In the first place, blockchain makes the funding process accessible from anywhere in the world, safe and 100% transparent, while also bringing in audience of crypto-users.
Blockchain lies in the core of the new fundraising method - security token offering (STO), fully compliant with securities regulations, however introducing major benefits due unique features of the technology.
Main benefits of an STO in comparison with traditional fundraising methods include the following:
- Instant transactions and settlement of securities
- Eliminating multiple intermediaries of financial markets
- Liquidity for previously illiquid assets
- Democratizing the market by allowing more retail investors to step in
- Giving medium-sized venture-backed startups a fundraising alternative in between M&A/acquisitions and IPO
- Allowing the issuers to remain in control of their project (unlike VC funding), while achieving scale in amounts raised.
Right now, the entire infrastructure for blockchain-based fundraising is being created: issuance platforms, exchanges, custody, compliance, cap-table and other service providers form partnerships to create an industry that is going to be more efficient compared to traditional VC, equity and capital markets.