiving dividends, yields and voting rights in the company you purchase a security from. For the investors, receiving passive income with security tokens becomes so much easier rather than moving toward a largely unstable and volatile utility token dragged up and down by bitcoin price.
Since 2016, it took some time for the global audience to learn about the benefits of tokenisation, including financial regulators. Now we are seeing interest from regulators worldwide on how to apply DLT and blockchain technology to regulated securities markets.
AT: TokenMarket recently announced a partnership with Loopring which is a protocol for decentralised token exchanges. Could you tell us more about this and what we should expect from this partnership?
Mikko: Loopring is one of the industry leading projects developing layer two scalability for decentralised exchanges and we will use Loopring’s technology to scale our own DEX.
As you might know, at the moment, decentralised exchanges have scalability issues and cannot match the volumes of exchange giants such as your Bitmexe’s and Binance’s. But from other aspects, decentralised exchanges are more secure and fair. Bitcoin exchanges get hacked every two weeks. Some exchanges are accused to trade with insider information and against their own users. Regulators like the decentralised aspects, as they guarantee that all the investors and traders can access the post trade data in equal manner, there cannot be irregularities with accounting and trading with something that is merely fabricated.
The good news is that the security tokens will have low liquidity, like Bitcoin back in 2012, when they start to roll out for trading. But for the future exchange technology, we want to build it better and more bulletproof what both traditional trading and crypto trading has today. We see the academic research and theory that allows us to get there, now it is just engineering over the next few years to fulfill this promise.
AT: Can you tell us what the listing requirements are for companies who wish to crowdfund via the TokenMarket platform?
Mikko: There are many crowdfunding platforms out there which operate on a ‘cater for all’ thesis, TokenMarket operates on an industry specific focus. We mainly look for global growth companies in sectors such as fintech, gaming and software services as this is what our investor audience has looked for in the last two years.
We mainly look for companies which are close to, or already have, some substantial revenue generated with a key commercial focus on B2C businesses.
AT:TokenMarket is current raising their own STO. Are you happy so far with the progress of this raise?
Mikko: This is a pilot raise under the UK’s regulator, FCA, sandbox. We need to demonstrate them that tokenised equity crowdfunding works: payments goes in, people get their tokens and are properly registered in Companies House as shareholders.
We do not expect huge intake of money for our pilot project due to the UK’s FCA’s Sandbox test limitations. Awaiting regulatory approval we will be able to raise up to €8M from self-accredited investors for all our STOs with no private funding cap restrictions.
AT: Are there any STOs that are launching on TokenMarket that have you personally excited?
Mikko: Yes there are! But at the risk of publicly endorsing or soliciting a securities investment go check out our pipeline of projects here.
AT: Where do you see the marketplace in 10 years?
Mikko: The change and transformation is not just about the technology or blockchain. There is an ongoing process of how new investors, millennials behave. There is an ongoing process to dial down the regulation for SME listings since the last financial bubble, especially in Europe. Then there is a change in globalisation as the future powerhouse economies of the world may come from countries like Brazil, Indonesia and Nigeria.
The future investing is going to be more “marketplace driven” and less about relationships and network centric models. We are going to replace Silicon Valley and their venture capital networks with a website like Amazon did for retail commerce. Ironic, is it?
AT: Is there anything else that you would like to share about TokenMarket?
Mikko: If you are a high tech company looking for funding, contact us. If you are a fund, a family office or similar looking for alternative investments, contact us. We do not care which part of the world you come from. We want to create an equal playing field for opportunities and investors all around the world.
StartEngine Makes Inc Top 10 California Companies List
This week, StartEngine CrowdFunding raised eyebrows across the entire blockchain sector after making the 2020 Inc. 5000 Series. The list shows the top 10 fastest growing companies in California over a two year period. The firm secured the tenth spot after showing a two-year growth of 1,418%. Consequently, this news demonstrates how fast the blockchain crowdfunding sector expanded over the last two years.
Importantly, StartEngine is the largest investment crowdfunding platform in the US. The platform has held a key position in the US market since its founding in 2014. StartEngine developers entered the market with the goal to democratize access to capital. Since that time, the firm raised over $100M for over 275 companies.
2020 Inc. 5000 Series
StartEngine making Top 10 on Inc’s 2020 Inc. 5000 Series is a huge deal. For one, this report is Inc.’s first annual ranking of America’s top businesses in California. Additionally, the firm needed to meet strict criteria to even receive consideration. Just to be eligible, firms must be U.S.-based, privately held, for-profit, and independent. Importantly, the actual ranking is according to the percentage of revenue growth experienced between 2016 to 2018.
