Going public is almost as difficult as making it big in Hollywood or Multi-Trillion-Dollar Industry. Many a talent just ends up waiting tables and fizzles out without ever shining – all because they did not have the right connections. In an acting career – this lack of connections only hurts the person’s aspirations.
However, in a business world – privileged access to capital affects business, lost employment opportunities and customers who never know what they missed.
That’s just one aspect of the status quo of the current stock/capital market, there are many other problems:
- The biggest problem is the lack of access to capital to Micro, Small and Medium Enterprises
- A great many hurdles and complications to go public
- Investing opportunity access is limited to venture capitalists and accredited investors, that means, a common man will never be able to get on the ground floor of projects with potential
- Huge commissions, as much as 7% of total capital raised
- Even after raising money via IPO, the sheer amount of wait time from IPO to trading on the stock market is just ridiculous (estimated 2 years)
- Traditional financing options like banking finance, private equity, recent crowdfunding is really not optimal and carry many red tapes and high fees
We know there are problems. Many problems.
The business world has come to accept these unacceptable-redundant-costly-restrictive ways of raising capital. While ICOs have solved this problem for some part – it is not a panacea to the problems associated with raising capital.
Biggest problem with ICOs is answering the question of what if the company’s business model does not require a token? If a company raises money knowing that it doesn’t need tokens – it is certifying that it is raising money using securities but without following the rules and protocols.
That is a one-way ticket to SEC slamville.
And we know with certainty that most ICOs either do not have a blockchain use case or any utility for their tokens. The ICO fever is fizzling out but the blockchain use cases are just getting discovered.
What is the answer to this multi-trillion-dollar problem?
WeOwn (CHX), our pick today, aims to disrupt and challenge the status quo of traditional ways of raising capital. They are building a platform to make raising capital as simple as ordering a pizza. Think of it as Uber for business capital. Of course, we are exaggerating to make a point.
Cryptotapas contacted Own’s team for their comment in describing their platform, and in their own words, “We see ourselves as a servicer and not just an issuance platform. Whilst we do offer and manage primary issuance of financial asset backed tokens, we provide many other services after the issuance event: we manage investor and shareholder data (on our Decentralised Share Register), we manage the dividend disbursements, we create and generate tax and financial reports for both issuers and investors, and we support and manage corporate actions and other events.”
Own team is bringing the complicated process of raising fund for companies of all sizes onto an app that records transactions on a Blockchain.
Here is how the existing process (simplified) looks like when raising capital by issuing shares.
Own cuts down the intermediaries and makes this process much simpler and easy to access to retail investors.
Source: Own whitepaper
One of the key administrative issues that Own solves, beyond helping raise capital, is to help maintain share register once company raises money. Right now, companies use all sorts of spreadsheets, databases, third-party vendors, to keep track of the share register (record of ownership status including changes in ownership). This is a painful task but companies have to comply with the mandatory rules that span across many countries around the world.
How will you communicate with your shareholders if you do not know who holds your shares? That’s the purpose Share register accomplishes.
Then there is an issue of paying dividends, communicating with shareholders, collecting votes, most of which is currently handled in inefficient traditional ways.
Own’s platform can automate all of these tasks and in the fraction of the time and cost. Remember, Own is a single platform that connects both the investors and the company.
“Own was founded by a core team that has worked together in the share registry and financial services industry for more than fifteen years.”
Sascha Ragtschaa, the CEO, has an impressive profile. He has direct experience in dealing with the share registry. He says Own is aiming to be “beautiful app with real purpose”.
Their COO, Florian Batliner-Staber also comes with an impressive profile.
We are impressed with the team that has come together to work on Own. <Click on the profiles to learn more about the team’s background.>
Users of the platform are required to lock up a reserve of CHX tokens for the life of equity issue cycle. CHX is also used as fees for those users who decline to share their data. CHX is also used to acquire user analytics.
Investor communication on the platform will incur fees in CHX tokens.
While there are many ways to create organic demand for CHX tokens – it heavily depends on the adoption of the platform. While that is the true definition of a utility token – Crypto community has come to expect more (PoS models, for instance).
In the grand scheme of things, the total supply of 168 Million is not a lot when you start onboarding clients that are looking to raise capital of all sizes.
One of the only projects to take data security seriously
In the realms of cryptosphere, everyone seems to be focusing on either speed to land or ‘making a quick buck and speed to flee’. Most projects never address the issue of security of data. We are glad to see that Own team has thought through the security aspect and have a separate technical whitepaper addressing just that. They are also planning to undertake independent audits by accredited parties.
Why not Polymath?
Our readers know that we have picked Polymath before. Why then are we now picking Own that seems to be operating in the same space?
The answer to that question is two-fold:
- Market size: the traditional stock/capital market is ripe for disruption and has space to accommodate 100s of players without breaking a sweat
- Team and vision: we like the team and vision behind Own as much as we liked the hustling nature of Polymath
- End to end lifecycle: Own’s team commented, “Issuance platforms focus on a one-time event, we manage the full end to end lifecycle from creation and management of a shareholder and investor base. In addition, we support a number of secondary marketplaces, and we are also going to create our own (exchange).”
Addressing the business risks
Own’s whitepaper addresses the business risks associated with investing in the tokens. We recommend that you read all of them. We are glad to see risks being addressed within the whitepaper. This shows that the project is not run by some wannabees or business amateurs.
We are not there yet from a regulatory standpoint. We still have a lot of hoops to jump and it may not be another good 2-5 years before Own’s vision becomes a business reality. Since they have MVP available for people to use right away – it could be sooner, if regulatory authorities respond on time and provide clarity.
We wish Own very best in disrupting the traditional market to make capital more accessible to Micro, Small and Medium Enterprises while reducing costs of raising capital for big enterprises.
Thank you for reading this article.
Please subscribe to the browser alert to be notified. No annoying emails, just in-browser reminders!
Buy us coffee: Keep information FREE. We do not sell what we research. A small tip from you can help us bring you more content like this for FREE.
If you are thinking to open KuCoin account, please consider using our referral link.
Join Cryptotapas facebook group to see our cryptocurrency recommendations, for FREE.
Logos used in this article are the property of the respective organizations and individuals.
Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.
About the author
RK Reddy holds two Masters degrees, one in Accounting and another in Business Administration with over 15 years of experience in the financial services industry.
RK Reddy is an ardent fan of Blockchain and Cryptocurrencies. You can see the excitement about this new technology in every article on Cryptotapas.com. Sometimes this excitement leads to an overly optimistic view. Guilty as charged. RK Reddy says “what may seem like an ‘overly optimistic expectation’ today may become an everyday norm in 5-10 years; look at the history of cars or airplanes, Blockchain and Cryptocurrencies belong to a similar frame of reference.” Of course, that is just his opinion.