Many speculators have denounced STO as a hype; a craze; a fad, but Neofund has raised up to €3 million in first security token offering in November. To understand why STO succeeded, we need to first understand the fall of Initial Coin Offering (ICO).
One of the primary flaws of ICOs is that 80% of the ICOs are scams. Projects would utilise ICOs to raise fund by pitching about their ‘cutting edge’ technology. Thereafter, projects would make away with the funds without launching even the prototype. This is the major flaw of ICOs.
Security Token addresses the flaw by preventing the abuse of trust and offer certainties as it is backed by assets.
Neofund creatively combined traditional initial public offering (IPO) and ICO. Thus, the issuer could raise fund in both EUR and ETH. This simultaneously forms liquidity for tokens to be traded on secondary market. The business consultancy claims to be one of the first in Europe to ‘launch fully compliant offering of equity on blockchain.’
Michael Jackson, VC and board-member of Volvo Cars, AXA Insurance, Blockchain and Kneip Communications, calls Neufund a “refreshing wind of change in the traditional VC and private equity worlds.”
“Digitizing real-world equity into blockchain-based tokens brings a variety of benefits: Increased liquidity, programmable functions, full transparency, automated compliance, to name just a few. I’m excited to support Neufund, and truly believe we are on the way to making fundraising much more accessible,” Jackson told Crowd Fund Insider.
Robert Viglione, CEO and Co-Founder of Horizen told Washman:
“There is a future for utility tokens, but such tokens will come from protocols with broad possibilities and large infrastructure, not so much on the niche utility-for-a-single-service side. The next bull run will likely be built on securities token offerings (STOs) in which regulated businesses tokenize large swaths of known asset classes, or even equity in small to medium size ventures that enter the crowdfunding space.”