22X Nuggets of Value in the Crypto Hype

30 promising startups vouch equity to back the value of a world-first Security Token.

The apex of the Gartner Hype Cycle of Emerging technologies has been occupied by two key advances in recent years that will change the world: blockchain and Artificial Intelligence (AI). There is a reason why this is called a Hype cycle and our role as entrepreneurs and technologists is to leverage applicable advances to produce actual business outcomes for our investors and customers.

While I’m devoting my career to making breakthroughs in AI-enabled document composition through reDock, I’ve been following blockchain-enabled cryptocurrencies since early 2012, and I do share some doubts and criticisms shared by Warren Buffet and other prominent fund managers about Bitcoins: “what is the underlying value beyond the hope that you will sell it to someone for more than you paid for it?”

A more recent blockchain-enabled innovation was the introduction of Utility Tokens whereby investors buy tokens to have future access to a company’s product or service. FileCoin, for instance, raised $205M through an Initial Coin Offering to allow people to store files on decentralized unused storage. The underlying value is access to reliable and encrypted storage.

When members of the batch 22 participated in the 500 Startup acceleration program sat down in August 2017, we figured that the bigger trillion dollar opportunity was to tokenize securities. We had jointly raised over $22M so we were well aware of the cost and overhead of managing investor transactions from both angels and VCs. Changing the world through the development of innovative products wouldn’t be possible without investors and we had the vision to spearhead the use of security tokens so both investors and startups would have one more option to their arsenal. The result: 22xFund, a single, liquid token that represents equity in 30 pre-vetted companies that took part in the extremely competitive 500 Startup program.

This instrument is interesting for investors as it derisks the investment over 30 companies, and allows them to cash liquidate their position without waiting for an exit event. It also provides a fully-compliant vehicle with minimum management fees.

This is equally interesting to startups. It provides capital at attractive valuations, shortens the deal cycle, exposes them to a much broader set of investors, and reduces the legal burden.

I believe it’s only a matter of time before ownership of both tangible assets like real estate projects and intangible assets such as the 22xFund will be tokenized and will be using smart contracts thanks to all the benefits listed above.

22xFund is a world-first opportunity. I’m extremely energized to be at the forefront of it along with the amazing founders behind the project.

Read a great summary to Security Tokens by Anthony Pompliano.