On Launching STOKR, an all-in-one Security Token Offering (STO) solution

Two days ago we launched STOKR, an all-in-one solution for Security Token Offerings (STOs). In the following, I’ll provide a brief introduction to STOKR and why I’m stoked for the future.

Why Are Security Tokens Relevant?

Security tokens have a real underlying value, as they are regulated financial instruments and, for example, represent equity in a firm. Compared to Initial Coin Offerings (ICOs), where “investors” may only have very limited rights (you could also name them donors), investors in STOs classify as real investors and are protected by financial regulation. ICOs are a wonderful financing tool for niche projects, such as open source protocols, but most business models do not qualify for an ICO.

I believe that security tokens are the future of capital markets, as they hold the potential to unlock access to these financing options for startups and SMEs. A new form of corporate financing for SMEs would decrease dependence on banks or business angels and could result in a much more efficient market. Tokenized securities allow retail investors to directly invest into startups and investments can immediately be traded on secondary markets. In theory, investors can always exit their positions. Practically, it remains unclear to what extent a small startup, that is for example valued $500,000, will have real liquid order book. Anyways, markets will become more efficient.

Another benefit of tokenized securities is that it enables 24/7 trading; meaning brokers or bank custody become obsolete. Additionally, clearing and settlement processes are eliminated, as transfers are immediately settled on the (semi-)transparent blockchain.

Gathering financing is hard, even without using a new technology like blockchain. Therefore, we want to provide an all-in-one solution to our clients, eliminating as much hassle as possible. Yet, don’t be mistaken: it will still be hard.

Who Is STOKR Looking For?

Any company looking to raise a minimum amount of € 100,000 can become a client of STOKR and conduct their STO with us after passing through our due diligence processes. For now, we focus on investors from the European Union (EU), as we use the MiFID regulatory framework.

STOKR For Investors

• By using STOKR, investors need to only identify themselves (do KYC) once and can then invest into ventures and manage their investment on the platform. Additionally, companies will transmit updates via STOKR, so users may not need to actively monitor various sources to stay up to date.
• STOKR has a strong due diligence process while on boarding businesses. We not only do the process internally, but also involve external experts from industry verticals.
• We target all kinds of investors: like retailers, angels or professionals. For professional investors, we especially developed models of co-investing for B2C-projects: by getting retail investors on board, they are also users of a project.

STOKR For Businesses

• Regulatory Setup: Issuing securities requires a strong legal foundation. STOKR supports its clients in setting up all necessary regulatory processes through qualified service providers.
• STOKR Framework: To issue a security token, various legal implications need to be ensured. As a company you always need to know who buys or holds your securities. We developed an open source state of the art security token framework (on the Ethereum blockchain) that ensures that legal necessities are followed. While blockchain and the idea of true decentralization is very noble, existing regulation demands for some centralized aspects. Blockchain transactions cannot be reversed, which represents a high risk. To protect projects and investors, we built a recovery function that allows us (in cooperation with the respective project) to recover lost tokens. The Ethereum blockchain is publicly accessible, therefore anyone will be able to see if this recovery function is used. We will soon share the STOKR Framework with you in coming weeks.
• Know-Your-Customer (KYC): When issuing a security, investors always need to be identified. To do so, all STOKR users can directly pass through the necessary identification on our platform. We will handle all the KYC / Anti-Money Laundering (AML) processes for our clients (also after the STO).
• Accepting Crypto and Fiat Currencies: We assist ventures in setting up banking and provide the necessary tools to accept both crypto (right now ETH) and fiat (EUR) for their campaign.
• Interface & Community: STOKR has an interface where ventures can directly interact with their (potential) investors. Using a specialized management interface, ventures can easily manage their communities and access statistics on their users.

What To Expect

With ParkinGO, we just announced a profitable and well-established company as the first STO that will launch on STOKR. You can also expect more project announcements in the close future.

Right now, the security token ecosystem is just emerging. The ecosystem is working on secondary markets, custody solutions for professional investors, payment gateways and many other highly relevant processes that will enable wide adoption of security tokens. Such development will take time, but once this happens, I expect to see a heavy shift towards tokenized securities due to the benefits mentioned above.

STOKR is looking for innovative ventures to conduct STOs and encourages users to sign up to the platform and the newsletter. In case of any questions, feel free to drop a mail at lennart@stokr.io .