STO Launch Strategies
Should You Consider an STO?
From a legal perspective it can be argued that any ICO is in fact an STO. The Howey Test defines a “security” as having the following attributes:
Any contract, transaction, or scheme whereby (a) a person invests money or anything else of value, (b) in a common enterprise, (c) and is led to expect profits, (d) predominantly from the efforts of others.
While Singapore is showing signs of not following the same definition of a security, the majority of the world is following the United States definition and interpretation of a security.
If you are considering any of the following you might want to consider an STO.
- Tokenization of real estate or other real world assets.
- Tokenization of traditional securities and companies. This behaves like shares of a corporation and are also be known as “Equity Token Offerings” or “ETOs”.
- Tokenization of venture funds or incubator programs;
- Tokenization of precious metals, oil, or other commodities.;
- Profit-sharing right in a business entity, etc.
Advantages of an STO:
There are numerous advantages to performing an STO. These are some of them:
- 24/7 liquidity.
- Simpler and more cost-effective than an IPO.
- Compliant for crowd-funding via certain SEC Exemption.
- Fractionalization of real estate, or other assets.
- Offers investors more transparency than an ICO.
- Less legal uncertainty than an ICO.
- Simpler management of investors with KYC/AML being baked into security tokens.
Disadvantages of an STO:
- Careful tax structuring is required.
- Legal compliance requires investment in reputable law firms.
- Limitations on resale such as 12 month lock-up period.
- Number of investors might be capped at 99 or some other arbitrary number depending on legal structure.
- Corporate structure may be complicated, and requires legal advice.
Summary:
Executing an STO requires more legal and corporate work than an ICO, but the rewards are reduced legal uncertainty, and the ability to raise funds in a legally compliant manner. By following a strategy that is advised upon by proper legal council, your STO will be able to raise funds without jeopardizing the future of the founders or the corporate entity itself.
Not every STO needs to revolve around a billion dollar tokenization. One of the draws towards the digital securities sector is the ability to open capital generation opportunities for companies of all sizes. A young start-up has recognized the potential benefits they stand to experience by turning to this new way of raising capital.
The Nu+ Company, a German company with a focus on healthy and sustainable food practices, have announced their intent to raise funds through tokenization platform, NeuFund. The company specializes in their line of chocolate bars, which tout unique characteristics.
While full details of their anticipated raise have not yet been divulged, the company has made their pitch deck available for interested parties to peruse.
As this capital generation event is being structured as a security token offering within Liechtenstein, strict compliance measures will most likely be put in place. This means access to accredited investors only, along with typical AML & KYC practices – although, as stated, structuring of the event has yet to be confirmed.
Blockchain
A large part of the appeal behind a company such as The Nu+ Company, is the ideology which drives them. This fact is not uncommon in many companies which have sought out the benefits of blockchain. As the technology has the ability to afford ease of access to capital – while driving new levels of efficiency in many company operations – tokenization through Neufund is right up The Nu+ Company’s alley.
Another example of a company utilizing blockchain, in a means of attaining their goals for bettering our impact on the earth, is Almond. This London based start-up has developed an intuitive app, designed to incentivize sustainable purchasing habits. Much like The Nu+ Company, Almond will plant trees to offset carbon footprints, based on user activity. Make sure to check out the following articles to learn more about how Almond intends on affecting change.
Almond – Be the Change the Earth Needs
Interview Series – Oliver Bolton, CEO of Almond Impact
Health Conscious Chocolate
The Nu+ Company has developed various chocolate bars, to date. These products were designed with the health of both, the environment and the human body, in mind. They are vegan, nutrient rich, and touted to contain 65% less sugar than a traditional a chocolate bar.
Currently, The Nu+ Company has a product line with three flagship products.
- nucao
- nucao white
- nupro
- Small on the surface, big change underneath
To date, these products have totaled over 1.5million sold, resulting in over €2 million in revenue last year.
Complete Package
The Nu+ Company is more than just their product. While their chocolate has been engineered with health and sustainability in mind, the team did not stop there. What is the point of developing such a product, only to package the chocolate in a traditional fashion?, ie. plastic.
This led the team to recently establishing a deal with a company called Futamura. In doing so, The Nu+ Company will make use of a Futamura product called ‘NatureFlex’. This is a new form of packaging, which has the potential to replace plastic. The following are a few key traits of what NatureFlex has to offer.
- Heat-sealable
- Renewable
- Compostable
Planting trees
The aforementioned ideology, which drives The Nu+ Company, is not simply for show. The team behind the project fully intend to act on their idea of sustainability. This is most evident in their promise to do their part in re-establishing forestry within the island nation of Madagascar.
The promise, on behalf of The Nu+ Company, is that for every bar sold, the company will fund the planting of one tree. More specifically, they will plant mangrove trees – known for their ability to consume high levels of CO2.
Madagascar is like no other place on Earth, and has captivated humans for decades, due to the unique wildlife found within its forests. Unfortunately, it is believed that roughly 97% of dry forests in the country have been decimated – primarily due to human activity. For those that subscribe to Netflix, an original production was produced under the title ‘Our Planet’. There is an illuminating episode found in this series, discussing the scope of this issue, which continues to plague Madagascar.
The Team
While the team at The Nu+ Company numbers over 40, including advisors, it is the vision of a trio of cofounders which got the company off the ground.
- CEO, Mathias Tholey
- CMO, Christian Fenner
- COO, Thomas Stoffels
Each of these individuals boast degrees in Industrial Engineering – a profession typically based on maximizing the efficiency of systems and products. This is something that should serve the team well, as this start-up looks to really get off the ground.
