Security Token Offerings Could Disrupt Venture-Backed Tech Startups Positively

A handful of methods exist for raising capital, from private offerings to semi-public to a full-blown IPO or ICO. Now STOs are on the rise which might just be what tech startups need to revitalize the market

According to data collected by Pitchbook, a smaller number of startups are being obtained by larger firms or are going public. Many of these startups, though venture-funded, have a minimal chance of starting an initial public offering (IPO). Some are resorting to cost-cutting measures to better their operating margins in the hopes of drawing mergers and acquisitions (M&A).

The Statistics

Today, more young companies are being allocated capital by VCs, and yet, fewer are exiting through M&A. And the exits are taking longer for those who go through an IPO.

It is said that 2014 was the height of VC-supported exits with 200 startups lined for an IPO. As the years passed the numbers dropped, in 2017, not more than 100 IPOs reached the market.

The sloping movement persisted throughout 2018. Now even less companies backed by large investments are being offered an IPO or M&A exits.

Pitchbook notes that in 2006 it took businesses an exit time of around 4.9 years. But by 2016 it took roughly double that time, 8.3 years. Investors are holding back for an exit from a position for 10 years.

The STO: A Modern Route to Liquidity

Initial coin offerings (ICOs) have transformed crowd-funding and capital-raising. However, a majority of it was ineffectual in delivering business benefits.

On the other hand, an STO can lead the way to equip medium, VC- supported tech startups to re-define itself whilst allowing innovative entrepreneurs to elucidate new problems.

Anticipated to be compliant, security token offerings (STOs) behave like traditional equities. Typically, it has a standard exemption through the SEC’s Reg D. Its difference from the traditional lays in the execution which is done through a smart contract.

Tokenizing a business backed by big money unravels liquidity difficulties. The accepted scope for tokenizing starts from $100 million up to $1 billion. But there are other alternatives such as a partially private token offering using the SEC’s Reg D exclusion which can be offered to qualified investors, or a semi-public offering through the Reg A+ Sec exemption. Though it can be proffered to non-accredited investors, the semi-public offering is restricted to $50 million per year.

The significance of tokenized shares can also be felt in the secondary market enabling seed investors to shift funds to other innovative businesses.

Advantages of Tokenization

Young companies that have undergone several funding rounds possess proof that can be considered quantifiable and comparable. After half a decade or so, these startups already have a client base, a product, revenues, and financial background where fair market valuations can be derived.

Startups in tech have the financials ready for tokenization. Through tokenizing, the opportunity for discovering capital and talent is realized. It can revitalize the tech industry and its accompanying market.

Another benefit that comes with the process is that token converted shares can be sold at a later time on exchanges viz. Open Finance and tZero.

In summation, tokenizing shares and conducting STOs can pick up on the innovation started by ICOs and breathe new life into the market.

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Europeans Are Bullish On Crypto, Study Finds

