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Some of the Earliest Security Tokens were Tokenized VC Funds

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Some of the Earliest Security Tokens were Tokenized VC Funds

In late 2017 and early 2018, around the same time that the biggest bull run in the history of digital currency came to an end, a much quieter evolution in digital securities started to take place: the tokenization of assets by four VC Funds known collectively as “The First Four.”

Founders and other executives from these four VCs will join us this April 8 at the Ritz Carlton in Los Angeles for the Security Token Summit.

VCs started to tokenize funds surfaced because it allowed processes to operate more efficiently for a number of reasons, most of which have to do with increasing access to capital and streamlining interaction with investors.

How did VC’s Help Build Security Tokens?

Both VC firms and investors realized that digital securities are more secure, have higher liquidity, and allow for features such as easier exit payouts for investors. That is the case with Spice VC, one of the sponsors of CIS and Security Token Summit, who raised $15-million with a security token that is trading on the OpenFinance Network. Spice VC is registered in Singapore, and it is one of the first tokens to be traded on a regulated trading platform in the United States.

(You can listen to our interview with Spice VC’s managing partner, Ami Ben-David, on Episode 2 of our podcast, Security Tokens Uncensored. Spice VC’s other managing partner, Tal Elyashiv, will join us for the above-mentioned panel discussion at the Security Token Summit this April in Los Angeles).

Security Tokens Increased Access to Opportunities Previously Inaccessible for Most

Security tokens became an easy crossover point to transition into for VCs because they provided liquidity and easy access to what was previously an exclusive investment vehicle.

Jamie Finn, President of Securitize, made this point clear:

“It’s simple really, venture capital is illiquid and hard to access, security tokens are liquid and easy to buy, this coupled with an attractive asset class made it interesting to investors. Venture capital is an asset that is usually out of reach of most investors and this coupled with the high returns that can come from this sort of asset made it an ideal crossover asset to the crypto-curious crowd of late 2017/ early 2018.”

Providing a Proof-of-Concept Alongside Access to More Investment Opportunities

The tokenization of VC Funds provided an easy way to demonstrate a Proof-of-Concept while delivering access to more investment opportunities, according to reporter and founder of Crowdfund Insider, Andrew Dix.

“Creating a security token for a venture fund is a great way to show proof of concept while providing access to a diversified portfolio of assets – especially in a sector that is so volatile. Just like single asset tokens, creating a smart asset can make it easier to manage the fund and the investors. It can also enhance the prospect of liquidity. As for what’s missing, I think there is a lot to come as we are still in the early days. It is going to take some time to figure everything out.” said Dix.

Jamie Finn, President of Securitize, also commented on how security tokens offer increased liquidity, easier access to venture capital, and increased access to a global capital pool.

“Liquidity and global capital formation are the primary benefits, but there is a lot more that people don’t consider like transparency. It’s usually very hard to know the NAV of a venture fund, but in a tokenized world it’s easy. Just check the site,” said Finn.

When is a Good Time in the Fundraising Process to Implement Security Tokens?

The benefits of security tokens alone do not provide grounds to integrate digital securities into your company. Instead, security tokens should start to be used once the need for strategic investors goes away after the product has a market fit. Some companies are developing security tokens too early in the fundraising process. However, if security tokens are distributed too early, that can negatively affect fundraising and cause liquidity issues (instead of further enabling liquidity).

Jamie Finn also commented on this. “Security tokens should be used once a company has product market fit and they are scaling the business without the need for strategic investors.”

How will the Industry Change in the Future?

As technology advances, more solutions need to be created specifically for digital securities, as opposed to the current custodial solutions which are mostly made for Crypto and don’t address the market needs for digital securities.

“The current solutions for custody are really CRYPTO specific solutions and don’t address what you need for Digital Securities. I am confident we will see this addressed in the near future by a number of players,” said Finn.

The future looks promising.

Closing

The path that VCs started on by tokenizing their funds has dictated market growth and laid the groundwork for a technological evolution in asset management to take place. Between the increased access to capital, the enhanced efficiencies in the investor accountancy pipeline, the ability to deliver a Proof-of-Concept, and increased transparency for the fundraising process, security tokens are transforming the way that companies raise money. This is just the beginning… Receive the latest information about the Security Token industry by listening to our podcast, Security Tokens Uncensored.

