Security token offering (STO), though a newfangled investment instrument, has gained lots of momentum in a very short duration. The reason being, that it complies with the regulations and requirements of SEC, the regulatory authority of the industry. It has revolutionized the industry, has a bullish prospect as per the industry experts.
STO has the competitive edge over other investment options like ICO, but this being the type of private placement of securities, the cost of an issue is higher. Therefore, it is an attractive avenue for professional investors, and attracting large institutional investors seems to be the lucrative offer for STO; they being the “elephant” of the industry.
Large institutional investors have the amplitude to stir the market and thus alluring these would be advantageous for Security Token Offerings. But unlike retail investors which mostly make decision investment on the basis of FUD and due to FOMO; large institutional investors go through various steps and ultraprecise view of different aspects before reaching a verdict. To lure large institutional investors for STO, the strategy and approach need to be threaded accordingly.
The trend shift from ICO to STO ignited talks about more and more involvement of large institutional investors in the cryptocurrency community. But the large institutional investors have already adopted the cautious approach and require a satisfying idea to stop and invest. The idea or the working concept of the STO should have been built upon an idea with the futuristic approach and not a self-appreciated and over-hyped project.
The things which large institutional investors are considerate about are innovation and compliance. Nothing goes the same way when the investor is expert and has thorough knowledge about the concept and technology beneath. The selection of token standard should be such which extends its arms providing innovation, security and compliance all at once. To attract such league of investors having compliance with various laws like KYC, AML and ATFL is a must, as this is the reason of switch to STO from ICO, and cannot be neglected.
Large institutional investors need more and more automation and decentralization when the idea is a fruit of technology like blockchain. This awakes the need to investigate how a fully decentralized concept can be implemented in the STO project. This requires creating a conceptualized smart contract with business logic; a smart contract which is able to handle every complex situation and can swiftly process the business decisions in a programming language, without any intervention.
As STO project is game to be played legally and technically as well, therefore, having a proficient team is like an invitation card; which in itself tells the whole story. It must have expertise and experience at the back-end. The team including developers, advisors and legal experts should have the expertise, and prior knowledge is an added advantage to have.
All the things need to be presented in a very descriptive and professional style document – White Paper. After all, this is what conveys the whole concept to the investor. It should be pitched right and in accordance to the expert level of the target investors. The white paper is like a salesperson to the project; therefore it should speak not only about the technical aspects and the future development phases of the project but about the team and the knowledge which supports the project as well.
It’s not just a document rather it’s a first building block of the marketing strategy. All the things including having a digital presence, a website, social media marketing and community engagement need not be overlooked, as a deep investigation of the projects extends to these areas as well.
A well conceptualized and innovative idea creates a base, on which the STO project is to be built. The STO should be seen as a building made out of different building blocks. In this, every block is playing its role which is no less than the others’. The beginning is as important as the end.
The aspects which large institutional investors notice are:
what token sale is all about? Why even the token sale?
How tokens will gain value over time? What will be the ROI and how it’s different from the existing available options?
Alex Rodriguez said
“I believe a champion wins in his mind first, then plays the game, not the other way around.”
There is a strong need to learn and get educated from the ongoing work in the industry and have a unique and nice concept coupled with a team of enthusiast and passionate developers, legal experts and experienced advisors. Last but least, Security tokens permits creation of innovative business startups which helps to explore the various business possibilities to entrepreneurs & crypto startups.
If you want to create security tokens & building fundraising platform through security tokens for various industries, Consult with security token development experts