Without a doubt, initial coin offerings (ICOs) changed the investment landscape all around the globe. This more open form of investing gave a huge jolt to the crowdfunding movement and in turn has raised nearly $14 billion since 2014, spread across thousands of companies. ICOs were exactly what the blockchain world needed to launch itself into the mainstream, but what it didn’t need were all the negative ramifications that came along with ICOs: fraud, pump and dump schemes, outright theft.
Because ICOs offered little to no rights to token holders, governments struggled to step in and assert their control over the situation. On top of this, ICOs were missing out on major investment opportunities from VC funds and angel investment firms (essentially because laws dictate that VCs can only invest in securities). The solution to these problems came in the form of STOs, or security token offerings. STOs focus on both retail and institutional investors while abiding by all legal regulations and restrictions. Because of this legal compliance, STOs open the door of VC funding opportunities that were previously restricted to select groups.
Just as we saw ICO agencies popping up overnight during the boom in 2017, we’ll see STO agencies pop up overnight as they grow in popularity. Beware, however, of the agencies that once offered ICO services and are all of the sudden “STO experts” now. Remember, just because a company provided ICO services in the past doesn’t mean they can also provide STO services, since the processes are quite different (not only legally, but also in terms of marketing strategies, investor outreach protocols, and much more). It’s important to look at a company’s track record and investigate how they are planning to offer STO services; if they are actively changing to accommodate this new type of offering then we’ve included them in the list provided below.
These are agencies that became well known as ICO agencies and are now working toward becoming STO agencies. They are improving their marketing, outreach, and legal services to provide STO services with the same efficiency as their ICO counterpart. These companies will certainly improve over time, and their past track record with ICOs guarantees them some legitimacy in the market.
Fundraising, Investor Relations, Legal Framework, Tokenization/STO Dashboard and Incorporation Guidance, PR and Marketing
Priority Token has proven their reliability in the ICO market with many successful projects (Faceter, Modultrade, PlayKey, BitRewards, SharPay, SkyfChain, EiraCube, LipChain), a strong investor network, heavy community involvement, and great reviews. They manage a huge chain of investors and funds in the Far East, Middle East, and Europe and also have partnerships with credible exchanges, such as Coinsuper. As they move into the STO market they focus more on fundraising and cater their STO services appropriately. Founders can expect a full suite of STO services from Priority Token that have been specially designed to fit this new market. Their legal framework is one of the strongest services on the market.
STO Launchpad, Legal Framework, Investment Package, Marketing/PR, Community Management, Fundraising, Post-ICO and Exchange Assistance
Some clients that the X10 Agency has successfully worked with in the past include Faceter, Securix.io, Blockchain in Telecom (BubbleTone), CGCX, Paygine, and more. As their primary focus is on marketing in general, their STO services are oriented towards marketing, but also includes special investment packages, PR, and exchange assistance. X10 has proven success with STOs in their portfolio and have plans to focus on the STO niche during 2019 with their “from scratch” approach, which involves creating legal frameworks with a strong legal team, fundraising assistance through their investor network, the investor’s dashboard, and much more.
Exchange Listing, Tokenization, Turnkey STO Service, Consulting, Marketing, Blockchain Development
Some of Blockchain App Factory’s previous clients include Shell, McDonalds, Dash, and DasCoin. Blockchain App Factory has plenty of industry experience, offers an extensive suite of services, and has worked with many reputable companies. Their emphasis on STO legal services, STO specific marketing, and STO asset management make them favorable in a market where many ICO companies are dipping their toes into STO services without having the necessary experience.
Community Management, Translation, Advisory, Community Rewards, Turnkey Solutions
AmaZix’s portfolio is primarily focused on community management, with clients such as Babb, Bancor, GBX, Hdac, WePower, and GoChain. They have a lot of industry experience, and although their primary focus is geared toward community management (that is what they like to flaunt), they also focus on STOs when consulted for advisory services. AmaZix “specializes in helping clients structure security token sales, while navigating the quickly changing regulatory environment. Meet and exceed the high level of scrutiny for your upcoming security token offering.”
Marketing, Consulting, Investor Outreach, Community Management, Smart Contracts, KYC/AML, Security Audits
TokenAsia is a bit of a hybrid, offering a variety of services as well as a platform creation service on which founders can host their STO. Their past clients include Zagg, GeoMain, GoEureka, JustPowerIt, DigitalBits, and more. TokenAsia works globally and has been in the industry since 2016. They made their place in the market doing ICOs and as trends are starting to shift they began to specialize in STOs as well, using their STO specific platforms to help founders stay within regulations and legal limits.
Investor Relations, Consulting, Content Creation, Advertising Management, Token Listing
Because TSM Global oversees many smaller companies, it doesn’t directly list clients. However, they have industry partnerships with Top ICO List, Coindesk, Tech Racers, Bitraffic, Deloitte, and Blockchain Marketing Asia. TSM Global, and its predecessor, have been in the industry for over eight years and have served over 80 clients. They are essentially a middleman that connects founders to the appropriate services around the world, based on needs. Because of this, they are useful for STOs as they can connect founders with the appropriate legal guidance based on their local laws.
Listing and Marketing Platform, KYC Vetting, Investor Outreach
Being a household name has helped Indiegogo move into VC, ICO, and now STO markets. They successfully worked with the St. Regis Aspen Resort (18 million USD raised through STO) and have plenty of market credibility. They offer compliance services to ensure that the STO meets legal requirements (the hardest part of STOs), and they actively vet companies that apply to be on their listing. They also offer a global platform (on which over $1 billion has been raised) by pairing with Templum.
