Democratizing Finance With Equity Crowdfunding

Could we be about to witness the dawn of crowdfunding 2.0? Late last year, the UK’s primary financial regulation watchdog the FCA quietly approved the first STOs or “security token offerings”, the new kids on the block that shares many of the benefits of crowdfunding… and then some. Experts are already estimating that STOs could boom in 2019 — raising billions globally.

Much like traditional crowdfunding, a company wishing to raise finance to grow its business can sell equity to investors, but rather than selling shares via an inefficient and dated offline process, instead, it can sell so-called security tokens.

These security tokens offer the same rewards as traditional equity such as ownership, dividend and voting rights. Essentially, they are digital representations of the same financial instruments which investors have been buying and selling for decades. It all sounds very similar to traditional crowdfunding, so what’s the point, you may ask?

STOs have some important advantages which will make a difference to both entrepreneurs and their investors. For a start, security tokens are built and managed on blockchain technology. That may put off a lot of investors, as cryptocurrencies have crashed in the last few months. However, STOs can be priced in fiat currencies such as pounds or dollars, so investors are not exposed to the perils of cryptocurrency volatility.

The efficiency of blockchain technology means better transparency, a simpler and easier fundraising process, with lower administration and management costs for both companies and investors.

Entrepreneurs can also reach a wider universe of international investors. Further, the ongoing development of a real, cross-border, 24/7 secondary market will offer real liquidity for both investors and companies raising money. Greater liquidity is one of the major problems facing angel and seed investors with an average lock-up time for investment is between eight and nine years. Greater liquidity also supports higher valuations as creating a bigger market draws in more investors.

For those early investors, a properly functioning secondary market means they won’t have to keep their money trapped in companies for years on end; it also means efficient price discovery enabling the easier, more transparent valuation of investments.

Those investors have greater access to investment opportunities that, up to now, have been the preserve of VC funds only.

Tokenized Asset Offerings, you could say, will help to democratize finance.More Information

• For the latest events from the TaoDust platform, please follow our blog.
• To learn more about the TaoDust tokenized crowdfunding platform please visit our website.
• If you wish to chat with the team about your questions please visit our telegram channel
• For general updates about the platform, please follow us on Twitter.
• Press and partnership request email info@taodust.com