Looking At You
The Nu+ Company is in the fortunate position of following up another recently successful campaign, hosted through Neufund. GreyP is a Croatian tech company, set on transforming the mobility sector, with an influx of ‘smart features’. They also held their STO in Liechtenstein, much like the upcoming STO discussed here today. Their process and experiences should act as a rough blueprint, moving forward, for The Nu+ Company, as they look to replicate the success of GreyP.
GreyP Scores with NeuFund STO – Black One Entertainment on Deck
This week marks another important first for the EU security token sector after the Swiss IT solutions and industrial systems provider, Overfuture received final approval from regulators to list its articles of incorporation on a public blockchain. The news marks the first time a company received approval to carry out such a task in Switzerland. As such, the approval marks an important milestone for the entire Swiss blockchain community.
News first broke of the approval via a press release from the STO advisory firm Andriotto Financial Services. In the release, the firm explained in detail some of the attributes of the plan. The report stated that Overfuture will tokenize their Initial Public Offering (IPO) in order to offer investors access to tokenized class A shares.
In the report, Andriotto Financial Services called the accomplishment a “huge revolution for the financial industry.” Importantly, the report explains why allowing firms to launch an IPO and coordinate secondary market transactions without the use of banks is a game-changer. For example, a traditional IPO requires the use of multiple financial intermediaries. These firms can include broker-dealers, central depositary systems, notaries, and investment managers, just to name a few.
Removing these third-parties from the equation brings about some serious benefits. For one, it lowers the overall cost of conducting business. Additionally, it reduces the friction encountered by both firms and investors looking to participate in public crowdfunding strategies.
Overfuture Strategic Partnerships
In order to make the Overfuture IPO a reality, the firm made a number of strategic partnerships. For its part, the Swiss-based European Digital Assets Exchange, EURO DAXX programmed the smart contracts that ensure each share remains compliant throughout its lifecycle. Smart contracts remove the need for multiple third-parties because the regulatory compliance mechanisms become part of the token’s core protocol.
Overture IPO Info via Prospectus
Andriotto Financial Services provided the necessary financial advice surrounding the entire project. Andriotto is well-known in the space as a financial service advisory. The decision to utilize the firm definitely expedited the project. Additionally, Andriotto Financial Services ensured full compliance with Swiss regulations.
Two Audit Firms – Overfuture
As a regulatory compliant tokenized IPO, Overfuture decided on the use of dual auditing firms. The firm hired Swiss-based auditors, PKF Certifica SA, as well as, Studio Mariotti & Capelleti. The latter is an Italian auditing firm that has been in operation since 2011.
IPO Details
According to Overfuture’s investor prospectus, the firm intends to offer a total of 8,399,000 common equity shares. Importantly, these tokenized shares will live on the Ethereum blockchain. Ethereum-based tokenization protocols are by far the most popular standards in use today in the sector. Notably, each share will cost €1.25 ($1.38). Notably, the IPO is only available to Non-US residents.
Overfuture Looks Bright
Overfuture is an IT solutions and industrial systems provider. The firm provides advanced systems to large enterprises globally. As such, the company remains on the cutting edge of information tech and innovative technologies. Given the company’s network, timing, and technical know-how, you can expect to see the Overfuture IPO go off without a hitch.
The next-generation blockchain financial platform, MEDsis International announced a strategic partnership with Korean-based WTIA this week. The partnership is part of a broader strategy focused on the launch of the highly-anticipated Kfinancial platform. Importantly, the launch is set to coincide with the company’s upcoming STO.
The partnership and expansion strategy carried out by MEDsis isn’t a complete surprise. The firm announced plans for such a deal way back in December 2018. In the announcement, the company expressed a desire to develop a custom blockchain. In the end, the company decided it was more cost-effective and an overall better approach to partner with the WTIA Korean blockchain to accomplish its tasks.
MEDsis Expansion
Interestingly, the partnership strategy continues to take shape. Company officials stated that contracts, financials, strategies, pilot program results, funding, and strategic partnerships will continue to see expansion as the program develops. According to company officials, all of this information will become publicly available through the upcoming KFinancial White Paper.
MEDsis via Homepage
Discussing the new strategy, Joshua Dax Cabrera, CEO of MEDsis spoke on the years of planning the firm has put into the expansion. The new partnership will provide unprecedented reach for the MEDsis platform moving forward. Cabrera explained that the new approach brings MEDsis’ global payment opportunities to the masses. Additionally, he touched on how the maneuver strengthens the firm’s current partnerships as well.
MEDsis – KFinancial White Paper
The release of the new joint White Paper associated with the STO will shed some light on the project moving forward. For its part, KFinancial will become the stand-alone payments and fintech division of the new joint venture company KFIN WTIA PTE. The new firm will operate out of Singapore. Importantly, Singapore is one of the most blockchain-friendly countries in the world currently.
Billions in Revenue
The merger will bring investors and token holders the direct rights to more than $3 billion in projected revenue. Uniquely, the STO will assign revenue and not equity toward the STO. In this way, investors receive direct access to revenues without previously anticipated equity dilution.
Discussing the merger, WTIA Chairman Keun Kim, explained the motivation behind the decision to partner with WTIA. Kim described the immense benefits obtained through the merger. He explained that the new platform brings the partnership to the world. Additionally, this new level of market confidence will help to further security token adoption globally. He ended his interview discussing the importance of job creation in the markets the firm intends to expand into first. These markets include “Argentina, Brazil, and beyond.”
A Company on the Move
The MEDsis payments ecosystem gained strong positioning in its perspective markets with this latest maneuver. The decision by company executives to focus on the underserved Latin American markets could prove to be pivotal in the space. For now, MEDsis prepares to see their products and services go global as the firm’s STO is set for a May 1, 2020 launch date.