Investing, Capital Raising, pre-IPO Funding, IPO Advisory
Security Token Offering (STO)
Welcome to the brave new world of blockchain-based capital raising!
What is an STO?
STO stands for security token offering. It is a process similar to an ICO where an investor exchanges money for coins or tokens representing their investment. They are linked to an underlying investment asset in a way like stocks, bonds, real estate investment trusts (REIT) or other funds.
Security Tokens are defined as financial securities in accordance with the Howey test and empower investors with financial benefits such as:
• Profit Sharing Rights
• Buy-Back Rights
What are the benefits of STO?
Low Entry Barrier vs IPO
Floating on a stock exchange via a traditional IPO is a time-consuming and arduous process, only available to large companies looking to target over $10m. It requires a lot of middlemen – including brokers, exchange fees, extensive due diligence, etc. – costing large sums of money.
STOs provide much greater flexibility in terms of how you actually run your business, comparable only to a privately held company; However, unlike a privately-held company, security tokens can be traded after the initial sale, making them a much more liquid investments.
Attract Global Investors
As such, STOs tend to appeal to a slightly different investor profile than stock markets. They often attract contributions from global investors looking to make a good return with greater liquidity, helping raise large sums quickly and to spread awareness of your business around the world.
Compliance can be Hard-Coded
Although compliance is slightly more complex with an STO than an ICO, compliance can be hard-coded into the security token through new standards developed on blockchains, such as Ethereum.
Security tokens allow you to divide underlying assets into smaller units, enabling fractional ownership. This makes it more affordable for some investors to contribute to your STO and can also make the token easier to transfer on the secondary market.
How CAPITAL can help?
We act as lead advisor in managing the whole fund raising and STO / IEO process for you, including assemble a STO professional team, advise and organize the resources necessary for a successful execution and provide ongoing services after the fundraising exercise.
Business Model Review
Provide guidance on your project, laying the groundwork for a solid business model designed to weather the volatile cryptocurrency market. Project and Economics analysis to ensure the proposition is attractive to investors while feasible for your business.
Token Model along with Issuance Structure
Provide Guidance on how to create a sustainable tokenomics strategy that keeps your token’s market value and cap raise healthy; Determine Token Rights and Economics; Help determine Issuance Phases, Token Values, Dividends, etc.
Legal Structure and Compliance Model
Analyze the existing business and token strategy, then provide guidance to help ensure there is a sound legal structure to proceed with the STO;
Identify the best legal jurisdiction to run the STO.
Legal Entity Creation
Assistance in the formation of entities that provide sound legal structure to proceed with the STO and opening of bank accounts.
Private Placement Memorandum (PPM)
Our network of legal professionals will work with clients through every step of developing the Private Placement Memorandum, including preparing and filing necessary documents with regulatory bodies such as MAS / SEC.
A complete suite of Tokenization Management System delivered in conjunction with a strategic partner offering an industry leading solution including KYC/AML approvals, creation of wallets, investor accreditation process, e-signatures for the fund subscription agreement, investment process email notifications and investors mailing, blockchain information retrieval, token issuance, smart contract and so on.
Marketing and PR Campaign
Creation of website, marketing collaterals, video, one pagers, banners, social media channels, and engagement with blockchain media and bloggers..