Blockchain Services from an experienced team, make sure you are covered in all ways. We leverage our numerous years of experience within the crowdfunding industry and our vast network of contacts, to help you make the most of your fundraising opportunity.
What is an Initial Coin Offering?
An ‘Initial Coin Offering (ICO)’ is an unregulated means by which funds are raised for a new blockchain and/or cryptocurrency venture. An Initial Coin Offering (ICO) is used by startup companies and allows them to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.
What is a Security Token Offering?
Among the acronym soup of digital currency phrases, one term is being heard more often: security token offering (STO). The STO is emerging as a powerful and valuable alternative to private equity and venture capital financing for companies globally. It is such a powerful alternative that Polymath estimates will grow to a $10 trillion opportunity over the next two years.
In simple terms, a security is a financial instrument representing a real asset. Stocks, bonds and managed real estate trusts are examples of securities. Historically, when a security is purchased, the transaction is signed on paper. A security token performs the same function, except it confirms ownership through blockchain transactions. Security tokens can offer many financial rights to investors including equity, dividends, revenue shares, profit shares, voting rights and other financial instruments.
STOs offer enhanced terms when compared to raising capital from VCs. Firstly, companies do not have to give up control of their company or a board seat. This puts management teams in a stronger position to make business decisions, and it reduces the risk of being removed from their own company. Next, for equity STOs, companies can sell common stock instead of preferred stock. This effectively lets management and other common stockholders retain a higher percentage ownership in their company, especially in downside scenarios. While dividend rights will be granted to common stock security token holders, STOs can be accomplished without offering voting rights to these investors. Again, this is another advantage that gives management teams more control over their company. Finally, STOs generally raise at higher valuations.
Low cost of entry
A security token offering can be used to tokenize many assets, commodities and financial instruments. That means smaller companies have the opportunity to raise large amounts of capital from a global investor pool quickly without necessarily having to absorb large costs, particularly in legal fees. Imagine, for a moment, raising capital from a global investor pool using traditional means. You’d be required to engage a new lawyer in every country where an investor wanted to buy into your offering. Security tokens remove that requirement because compliance is integrated into the token itself. In the US, frameworks such as Reg D and Reg A+ are used by companies seeking to raise capital, and compliance with their requirements can be guaranteed without the use of lawyers.
Uses beyond a traditional security
By incorporating utility token-like features into security tokens, additional value can be created. For example, if Hotel Crypto released a security token, customers of the hotel who purchased tokens could be entitled to a 10% discount on their room rate or free access to VIP areas. With tokenized offerings, companies have the opportunity to use their imagination to offer new benefits to their customers. In another example, companies could offer benefits with financial value to customers who hold their tokens for more than three years, for example, discounted meals, spa treatments, in-room entertainment or reduced room rates. Essentially, companies offering security tokens have an option to reward customers for buying and holding their securities over time. These rewards go beyond an appreciation of the value of the underlying security.
Disclaimer: This is not legal advice and you should consult an attorney before proceeding with any STO/ICO methodology.
Our Blockchain Services include Consulting and Marketing Services for innovative startups entering this space.
Our services cover the following and more:
*Corporation Structure – how best to structure your organization for an ICO.
*Whitepaper development – a great Whitepaper can make all the difference.
*Legal – through our team of global partners we make sure that you are fully compliant.
*Marketing – We make sure you are able to maximize your opportunity through an effective plan.
*Technical Development – we have access to a network of more than 100+ developers.
à la carte ICO & STO Services
|PR and Marketing – (dependent on soft and hard cap)||8.00 – 40.00 BTC|
|Localization Management (up to 3 languages)||0.50 BTC|
|Whitepaper Development/Preparation||1.00 BTC|
|Prospectus Development/Preparation||0.60 BTC|
|Whitepaper Review (two page detailed feedback)||0.10 BTC|
|ICO/STO Website Landing Page w/ Infographics and Design||0.75 BTC|
|ICO/STO Smart Contract Development||0.50 BTC|
|ICO/STO Project Manager (0.5 BTC/pm x 3 months)||1.50 BTC|
|ICO/STO Customer Service Rep ($0.25 BTC/pm x 3 months)||0.75 BTC|
|Token Exchange Listing Assistance (per successful listing)||0.50 BTC|
|Escrow Agent for ICO Funds (optional)||0.50 BTC|
|Due Diligence Report||0.50 BTC|
|Legal Services (3rd party)||0.05/0.10 BTC hr|
|Post-ICO/STO Blockchain and Software Engineering||0.3/0.10 BTC hr|
|Total Pre-ICO/STO Investment (estimated)||10.00 – 50.00 BTC|
|Estimated Timeline||3- 6 months|
|Retainer Due at Signing||3.00 BTC|