Security Tokens Are A Thing — 22X Fund Is Tokenizing A Venture Capital Portfolio

What happened when 30 hungry entrepreneurs were thrown together in an accelerator in San Francisco during the crypto crazed summer of 2017? 22X happened, one token representing equity in 30 startups that’s disrupting the traditional way investors get access to a diversified portfolio of world class early stage tech companies.

22X is comprised of 30 companies from 500 Startups summer 2017 accelerator class. The token represents a 10% equity interest in each of the 30 companies, providing investors with a diversified portfolio from inception. Liquidity — or the ability to trade the token before a startup exits — is where the real magic in 22X lies. A security token lets a large group of investors take a small piece of the pie and trade those pieces when and how they see fit, rather than waiting for an exit far in the future. The ability to raise capital globally, coupled with the liquidity, are why we believe that Security Tokens are a thing, a very big thing.

What’s super impressive about 22X is the fact that the 30 Founders appreciated the power of ICOs and organized the process themselves. 22X is not a 500 Startups led initiative, it’s a Founder led initiative. While the Founders were in San Francisco, being taught by 500 Startups how to raise money the traditional way, knocking on the doors of Venture Capital firms around the Valley, they recognized that they would be competing with their 500 classmates for VC time and attention. So rather than compete, they decided to partner, and 22X was born.

Security tokens are also democratizing access — giving smaller investors a chance to have a piece of the pie traditionally reserved for the wealthy and large institutions. Because while crowdfunding promised to open the floodgates for small investors, the truth is, most small investors are not interested in illiquid assets.

Transparency is another benefit. Rather than letting VCs pick who gets investment, the portfolio of companies in 22X is pre-assembled, allowing investors to know who’s receiving their capital and judge for themselves if the index of startups can grow in value or not.

I believe that 22X is another sign of a massive new trend, the tokenization of private assets. That’s why I’m excited to be hosting a Meetup for 22X on February 21st in San Francisco. Click here to get the invite

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