On December 2nd, 2019, Max Property Group announced plans to launch a security token offering. The group hopes to raise nearly €4 million to launch its real estate crowdfunding platform, Max Crowdfund. The company is well versed in the real estate sector, as it maintains more than €7 million worth of property assets.
Details of Max Property Group’s Security Token Offering Explained
Max Property Group is a Netherlands-based real estate company that has been in operation since 2016. The group offers property funds, management services, and property sales. As of late 2019, the company features more than €7 million worth of property assets, with four property funds in the United Kingdom, the Netherlands, and Germany.
The group is now leveraging the Security Token Offering (STO) in hopes of raising a total of €3.75 million in exchange for 20% of its shares. The offering will take place over five different phases, with each phase aiming to raise €750,000. The first phase has already begun, with more than €500,000 raised.
Max Property Group says the funds will be used for the official launch of its international real estate crowdfunding platform— Max Crowdfund 2.0. Following the launch, the platform will be open to third party property listings. According to the group, this will allow real estate developers to finance their projects, all the while using real estate as collateral.
Max Crowdfund was initially launched in 2017 and boasts more than 75,000 users across the globe. Yet version 2.0 anticipates several added functionalities. Investors will see minimum investments as low as €100. Regulatory approval is still pending from the Netherlands Authority for the Financial Markets. The group expects to receive a response from the regulatory within the next 10 weeks.
Max Crowdfund itself is built on blockchain technology, leading to security tokens as a natural path in terms of an equity raise. The tokens will be deemed MPGS and will be issued on the IGNIS blockchain.
How the STO has Supplanted the ICO
Security tokens have become the go-to method of raising capital in the blockchain space. The days of Initial Coin Offerings (ICOs) raising millions in a matter of weeks — without any regulatory approval — have come and gone.
Yet the benefits of blockchain technology, especially in terms of asset and investor management, have remained. The same advantages of the ICO are now being seen through its regulatory compliant alternative, the STO.
By officially classifying itself as a securities offering, the STO is subject to the appropriate laws and regulations associated with raising capital. Those laws depend on the regulatory bodies involved, which in turn depends on the location of the company launching the STO as well as the nationality of eligible investors.
So far, the nascent security token industry has raised almost $1 billion collectively. Assets to include equity, real estate, investment funds, and even fine art have experienced the advantages of the blockchain through a regulatory compliant manner thanks to security tokens.
What do you think of Max Property Group launching an STO to fund its Max Crowdfund 2.0 platform? Will STOs see a high rate of implementation in the Netherlands? We’d like to know what you think in the comments section below.
Image courtesy of Max Crowdfund.