A quick look at StartEngine’s growth and you can see why the firm was chosen. A recent report highlighted the developments in detail. The platform saw a 67% increase in funds invested. In 2019 alone, StartEngine saw total investments equaling $43,718,660. These funds come from 55,577 investments made on the platform, which is an increase of 99.5% over 2018.
Of all the statistics listed in the report, one piece of data really sums up the impact of the platform so far. The platform had 19 firms raise more than $1M in 2019. This number is even more impressive when you consider that the platform funded 145 startups that year in total. Companies are involved in AI, blockchain, augmented reality, IoT, gaming, and other verticals.
How StartEngine Works
Much of StartEngine success can be attributed to the firm’s inclusive approach to the market. Literally, anyone can become an angel investor using the platform. You can invest in startups for as little as $100. Consequently, this strategy lowers the entry barriers for new funding to enter the market. As such, it creates more liquidity.
How to Use Start Engine to Fund Your Company
StartEngine features a very easy interface. The platform allows you to create your investment pitch in the form of a web page. Here, investors can become familiar with your firm. Your concept, pitch, and webpage are how you raise capital on the platform. Additionally, businesses gain access to a strong community of like-minded entrepreneurs when they join.
StartEngine utilizes a number of different types of crowdfunding techniques to accomplish its task. In most instances, the firm files Reg CF and Reg A+ funding rounds. In certain scenarios, such as side-by-side offerings, StartEngine will also utilize Reg D funding.
Congrats and Well Deserved StartEngine
It would be hard to think of a team that deserves to make Inc’s 5000 series more than StartEngine. These developers continue to push the envelope in terms of technological and financial developments. You can expect to see this recognition provide StartEngine with even more momentum moving forward.
Genobank to Bring Privacy to DNA Testing with Blockchain
We live in an age of connectivity. Technology has enabled us to stay in constant contact with the world, in real time. This connectivity has transcended communication, however, and changed the way we view our connectedness with others.
One company, by the name of Genobank, provides its clients with the ability to discover their origins, and connection with others. This is done through the examination of DNA.
What sets Genobank apart from the competition is their approach towards data ownership/privacy.
Deoxyribonucleic Acid (DNA) refers to the molecules held by all humans, which contain their unique genetic coding. By examining this code, we can learn about an individual’s ancestry, predispositions to mental and physical ailments, and more.
DNA first became popularized, and a household term, when it began being used as a means of identification – particularly in crime scenes.
In an effort to continue developing their product/services, and carve out their place in the industry, Genobank is currently hosting a crowdfunding campaign through equity investing platform, Republic.
This event, which has seen Genobank bring in roughly 175% of their minimum target, at the time of writing, is scheduled to remain live until March 14, 2020.
Investors partaking in the event will be compensated with a ‘Crowd Simple Agreement for Future Equity (Crowd SAFE)’. This is a form of agreement created by Republic, better structured towards use in crowdfunding campaigns than a traditional SAFE.
Essentially, those that hold a SAFE do not immediately acquire equity in the company. Transfer of equity only occurs when certain pre-set parameters are met, with regards to future progress/developments.
Our understanding of the insights, which the examination of our DNA can offer us, has led to a boom in companies such as Ancestry Health, 23andMe, and more. The data generated from services such as these represent the most important and intimate data of all – it represents you.
Unfortunately, we have seen time after time, in recent years, that data is abused, stolen, and generally misused. Naturally, this has resulted in large movements advocating for better privacy practices surrounding data generation and use.
Empowerment over your own data is the driving force behind Genobank. The company notes that they specifically make use of blockchain technologies to anonymize usage of their platform – allowing for clients to discover more about themselves, while retaining power over their most intimate data.
The company states,
“We use blockchain at its full potential by registering your DNA data as a unique digital asset also known as a non-fungible-token (NFT). This grants you exclusive ownership over it.”
For Better or Worse
While a lack of privacy may justifiably scare many, there are instances where access to DNA databases have proven beyond valuable.
A perfect example of this occurred in 2018, when one of the United States most infamous serial killers was identified and captured. Known as the ‘Golden State Killer’, Joseph DeAngelo was identified when a relative of his used a DNA service. This data was then able to be cross examined with DNA found at his crime scenes – providing authorities with enough information to deduce who their killer was.
While this particular instance had a positive outcome, it raises questions surrounding access to such data. If individuals who have never even used such a service can now be identified and tracked down, are any of us truly safe?
While you may not be able to control the actions of others, you can control your own data. Genobank plays to this, stating,
“Since there is only one private DNA Wallet per user, third parties will never have access to your DNA data without your explicit consent (digital signature). Only you can grant/revoke access and modify/delete biodata & records. YOU are in control!”
