The TokenFunder Project: Initial Token Offerings as a revolutionary equity crowdfunding platform on the blockchain
Imagine an entrepreneur who is able to raise capital for his or her project from a global investor base, and be fully funded within in 29 minutes, to the tune of USD 8.6 million.
Not only that, but the funding takes place on terms which are more financially favourable than those required by venture capital groups, angel investors, private equity houses, or online crowdfunding platforms such as Indiegogo or Kickstarter. And certainly more favourable than “pass-the-hat” financing rounds from family and friends and various strings attached.
This is exactly what happened for the entrepreneurial team behind The Golem Project, an ambitious initiative that aims to create a global supercomputer, one that commoditizes idle, individual computer power the world-over.
And the mechanism used by Golem? The Initial Token Offering (ITO), the digital equivalent of the Initial Public Offering, only faster, and much less expensive. The ITO, or Initial Coin Offering (ICO) as they are often referred to, is a groundbreaking form of digital finance which takes place on the blockchain.
Why the blockchain?
Blockchain technology is a new frontier of innovation which has radically altered both the structure of organizations (from hierarchical to decentralized), and the capital markets landscape (from IPO to ITO). It’s transparent, efficient, and inexpensive, and for this reason, more and more companies are seeking to raise funds by way of initial token offerings on the blockchain.
Why do entrepreneurs love ITOs?
This same entrepreneur’s vision and mission can be quickly pressure tested on the open market, using the cryptocurrency investor appetite as a benchmark. If the project needing funding solves a big problem, if the assembled team of advisors are reputable, if the timeline of the project is reasonable and the incentive mechanism compelling, the market will respond accordingly.
Why do investors love ITOs?
Instead of buying shares, investors use cryptocurrencies such as Bitcoin or Ether to buy digital tokens without paying the high commissions associated with equity investing. Minimum investment amounts are also significantly lower than most new stock issues that one might buy through an investment advisor.
For the qualified investor willing to take some risk, ITOs are highly publicized and accessible to anyone, and although certain projects have jurisdictional restrictions, they are otherwise a truly global phenomenon. Tokens purchased during ITOs are readily tradeable, and are pre-programmed to carry out the company’s incentive payouts — or returns — as set out in White Papers and Investor Prospectuses.
In some cases, if a minimum amount of capital is not raised within a specific period of time, funds below that minimum threshold will be returned to their investors. The financing either raises enough to achieve certain organizational milestones, or it stops a project in its tracks.
The ITO State of the Union
If the current number of ITOs is any indicator, they’re not going away any time soon. Today, blockchain tokens are being used to raise funds from technologically savvy supporters around the globe. Beyond Golem, other recent examples of successfully completed ITOs include The Ethereum Project, The Augur Project, SingularDTV, and Chronobank. Many others, like WeTrust, are still underway.
These initiatives were led by teams of experts in cryptography and blockchain technology. We believe that the same opportunities to raise digital capital should be available to anyone, and be as easy to use as internet-based crowdfunding platforms like Indiegogo. That’s the inspiration for The TokenFunder Project, and we hope you’ll read on to learn more.
A key point is this: tokens can be much more than the digital currency thought of in many current ICO’s. Tokens are an entirely new asset class that can represent digital shares, and eventually any digital asset.
What is The TokenFunder Project?
The vision for The TokenFunder Project is to bring blockchain innovation to the global financial market, beginning with crowdfunding. While token-based crowdsales have become a global phenomenon among the crypto-savvy, they have been largely launched in what many describe to be unregulated jurisdictions. In Canada, the OSC provides guidance to advise that tokens could trigger “securities law requirements.”
TokenFunder was conceived as a Canadian-based, regulatory-compliant service from the ground up. It will allow entrepreneurs and businesses of all sizes to launch their own blockchain Initial Token Offerings. Our goal is to standardize token creation and the cryptofinancing process in a way that aligns groundbreaking technology with regulators’ objectives for investor protection. We’re focusing on ease of use and bringing Canadian-based investment values to cryptofinance.
How will TokenFunder work?
TokenFunder is building the Smart Token Asset Management Platform or STAMP™, with a vision to make it easy for businesses around the globe to use these powerful token applications without needing to understand the technology behind it.
STAMP is unique because it is a hybrid web application that serves as the interface for users to interact with a blockchain. STAMP will begin by using the public Ethereum blockchain.
The TokenFunder Initial Token Offering
In order to bring the revolutionary TokenFunder platform to market and give investors an opportunity to participate, TokenFunder will soon be offering an ITO to kick things off.
Join us in helping entrepreneurs to easily and cost-effectively raise seed capital, and give investors from everywhere an opportunity to fund innovation, anywhere.
Sign up for news and our forthcoming White Paper at www.tokenfunder.io. And, if you liked this blog, please share it with friends.
Stay tuned for more details!
Hilary Carter, Founder InTune Communications
Alan Wunsche, Founder @TokenFunder
Originally published at medium.com on March 8, 2017.