The APAC region isn’t the only continent confident in crypto. Blockchain adoption is expanding in Europe, along with bullish sentiments. A recent set of studies published by bitcoin exchange bitFlyer, shows a high degree of consumer confidence in cryptocurrencies across Europe. The study polled over 10,000 people across several European countries, and found that approximately 63% of those interviewed believed in the long term potential of cryptocurrency and blockchain technology. The study also covered public opinion on blockchain use cases. The poll shows that only a small proportion of poll takers had an opinion on what blockchain will be used for, with 8 percent believing that crypto will be a medium of exchange and 7 percent believing that crypto will be an investment or security. According to bitFlyer’s announcement, Norway is the most optimistic about the future prospects of cryptocurrencies, with nearly three fourths (73%) of respondents bullish on the asset class. Furthermore, every country where citizens were interviewed showed a majority support, with France polling the lowest at 55%. bitFlyer believes these results show a certain maturity in the market, suggesting that the cryptocurrency space has moved beyond a mere hype cycle, and that the technology is gaining legitimacy as a medium and store of value. Andy Bryant, COO at bitFlyer Europe, said: “These results indicate that the reputation of cryptocurrency has moved beyond hype and become more established. It’s very easy to forget just how new cryptocurrencies still are; we’ve only just celebrated bitcoin’s 10th birthday, so for the majority of consumers to believe in crypto’s future is without a doubt an achievement.”Andy Bryant, COO at bitFlyer Europe Also mentioned in the report, Bitcoin seems to garner less support in the European public eye, though still sits near the majority at 49%. This suggests that while Bitcoin may have pioneered the blockchain space, consumers are more confident in the emerging second, third and later generation blockchains. Bryant continued: “The fact that bitcoin is not generating as much support as other cryptocurrencies is in part a symptom of the market’s volatility, but is also a direct impact of the constant media attention that is associated to its volatility. We of course believe that bitcoin is here to stay, and while we’re encouraged to see the large majority of Europeans think the same, this research shows there is much more to be done to demonstrate to consumers the benefits of and use cases across all cryptocurrencies more widely.” Andy Bryant, COO at bitFlyer Europe Despite rising public perception and growing extensive infrastructure, blockchain tech still remains in its infancy. Nonetheless, the level of consumer faith in this new asset class is a promising sign. While it’s impossible to tell what impact blockchain and crypto assets will have, more signs are pointing to the possibility of a worldwide digital revolution.     The post Europeans Are Bullish On Crypto, Study Finds appeared first on Crypto Briefing.

‘Twitter Hype Index’ Mirrors Cryptocurrency Market Cap, New Data Shows

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Harbor Cancels Convexity Properties STO

Convexity Properties announced this month the cancellation of its highly anticipated STO. The news comes as a blow to the security tokens market as this project was the first tokenized REIT in the US. Now it’s back to the drawing board for these tokenized real estate developers. Convexity Properties previously made headlines with their advantageous approach to the real estate market. The plan was simple from a strategic point of view. Host an STO to crowdfund the purchase of a 260 unit student residence for the University of South Carolina. The property resides in a swank downtown Columbia neighborhood and features a host of world-class amenities. These amenities included a rooftop pool deck, fitness complex, a club lounge, and spacious luxury rooms. The project gained praise from the cryptocommunity with many analysts predicting the concept to be a huge success. It’s a No Go Investors were to get a share of the equity in the investment.  Now, it appears that the deal is not going through for a multitude of reasons. Speaking to Chicago Business, Harbor’s Spokesperson, Kevin Young explained some of the issues that resulted in the decision to cancel the Convexity Properties STO. Amenities via Columbia Hub Homepage It appears that the main reason for Convexity Properties’ cancellation is the attitude of the buildings, current lenders. In response to the cancellation, Young spoke on the uncertainty of real estate transactions. He said that the issuer was unable to come to terms with the existing mortgage lender. He ended off his interview with some words of hope in which he said the entire concept is still exciting. Don Wilson – Convexity Properties The man behind the concept is Don Wilson, the Owner of Convexity Properties. He is no stranger to the real estate market and his pioneering effort to increase tokenization in the sector can’t be balked at. As an experienced investor, Wilson believes his concept is solid and he is confident a better opportunity will arise in the future. Harbor To make the entire concept a reality, Convexity Properties partnered with the token issuance platform Harbor. Harbor is one of the top security token launch platforms in the market. Harbor utilizes the R-token protocol to ensure all tokens remain compliant throughout their life cycle. Equity Tokens The use of equity tokens in the real estate market is on the rise. Unlike security tokens, equity tokens represent a percentage of ownership in an asset, whereas, security tokens represent a right to a percentage of profits generated. Tokenized Real Estate Platforms such as Harbor offer users an all-in-one ecosystem for digital securities, equity, and private funds. Tokenized real estate brings many advantages to the table that can’t be ignored. Aside from more efficiency and security, this concept adds liquidity to stagnant markets. Through tokenization, the entry-level threshold for real estate investments can be lowered. Additionally, local markets can accept funding from global investors when utilizing a tokenization strategy. The combination of these factors makes tokenized real estate an attractive option for both investors and traditional real estate firm. You should expect to see more concepts similar to this emerge in the coming months, The post Harbor Cancels Convexity Properties STO appeared first on .

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