Crowdinvesting with GmbH-Token is live!
Just like an ICO, but legally compliant.
Just imagine, you wouldn’t have to deal with the hassle of preparing for and completing fundraising rounds. No more negotiating legal fees, contracts, unique investment terms etc. Instead, you raise from your community, customers, fans, friends, family and the general public on your terms. And angels and VCs can still participate. What if everyone could click on an “invest now” button on your website, see your current terms and close an investment within minutes? What if you could continuously fundraise on your terms?
When you need funding, you simply set the current price per share (or token in our case) and the maximum amount you are willing to sell and offer to the public. Then shout out on social media or wherever you want and invite everyone to become part of your mission. Once you have sufficient funds raised, you pause the fundraise and when you need additional funds, you open it up again with updated terms.
Sounds like an ICO. Is this legal? In Germany? Yes.
This is “Crowdinvesting” with GmbH-Tokens. This is how I wanted fundraising to work — no compromises, no offshore legal entity or SPVs. A simple fundraise directly with your GmbH and without the drawbacks of traditional solutions.
I started working on this project almost three years ago. Since then we have spent countless hours to be where we are today:
- Created the legal templates with exceptional lawyers (available as a free download on our platform )
- Wrote safe smart contracts fulfilling all requirements and got them successfully audited: https://github.com/corpus-io/tokenize.it-smart-contracts
- Acquired the required licenses (getting set up as a tied agent of a licensed German “Wertpapierinstitut”)
- Built a WebApp with an awesome UX and design that also handles the legal requirements of a compliant fundraise
The process wasn’t straightforward but we persevered and figured it out. Now we invite every German GmbH to come and take advantage of our solution. It is as good as it sounds.
Let’s dig into the details:
The GmbH-Token
Each token represents a participation right (“Genussrecht”), providing the holder of the token the right to receive dividends, liquidation proceeds, some information rights and most importantly pro rata participation in a company exit. A GmbH publicly promises (“Auslobung”) these rights to the token holders, allowing for the potential of future secondary sales without the need to prove a binding chain of purchase contracts. This puts the token holder economically on equal footing with the shareholder. In other words, we structured the GmbH-Token such that one token economically represents one company share.
Additionally, the token holder receives a so-called “put option” to return the token to the company so the token can be converted to an actual company share at the notary (or receive the cash equivalent at the current valuation — for details check out our legal templates on the Tokenize.it platform). In this sense, a token is structured to always have the same value as a company share.
Technically speaking, a token is an ERC20 token on Ethereum and/or the Gnosis chain with additional admin rights for the company. For details check out the smart contracts and this blog post.
Compliance with regulations
The regulator has categorized GmbH-Tokens as securities (“Wertpapiere”). Specific laws apply to sell security tokens in a compliant manner.
Without going too far into the details, our platform provides a compliant way to privately and publicly issue securities tokens. Public issuances are permitted in an amount of up to €8M in a 12-months period when working with a licensed broker and using a so-called Key Information Document (KID or “Basisinformationsblatt”). The Tokenize.it platform is set up to do just that. In addition to providing you with templates for all required disclosure documents, including the Basisinformationsblatt, we handle investor KYC, AML, and suitability checks. This enables you to conduct a fully compliant token sale in Germany.
The investment process in detail
Once you have completed the onboarding process with us, you will receive a link that you can share with your community and potential investors. This link leads to your token offering on our platform.
When going through the investment flow on our platform, the investor receives a Monerium account which he/she can fund through a simple SEPA transfer. This results in the minting of EURe, a Euro stablecoin representing actual e-money issued by Monerium, which is utilized for the investment process that is governed by our audited smart contracts, leading to a direct minting of the corresponding tokens. Extremely convenient for the investor and fully non-custodial.
To allow for small investments starting with 200€, Crowdinvesting is happening on the Gnosis Chain. Fees on the Gnosis Chain are negligible, the infrastructure is great with excellent support for Safe, the most trusted Multi Sig wallet in the Ethereum ecosystem by far, there is a seamless EURe (Monerium) integration and Gnosis shares our values of a truly decentralized community-run chain with thousands of validators.
For any investors who are not web3 natives, we provide a closing flow using their Google account without the need to set up a wallet on their own. This feature is based on infrastructure provided by web3auth.
Thank you!
I am especially thankful to the whole Tokenize.it team that has worked relentlessly to ship such an awesome product. After having built a platform for private investments and employee participation using the same GmbH-Tokens, Crowdinvesting is now the crowning product in our suite, providing a fully digital and tokenized company participation solution for Germany-based GmbHs with the full spectrum of investors. This is a huge step towards our mission:
We enable everyone to become a co-owner of a company.
Looking forward to your raise!
Christoph Jentzsch
Contact for support: hi@tokenize.it
Get in touch: https://www.tokenize.it/contact
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