What is an STO?

STO stands for security token offering. It is a process similar to an ICO where an investor exchanges money for coins or tokens representing their investment. They are linked to an underlying investment asset in a way like stocks, bonds, real estate investment trusts (REIT) or other funds.

Security Tokens are defined as financial securities in accordance with the Howey test and empower investors with financial benefits such as:

• Dividends
• Equity
• Profit Sharing Rights
• Buy-Back Rights

Why STO?

Low Entry Barrier vs IPO

Floating on a stock exchange via a traditional IPO is a time-consuming and arduous process, only available to large companies looking to target over $10m. It requires a lot of middlemen – including brokers, exchange fees, extensive due diligence, etc. – costing large sums of money.

Greater Flexibility

STOs provide much greater flexibility in terms of how you actually run your business, comparable only to a privately held company; However, unlike a privately-held company, security tokens can be traded after the initial sale, making them a much more liquid investments.

Attract Global Investors

As such, STOs tend to appeal to a slightly different investor profile than stock markets. They often attract contributions from global investors looking to make a good return with greater liquidity, helping raise large sums quickly and to spread awareness of your business around the world.

Compliance can be Hard-Coded

Although compliance is slightly more complex with an STO than an ICO, compliance can be hard-coded into the security token through new standards developed on blockchains, such as Ethereum.

Fractional Ownership

Security tokens allow you to divide underlying assets into smaller units, enabling fractional ownership. This makes it more affordable for some investors to contribute to your STO and can also make the token easier to transfer on the secondary market.

How CAPITAL can help

We act as lead advisor in managing the whole fund raising and STO / IEO process for you, including assemble a STO professional team, advise and organize the resources necessary for a successful execution and provide ongoing services after the fundraising exercise.

Business Model Review

Provide guidance on your project, laying the groundwork for a solid business model designed to weather the volatile cryptocurrency market.

Project and Economics analysis to ensure the proposition is attractive to investors while feasible for your business.

Token Model along with Issuance Structure

Provide Guidance on how to create a sustainable tokenomics strategy that keeps your token’s market value and cap raise healthy.

Determine Token Rights and Economics

Help determine Issuance Phases, Token Values, Dividends, etc.

Legal Structure and Compliance Model

Analyze the existing business and token strategy, then provide guidance to help ensure there is a sound legal structure to proceed with the STO.

Identify the best legal jurisdiction to run the STO

Legal Entity Creation

Assistance in the formation of entities that provide sound legal structure to proceed with the STO and opening of bank accounts.

Legal Collateral

Our trusted network of STO legal professionals create well written, clear collateral that protects both you and your contributors, including token agreements, contracts, KYC/AML compliant, privacy policies, terms of use, disclaimers, and more.

Private Placement Memorandum (PPM) Preparation

Our network of legal professionals will work with clients through every step of developing the Private Placement Memorandum, including:

• Determining the appropriate structure and exemption model for each client’s unique requirements
• Preparing a comprehensive private placement memorandum that describes the security tokens and the terms on which they are being offered, informs prospective investors of the risks in acquiring the securities and explains how investors can participate in the offering
• Drafting the offering documents, including the purchase or subscription agreement, investor questionnaires, etc.
• Reviewing arrangements between our clients and third parties in connection with the offering, such as agreements with the tokenization platform, brokers, and consultants.
• Preparing and filing necessary documents with regulatory bodies such as MAS / SEC.

Tokenization Platform

A complete suite of Tokenization Management System delivered in conjunction with a strategic partner offering an industry leading solution including KYC/AML approvals, creation of wallets, investor accreditation process, e-signatures for the fund subscription agreement, investment process email notifications and investors mailing, blockchain information retrieval, token issuance, smart contract and so on.

Marketing and PR Campaign

Creation of website, marketing collaterals, video, one pagers, banners, social media channels, and engagement with blockchain media and bloggers.

Our Fees Structure

Combination of Retainer + Success

Is IEO / STO for You?

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> more info on Security Token Offering