STOs are bringing the next evolution for the companies to raise capital in an entirely digital way by utilizing the tokenization concept. Investors are going bananas with this new emerging opportunity because of huge returns.
New companies and investors are more inclined towards STOs because of greater liquidity, easy accessibility, and transparency. Many companies still opt for IPOs to raise capital, but industry dynamics are changing very fast due to a much more reliable technology like Blockchain.
Relatively STOs are still a new addition to the world of cryptocurrencies and blockchain. They are not appropriately regulated everywhere, and we see different changes in the market and updates in laws and rules regarding STOs at the official government level. Our 2020 Look Back Series aims to discuss various events and significant advancements that happened in the last year! In this first article of the series, we will discuss the expansion of the STO market and how the trend of STO is emerging. Plus, we will also discuss 3 of the top STOs that took place last year.
Blockchain is the base of these STOs where all information regarding tokens is stored. It is a much safer and transparent medium for trading securities. Moving to the STO investments, here a few companies that raised capital using security tokens in the year 2020:
3 STOs of 2020
Security tokens are an entirely new concept for many companies, but still, a lot of ventures managed to raise capital using this blockchain-based tokenization concept. Following are the few ventures that successfully raised capital:
Blockchain capital claims to be a leading firm in the blockchain industry. The blockchain capital is also an early-adopter of the tokenization concept, and they successfully raised a $50 million VC fund.
They launched their BCAP token, and within hours, they raised a capital of over $10 million. The BCAP token was first open for everyone, but then Blockchain capital imposed some restrictions on buying and selling of this token and only registered investors could hold it.
The BCAP’s issue price was around $1.00, and it quickly climbed to $2.61, which is a straight 161% increase. Private investors invested millions in BCAP token to take BCAP to the moon.
SpiceVC also utilized blockchain technology to launch its own security token to raise funds. The SpiceVC successfully raised over $15 million after the initial release of their security token. They mostly raised funds from qualified investors, and the value of its token skyrocketed from $0.80 to over $1.37.
SpiceVC was not just limited to one token, but their funds were invested in multiple ventures Bakkt, Securitize, and Slice. Due to this very reason, investors trusted the SPICE token, and they poured their funds to get huge returns.
Nexo was another early-adopter of security tokens. They offered crypto-backed loans, and they felt the need to raise capital; hence, they chose tokens because of their high potential—this Switzerland-based venture raised over $52 million.
Their initial tokens were issued at a price point of $1.00, and they got many investors in the early months.
Nexo took a revolutionary idea to make people trust them and their tokens. As a result, they raised huge capital to offer crypto-backed loans. These loans were given on interest, which Nexo reinvested to raise their value.
The STOs are creating a whole new market within crypto. According to Tokenist, there were only 5 STOs with a total volume of around $65.59 Million, and this number increased to 35 STOs with a total volume of $434.95 million.
In the year 2019, there were around 83 STOs and this number significantly increased in 2020. If we talk about different sectors and industries, then the financial sector is a clear winner because they raised around 77% of total STOs while real estate comes second.
Another huge reason behind this expansion is transparency, transactions can be made through exchanges, and almost everyone can invest their money in the token if it is listed on multiple exchanges. IPOs lack transparency, and STOs are certainly going to be more dominant in upcoming years.
SolarisBank or the Swiss stock exchange is already behind STOs to develop a proper solution that can be integrated with their current infrastructure. However, this new emerging market still needs time to mature, but the demand for these tokens is constantly increasing, and it’s becoming a hot topic among investors.
This was our brief discussion about the expansion of the concept of tokenization in the crypto market. If you liked this article, we are sure that you would like our next piece of the series that discusses significant changes regarding STO Laws, Regulations, and events in 2020!
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