The following are VC firms, lesser known STO agencies, and other advisory companies that provide solutions for companies looking to structure, launch, or trade STOs.
Token Design, Token Issuance Platform, Raising Capital
Being a bit smaller on the scene, New Alchemy may not have the same press coverage as the entries above, but they still have an impressive client list: Bittrex, AirToken, OvCode, Agorai, Xriba, and more. New Alchemy was founded by Peter Vessenes, who was the co-founder of the Blockchain Foundation, which helps lend credibility to the agency. New Alchemy has roots in VC funding, which is one of their key services, and this ensures they know the inner workings of securities law.
Token and Offering Structuring, Legal, Tax and Accounting Advice, Token / Smart Contract Creation, Investor Outreach and Marketing
The Satis Group claims to have over $100 million in token issuance experience, and when you couple that with the experience of the team it’s a win-win. Emma Channing, the founder and CEO of Satis Group, has over 15 years of experience in-house as well as at some of the leading national law firms. The Satis Group focuses on securities law, has been working with VCs for many years, and is a great choice for advisory services.
Investor Relations, Research, Advisory, Corporate Finance
Being an official sponsor of the Gibraltar Blockchain Exchange ensures that DLT Capital knows their business when it comes to security token offerings. The GBX is EU regulated and has to maintain the same regulatory standards as the Gibraltar Stock Exchange. DLT Capital has worked with such clients as iampass, Hycon, Vreo, Arxum, CoinMirror, and more. Aside from that, DLT Capital also offers investor matching services to help STOs find more success.
Turnkey Token Solutions, Exchange Listing Assistance, Legal Advisory and Strategic Partnership
Securitonomy is based in Malta, but given that Malta has one of the most ICO/STO-friendly governments in the world, this is far from a bad thing. Securitonomy partners with TokenBackers, Cryptovest, and Krypton Capital to bring clients a full range of services that operate within Maltese regulation. With over six years of blockchain development and 35 successfully issued tokens under their belt, Securitonomy is well equipped to tackle even the most difficult STOs in Malta.
Tokenization, Platform Listing, Advisory Services
Polymath is one of the industry leaders in token issuance, but in conjunction with that they also offer token creation services that ensure the tokens meet all legal and exchange requirements. Because of this, companies can launch their own STO using Polymath’s services to ensure they are legally compliant and pass all appropriate KYC/AML protocols. For the most complicated cases, however, founders may still have to contact a lawyer for legal guidance when creating a security token.
STO Launching, Issuance Platform, Advising
StartEngline, like Polymath, is a combination issuance and advising platform. They help their clients create compliant tokens, list them within StartEngine’s platform, and showcase them to investors. StartEngine has had successful STOs already, such as Waverly Labs and ElliptiGo, both compliant STOs that raised over $1 million.
This last section is a hybrid, listing the most common STO issuance platforms and a small collection of specialty lawyers who focus primarily on securities law. When in doubt, contact a securities professional to ensure your token is within regulatory standards.
Token issuance for SRC20 Compliance
Swarm Fund is also one of the industry leaders for token issuance and the SRC20 token ensures compliance with all securities laws and regulations. Swarm aims to simplify the corporate stock trading process by decentralizing and globalizing it, and they already have some big-name clients trading on their platform (Robinhood, Spark Labs, Farm Coin).
Securities Compliance Advisors, and Lawyers
Tatiana Koffman, a VC investor with a background in law (mergers and acquisitions), compiled the following list in her popular Medium post “4 Security Token Structures and the Lawyers to Help You Execute Them.”
- James G. Gatto, Sheppard, Mullin, Richter & Hampton LLP
- James A. Mercer III, Sheppard Mullin, Richter & Hampton LLP
- James J. Thompson, Sheppard Mullin, Richter & Hampton LLP
- Deborah S. Thoren-Peden, Pillsbury Winthrop Shaw Pittman LLP
- Curtis L. Mo, DLA Piper
- Margaret N. Rosenfeld, Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP
- Heyward D. Armstrong, Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP
- Grant P. Fondo, Goodwin Procter LLP
- Richard B. Levin, Polsinelli LLP
- Charles A. Gelinas, Dentons
- J. Dax Hansen, Perkins Coie LLP
- Kyle Wood, Perkins Coie LLP
- Robert H. Rosenblum, Wilson Sonsini Goodrich & Rosati
- Patrick Murck, Cooley LLP
- Michael McGrail, Cooley LLP
- Adam T. Ettinger, FisherBroyles LLP
- Marc Boiron, FisherBroyles LLP
- Pratin Vallabhaneni, White & Case LLP
STOs are still very new, so be wary of companies offering “full service” solutions. This isn’t to say that they don’t exist, but do a bit of background research to ensure the company isn’t just repackaging their standard ICO services as an STO one. It is important to remember that these two offerings are very different. If you are planning to raise a large amount of funds, it is always best to contact a lawyer to make sure you are following regulatory standards. No matter how expensive the lawyer is, they are always cheaper than the expenses brought on by being shut down by government regulatory bodies and having your company’s assets seized.
About the author:
Kirill Shilov — Founder of Geekforge.io and Howtotoken.com. Interviewing the top 10,000 worldwide experts who reveal the biggest issues on the way to technological singularity. Join my #10kqachallenge: GeekForge Formula.