Security Token News

Smartland Acquisition Opens New Doors for Crowdfunding

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Smartland Acquisition Opens New Doors for Crowdfunding

Acquisition

For companies working on a global scale, the shortest path to their goals is often through acquisitions of already established entities. An example of this was made recently when Smartlands announced that they had acquired a majority share of Shojin Financial Services.

By completing this move, Smartland now inherits the abilities of SFS – such as their investment licence. This licence was awarded to SFS by the Financial Conduct Authority in 2017. By receiving this licence, SFS is able to legally function as a global crowdfunding platform. The process of receiving this licence is a lengthy and difficult one – a process bypassed by Smartland through the acquisition.

With this move, there is not much left holding Smartland back from taking the sector by storm. The company even recently announced the listing of their platform utility token on industry leading crypto exchange, Bittrex. Everything is turning up Smartland.

STO

Beyond news of this acquisition, Smartland also indicated that the first security token offering to be hosted on their platform has now gone live. This event will see the distribution of digital securities backed by UK based real estate. No doubt, the choice to base the first platform STO upon a real-estate backed asset is due to extensive experience in property investment by SFS.

The sale has a funding target of £1 million, with 30% equity to be distributed among qualified investors.

Commentary

In their announcement, multiple representatives from Smartlands took the time to elaborate on these developments.

Arnoldas Nauseda, CEO of Smartlands, stated,

“The fact that SFS possesses the type of license necessary for the Smartlands business model to flourish is not the only reason for the acquisition…We are proud to share SFS’s values ​​and vision for the development of financial markets around the world. The firm also has a substantial pool of classic investors that the SFS team has been developing since 2017. Now, thanks to the Smartlands proprietary technology, these private investors have the opportunity to invest in the digital ownership of real assets secured on one of the most powerful and fast blockchains in the world ‒ Stellar network.”

Viktor Krekotin, Strategy Adviser of Smartlands, stated,

“The partnership with SFS is the last brick in the construction of the Smartlands Platform…This makes Smartlands one of the first fully regulated platforms for the issuance of security tokens. And Stellar will do what it does best: lightning fast, secure transactions at negligible costs to all involved, which makes Stellar the best blockchain for all operations with security tokens.”

Smartlands

Smartlands is a London based company that was founded in 2017. Above all, Smartlands functions as a tokenization platform, catering to a global client base.

Operations at Smartland are overseen by CEO, Arnoldas Nauseda.

Shojin Financial Services

Shojin is a UK based company that was founded in 2009. Above all, Shojin acts as an investment firm specializing in real-estate.

Company operations are overseen by cofounders Jatin Ondhia and Sandeep Puri.

In Other News

An emerging trend, as of late, is the increasing adoption being seen of the Stellar blockchain within the digital securities sector. Due to the structuring of this blockchain, it is proving to be highly adept at meeting the needs of the industry. Check out the article below for another example of a company recently adopting Stellar.

VMC – Connecting the Dots of Urban Mobility

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Security Token News

AmaZix turns to KABN for Identification Services

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AmaZix turns to KABN for Identification Services

Onboarding Identification

In their experience dealing with security token offerings, KABN has noted the need for next-gen identification services. Through the creation, issuance, and management of digital securities, they are able to ensure that tokens remain compliant with regulations. The initial onboarding process, which ensures only appropriate investors gain access to these STOs, is lacking in sophistication.

This recognition led AmaZix to seek out KABN for their patent-pending identification services dubbed ‘KABN ID’. This pairing of companies announced their strategic partnership today.

While KABN ID is what drew AmaZix to their new partner, they have indicated that they intend to make use of the full suite of KABN services. This includes opening new avenues for market access through KABN’s ability to facilitate crypto-fiat transfers.

Commentary

In their announcement, the CEOs of both KABN and AmaZix took the time to elaborate on this partnership.

Ben Kessler, CEO of KABN, stated,

“The overwhelming evidence justifies the need for closer scrutiny of processes and regulatory frameworks in token offerings, with the securitization of digital assets believed by many to be the natural progression for the space. It is a direction that AmaZix believes in and is working diligently towards, as demonstrated by their specialized advisory services and their partnership track record. We share their excitement and optimism for the industry’s future and look forward to collaborating.”

