Giacomo Arcaro, a top Growth Hacker and a university professor, in his column featured by the ICObench.com states that security tokens will democratise venture capitalism.
Blockchain technology and smart contracts introduced an efficient means to raise capital without the use of intermediaries and serve as the basics for the creation of security tokens, too.
As a vehicle for fundraising, security tokens allow companies to raise capital without having to turn to investment banks and stock exchanges. Businesses like Securitize, Polymath and Harbor, along with completely “tokenized” funds such as Spice VC, demonstrate this very well, writes Arcaro.
Given the legal control guaranteed by the U.S. SEC, FINMA Switzerland and other regulatory bodies on the token offering, investors can invest without having to worry about vetting the credibility of the project. Their only concern will be the financial success of the company, just the way it was with the good old stock issuances, making them much more prone to risk their money. With easier access to capital, the rise of new «unicorns» will be accelerated, as well as the disintegration of rickety companies. STOs will contribute to the formation of an unstable, meritocratic scenario, where even the venture capitalist will be able to invest and eventually exit the projects much faster.
The blockchain and distributed ledger technologies already allow today the tokenization of otherwise illiquid assets, from real estate to fine arts, asset categories otherwise previously reserved to the super-rich. Security tokens make it possible to apply fractional ownership to the most expensive real estate, thus giving anyone the chance to buy“a piece” of it. One might think that this is similar to owning shares in a real estate investment fund (REIT), but investments in security tokens offer much more flexibility to the investors, and they are not the only ones enjoying it!