While Genobank has various plans for the usage of funds raised through their crowdfunding campaign, one of their more interesting plans is the launch of DNA kit ATMs.
These kiosks would deliver exactly what their name implies – a kit allowing for the analyzing of one’s DNA. The goal of which is to provide these services to everyone, as no personal information is required.
Genobank indicates that these ATMs represent one of their two projected revenue streams. The other will be a ‘white-label’ version of their kits, which is sold to health clinics, hospitals, etc.
Founded in 2014, Genobank maintains headquarters in Palo Alto, California. The company specializes in developing solutions which allow for analyzing ones DNA in a privacy centric manner.
CEO, Daniel Uribe, currently oversees company operations.
Equity Crowdfunding in North America
Since roughly 2009, crowdfunding in North America has grown steadily. The continent, however, is a large place, with clear discrepancies in regulatory approaches between Canada and the United States. The result is that these variances have led to U.S. crowdfunding becoming a runaway market, relative to Canada.
What is it?
As the name implies, crowdfunding is a means of raising capital from a large pool of investors/donators, rather than select venture capitalists.
Crowdfunding started off simple enough – give a wider audience the chance to help young companies out of the gate. However, when first capturing the attention of many, securities laws prohibited issuers from compensating non-accredited investors/participants with equity in their companies; Meaning that participants weren’t really investors at all, but simply contributing to the growth of a company with the promise of potentially getting a product one day.
Fast forward to 2012, and a group of companies surrounding the industry successfully worked with regulatory bodies in the U.S. to amend existing laws. These efforts eventually resulted in the formation of, what is known as, the ‘Jumpstart Our Businesses Act’ (JOBs Act).
What the JOBs Act did was open the gates for the general public to gain exposure to true investment opportunities. Until it was enacted, securities were only able to be sold and distributed to accredited investors.
The goal of this was primarily to help young companies, as one of the largest obstacles a start-up will face is attaining funding (regardless of potential) for the development of their products and services.
Previously, to attain said funding, regulators required that a detailed prospectus be filed and approved for the sale of any asset deemed a security. This is a cost prohibitive, and time consuming, undertaking – meaning it is most likely not feasible for a small start-up. While this undertaking may be inconsequential for a company raising millions upon millions of dollars, start-ups looking for modest amounts may find it a steeper hill to climb.
Naturally, this new act came with restrictions. In an effort to maintain appropriate levels of investor protection, safeguards were put into place. The following are only a few examples of these:
- Capital generation events must be moderated by registered broker/dealers
- Net-worth based investment limits
- Generation caps on crowdfunding hosts
While this may sound restrictive, what this did was open the doors, ushering in a time where investment opportunities were no longer restricted to those that were already wealthy.
That brings us to the United States’ northern counterpart – Canada. While crowdfunding exists in Canada, the flexibility and freedom for issuers/investors is simply not the same as it is in the U.S – despite being years removed from the advent of modern crowdfunding.
The main issue is the fact that there is no nationwide ‘rulebook’, similar to the JOBs Act, in Canada. Each of the various provinces and territories may vary slightly in the structuring of their regulations, making it difficult to comply with all at once.
This segregation among Canadian regulators, means that issuers are often limited in their investor pool, as they are not necessarily eligible to host their offering in all regions – somewhat defeating the purpose of crowdfunding to begin with.
However, with the moves taken by the U.S. government over the past decade widely viewed as a success, the Canadian government has indeed taken notice. It was announced in early 2019 that they would be reviewing their policies; the goal of which is to eliminate the current segregation among regulators, by creating their own variant of the JOBs Act.
With the Supreme Court of Canada opening the door to the potential national securities regulator in 2018, and plans to develop a national crowdfunding rulebook announced in 2019, the great white north looks primed to play catch-up.
With all of this talk about crowdfunding, many in the U.S. may be wondering where access to such investment opportunities are offered. In an effort to answer these questions, securities.io’s very own, Antoine Tardif, recently penned an opinion article discussing his favourite portals offering equity based opportunities.
For those in Canada interested in equity crowdfunding, the following are a few of the more notable portals active today.
In Other News
Always striving to adapt and improve with the times, the Securities and Exchange Commission (SEC) has recently announced a proposal which would see access to more traditional investment opportunities become even easier for investors.
This proposal is based upon the restructuring of what defines an accredited investor. With the vast majority of investment opportunities restricted to those fitting the bill, broadening the definition, to reflect the modern world, will ideally democratize investing to an extent.