Jonas Karlberg, CEO of AmaZix, stated,

“Programmable regulatory compliance is a built-in feature with digital securities, ensuring the necessary KYC and AML processes are satisfied. But if STOs are to be the way forward, we have to analyze and consider the practical aspects of identity management on the blockchain, particularly with the growing debate surrounding privacy and the protection of personal data in the era of GDPR…And this is where we believe KABN’s solutions for token offering verification are technically appropriate for securing accreditation and will allow for responsible and compliant KYC processes. In addition, its neo financial services like its branded Visa prepaid card and banking wallet will give users an additional aspect that bridges the world of traditional and alternative finance, allowing them to use and spend crypto with more ease.”

AmaZix

AmaZix is a Hong Kong based company that was established in 2017. Above all, AmaZix functions as a consultation firm, focusing on the burgeoning digital securities sector. In their short time within the industry, they have been wildly successful – helping to raise over $1.3 billion for over 100 companies.

KABN

KABN is a Vancouver based company that was founded in 2017. Under the guidance of CEO, Ben Kessler, KABN has gone on to develop a suite of services aimed towards the digital securities sector. These range from their flagship identification service, to a crypto based debit card, and loyalty program.

In Other News

Both KABN and AmaZix have been busy establishing themselves in this nascent industry. Throughout their steps towards establishing themselves, we have detailed them various times here at securities.io. Check out the articles below to learn a little bit more about what these two companies have accomplished as of late.

Top STO Marketing Agencies to Watch in 2019

With an Eye on Digital Securities, AmaZix and Chainstarter have partnered

Digital Securities Consortium formed Between Industry Participants

KABN plans for Security Token Offering Hosted by Tokenise

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Security Token News

Tokeny and Archax form Strategic Partnership

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Tokeny and Archax form Strategic Partnership

Teaming up

Archax is ironing out all the details prior to the upcoming launch of their digital securities exchange. Part of this process is establishing partnerships with issuance platforms. In doing so, Archax will ensure that their own platform will have no shortage of token listings.

With this in mind, today, the duo of Tokeny and Archax announced a strategic partnership. This relationship will see digital securities issued via the Tokeny platform, through the use of their TREX framework, listed for trading on the Archax exchange.

This development creates a comprehensive suite of services for investors, and will help the industry deliver the much sought after liquidity within these assets.

Commentary

In their press release, the CEOs of both Tokeny and Archax, took the time to comment on the partnership discussed here today.

Graham Rodford, CEO of Archax, stated,

“We are building a regulated, institutional market – based in London – for institutions to trade in credible, digital securities globally.  As such we want to partner with leading firms like Tokeny, who are a key part of this emerging ecosystem, and tokenising assets that can then be listed and traded on our exchange.  The tokenisation of real-world assets using blockchain technology will not only unlock liquidity and create secondary markets for assets that are currently hard to trade, but also has the potential to disrupt all traditional financial markets too.

Luc Falempin, CEO of Tokeny, stated,

“We know how strong Archaxs team is and they share the same belief that blockchain will transform capital markets. For blockchain to become the preferred infrastructure for this industry its imperative for there to be seamless transferability between the key actors in the market. By agreeing this partnership, we are able to offer the end-to-end compliant issuance of their security and Archax will provide the customer with the all-important access to the secondary market.

Tokeny

Tokeny was founded in 2017, and is headquartered out of Luxembourg. Above all, Tokeny functions as a FinTech company. Over the past year, the team has set their sights on developing a comprehensive platform, tailored towards the digital securities sector. Under the watch of CEO, Luc Falempin, Tokeny has managed to establish various strategic partnerships, along with the release of the ‘TREX’ framework.

Archax

Graham Rodford founded Archax in 2018, and currently acts as the CEO of this young company. Archax maintains headquarters in London, England. Here, the company is actively developing a next-gen exchange for digital securities – which is anticipated to launch in the latter half of 2019.

In Other News

Both Tokeny and Archax have found themselves in our news feed various times over the past year. Whether establishing strategic partnerships, or announcing future STOs on their platforms, this pair of companies has been active. Below are a few articles detailing past developments of each.

Archax Gears up for Launch with Quod Financial

Archax – A Bridge to the Digital Economy

VR Bank to Issue Security Token with the help of Tokeny and Lition

Tokeny releases TREX – The First Public Framework for Security Token Offerings

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