Fundraising has always been a difficult task for startups and even established companies. However, we are now moving into an era where access to capital is no longer restricted to the elite.
The blockchain industry is made a pivotal shift in how startups can raise funds without the red tape associated with traditional finance, which often limited early-stage ventures from growing. The creation of token sales has given access to investments to retail investors at a scale that was impossible before.
Initial coin offers, staggered across the web’s best ICO list, have been on the rise. However, more recently they have morphed into initial exchange offerings. While IEOs and ICOs allow startups to raise capital with little to no regulatory restrictions, they act as a double-edged sword at the risk of investors. They enable startups to raise capital with no fiduciary responsibility to investors.
ICOs have raised more than $15 billion in total since 2017, but the legality of ICOs isn’t certain, especially due to the vast portion of them being mere scams. The risk associated with ICOs are huge, and not only because of the legal aspects, but also because of the high probability of frauds and scams. Recent studies have shown that the majority of ICOs (and even IEOs) have either failed or were blatant scams.
But there isn’t a need to be dismayed as the value blockchain technology provides is real and there simply needs to be a more regulated manner of executing tokens sales. This is STOs come in. STOs (Security Token Offerings) are the solution to all the issues ICOs encountered.
Marvin Steinberg, an expert in STOs and the founder of CPI Technologies, a company offering white label STO solutions, says that blockchain technology has quickly become the solution to most of the challenges faced in the traditional financial industry and STOs are the most optimal way to raise funds.
How does a Security Token Offering Work?
STOs are fundamentally different from ICOs because they are fully regulated. They are far safer and more reliable to investors, which in return provides businesses with a safer path to funding while issuing a token that is attractive to even institutional investors.
Security tokens are backed by real assets like private funds, stocks, real estate, etc. Security tokens do grant investors the ability to benefit from dividends and equity shares. In essence, an STO is similar to an IPO, but a more accessible offering to the public as tokens can be acquired with greater ease and simplicity.
Marvin Steinberg explains how STOs are not only safer, but also far more flexible and convenient than IPOs. However, as the STO ecosystem is still in its infancy, STO lists aren’t as popular and STO news hasn’t yet reached the mainstream media.
Advantages over Other Forms of Fundraising
The security tokens offered by STOs have intrinsic and real value backed by the company’s assets. While ICOs have been extremely successful throughout 2017 and 2018, recent trends show investors quickly realized that regulatory uncertainty was simply too risky.
STOs are the most trustworthy form of fundraising in the blockchain industry, even above IEOs (Initial Exchange Offerings). Additionally, STOs are able to raise more funds at a faster pace, without all the hassle associated with other traditional fundraising methods, including IPOs.
The key value-add is that unlike an IPO, STOs are far less costly to execute as there ins’t a need to tackle the bureaucracy and investment bankers that are a near-must for an IPO. STOs also make the issuance of securities far more accessible to the masses, enabling a business to pool in the vested interest of a great number of people. This factor in itself can enable a business to push its expansion, which is a great bonus on top of a massive amount of funds STOs can help raise, and that too at a low cost.
At the same time investor protection is far higher with STOs when compared to ICOs. Marvin Steinberg, whose CPI Tech is spearheading a $700 million STO for a part of Times Square, explains that STOs take the best of both IPOs and ICOs, and deliver it in a better fundraising tactic. Marvin Steinberg believes that STOs are the future as they enable everyday people to benefit from investments they could’ve never reached before.
Marvin Steinberg asserts that the accessibility enabled STOs allows security tokens to raise more capital without tarnishing any of the legally compliant security investors would receive from an IPO.
How CPI Technologies is Helping Startups Succeed Through STO’s
While STOs can be extremely powerful for fundraising, it is critical to use the aid of industry veterans in order to avoid illegal steps.
While most of the blockchain sector is focused on ICOs and utility, Marvin Steinberg is looking towards the future, and that is clearly a frontier dominated by STOs. Thus, after making a multi-million dollar exit from his personal venture in the German energy sector, Marvin has launched the leading STO white-label solutions in the blockchain space.
CPI Tech is offering all the STO resources a security token offering would need. Marvin Steinberg has opted for such a product suite as it allows a greater number of startups and enterprises to take advantage of blockchain technology in the quest to raise capital. CPI Technologies has had great success and has helped more than 40 projects succeed. In fact, CPI has processed over 32,000 bitcoins on their software.
A crucial feature of CPI Tech’s success is its exchange platform, giving anyone the ability to start their own exchange while providing the marketing strategies needed to become successful and profitable as soon as possible.
The main reason Marvin Steinberg and his company have become so successful is the fact that Marvin only works with companies that have a real product or service and are looking to change the world. This is also the reason for focusing only on STOs which are far safer for investors.
To push forward the adoption of STOs and draw in greater interest into blockchain technology, Marvin Steinberg has created an easy 2-minute quiz that can help anyone become acquainted with the fundamentals of security token issuance. Try Marvin’s 2-minute quiz here.
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I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.