Bringing Liquidity to an Illiquid Market

Disrupting Equity-based Crowdfunding

If the past decade’s dawn of the Initial Coin offerings (ICOs) has proven anything, it is that crowdfunding and alternative finance have been unable to address all of the needs of startups and entrepreneurs. Traditionally there has been an intentional gap between brand-new early-stage issuers and the global market investors.

Today, crowdfunding has made alternative finance a viable option but yet the market is still an underdeveloped emerging industry with only 5% of the alternative finance in the world belonging to equity-based crowdfunding. Additionally, there is still another $145 bn in annual turnover for alternative financial funding being raised globally in the form of p2p lending platforms.

There has been a problem with these alternative capital raising processes which has prevented this type of funding models from developing in a mature marketplace. This bottleneck between investors and early-stage investment opportunities has been the absence of a liquid secondary market and present an interesting opportunity to disrupt the current equity-crowdfunding model.

“Digital securities are to paper-based securities what streaming music is to vinyl records.”

— Alan Tonetti, CEO & Founder of TaoDust

In an effort to bridge the gap between private companies and public markets, TaoDust is creating a platform which disrupts these two models to improve the liquidity problem. For the first time in history, startups, entrepreneurs, and even small-to-medium sized companies can undergo the process of offering equity as tokenized assets — Security Tokens

A Solution for the future of Equity Crowdfunding

TaoDust provides organizations with an ecosystem to tokenize securities or offer equity in private companies. These Tokenized securities, which are in-fact financial instruments or alternative investment, can be re-sold and traded on a liquid secondary market. Security Tokens issued by TaoDust gives companies direct access to capital and liquidity to both primary and secondary markets of private securities(STOs) and alternative investments(Crowdfunding, ICOs).

By tokenizing assets, a company is essentially digitally transforming equity in the company, shares, dividends, votings rights into a cryptographically secure token which then automatically represents its accounting, transaction settlement, and other managerial tasks on a global ledger system; making the equity “portable”. This will provide equity-based crowdfunding projects launched from the platform to provide issuers more depth in their global investor pool.

The TaoDust platform makes use of smart-contracts on the Ethereum blockchain which issue digital securities. This approach has been chosen for its proven ability to facilitate reliable cross-trading against other tokenized equity and fiat currencies. Without solutions like the one TaoDust is bringing forth, investors in equity-based crowdfunding have limited opportunity to exit their position.

In most instances, only very sophisticated investors were willing to risk sitting on their holding, waiting for a buy-out, merger, or IPO. These drawbacks were once generally accepted as the cost of doing business in equity crowdfunding and viewed as the apparent downside to the high-return potential of these investments.

Conclusion

P2P based lending still dominates alternative finance but there is over $10 trillion in offline assets worldwide, which when tokenized could be the catalyst for growth that will place equity-based crowdfund at the forefront of mainstream 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.
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• Press and partnership request email info@taodust.com