Businesses should focus on what they do best. This is a trite statement that everybody would agree with, yet many managers and executives would, in practice, waste resources on tasks and processes that take away from their company’s core competency. In today’s globally connected world, where capital is by and large free to travel and seek the most productive home, competing in your domain of expertise is more important than ever.
The need for a professional tokenization platform
For this reason, using an asset tokenization platform is becoming the de facto method to raise capital by issuing blockchain-based ownership claims. Whether issuing utility or security tokens, using an end-to-end integrated platform to handle your token sale removes a plethora of worries from a team’s plate: built-in security regulation compliance, including KYC/AML, professional developers applying the safest technology and minimizing the likelihood of smart contract errors, and legal assistance reconciling real-world paper claims to digital tokens.
By using a professional platform to assure your company or assets become standardized tradable ERC20 tokens, you can focus on the non-repeatable parts of your business, such as your core operations, marketing, or relationship building with investors and other stakeholders that will lend to your success. Beyond the ability to focus on what differentiates you and not the minutiae of legal compliance and technical quagmires, you are also instilling confidence in your potential investors.
With new asset classes, or with new representations of existing securities, investors are understandably apprehensive. Specifically for larger institutions that obey more prudent mandates, following best practices — let alone adherence to regulation — is a primary box that must be checked. To gain the support of these institutions, provably secure tokens and standardized processes represent a strong advantage, especially in a nascent ecosystem that is still home to nefarious actors.
Although security tokenization seeks to remove many of the middlemen entrenched in traditional security offerings such as investment banks and other advisors, the pervasiveness of these middlemen is instructive: it is not easy to offer compliant securities. The difficulty of the process is what has historically substantiated the high fees, typically in the 7% range for IPOs, paid to investment banks for guidance.
Similarly, tokenization is no trivial task, and having the support of experienced professionals and a robust technology platform is the first step to becoming a viable project or investment in an intensely competitive global movement. Gone are the days where ad hoc, sloppy token sales can succeed, and we have entered the era where professionalism is not a differentiator, but table stakes. In fact, with today’s heightened scrutiny by security regulators, you may be more likely to receive a subpoena for non-compliance than merely fail.
Too Successful of a Token Sale?
Beyond compliance and confidence building for your investors, the platform must be able to handle the technical challenges of a token sale. Token sales, specifically successful ones, will receive contributions from thousands of your project’s enthusiasts. These contributions will span from fractions to thousands of ETH. Although code is much better suited than a maze of administrators to handle this burden, the contribution phase could buckle under the weight of its own success. Thus, paradoxically, the larger or more successful a token sale is likely to be, the greater the need for a professional platform.
If you’re like us, then you believe that tokenization will eat the world, and that we are merely in the first inning. With this in mind, it’s clear that there is a need for a robust system to effectively navigate the regulatory and technical challenges associated with a token sale. Using an end-to-end integrated platform to handle your token sale represents a project’s best chance of capital-raising success.