On October 29th 2018, the world’s first space security token was announced by Texas-based Venture Capital firm SpaceFund. The new token will allow for increased liquidity and efficiency for investors who wish to participate in the funding of space-focused startups.
How the Benefits of Tokenization have Reached Space
Enterprises throughout the Fintech realm are realizing the benefits that come along with tokenized securities. Real estate funds, luxury property, and even Hollywood films have all experienced new ways of raising capital thanks to the quickly expanding industry.
The SpaceFund venture capital firm has officially brought these benefits to the space industry. According to founding partner Rick Tumlinson— who has also co-founded several other space initiatives— the Security Token Offering (STO) has the potential to transform the current structure of space-focused startups.
“SpaceFund’s goal is to support the development and profitability of amazing new space startups around the world. With Jeff Bezos, Elon Musk, and others investing billions into a space economic infrastructure, a revolution is underway in space. We want to allow more visionary people to get involved, to support the entrepreneurs opening space to humanity, and to share in the wealth it will create. This offering is both a giant leap and a first step in that direction.”
Several partners have already been announced, including Yeoman’s Capital, Abacus, OpenFinance Network, and Smart Valor.
David Johnston, CEO of Yeoman’s Capital, made the following comments concerning his company’s collaboration with SpaceFund.
“This is a match made to open the heavens. Yeoman’s has started over 30 companies in the blockchain space, and we are applying that knowledge and network to SpaceFund. Together we are going to change the way people invest in space.”
How SpaceFund will Revamp Investing for Space Focused Startups
Space investing does appear to be susceptible to major changes. Historically, it has been an inaccessible asset class for most investors. But with security tokens, fractional ownership can lower initial investment amounts, thereby increasing investor access.
Tokenization also allows for added liquidity when compared to traditional fundraising. Further, SpaceFund will combine tokenization with a traditional venture capital structure to mitigate risks by diversifying investor interests through dozens of enterprises with the highest growth potential.
Pradyuman Vig, CEO of SpaceFund’s partner Abacus, summarized the benefits offered by tokenization.
“Tokens do 3 things for space; soften liquidity issues, simplify transactions, and create regulatory transparency. Abacus has the technology and team to make the tokenization process smooth, seamless, and safe for all involved. Together, the SpaceFund team is well suited to run the first space venture fund that tokenizes on the blockchain.”
The Details of SpaceFund’s STO Explained
For the immediate future, SpaceFund’s security token will be available to accredited US investors. In this sense, the offering aims for transparency and SEC compliance.
As regulatory bodies around the globe establish clear regulatory guidelines, SpaceFund hopes to eventually offer its token to investors throughout the world. Their partnership with Swiss-based Smart Valor will aim to develop strategic expansion methods to enable a diverse and international investor base.
Smart Valor CEO Olga Feldmeier provided comments on the future growth of SpaceFund and its priority of compliance.
“A diverse set of regulatory frameworks for tokenization are rapidly developing in various jurisdictions around the world, while investor acquisition costs are growing quickly. Smart Valor has the platform and knowledge to efficiently reach a broad base of international investors in full compliance with these regulations. Our partnership will ensure that, once the time has come, SpaceFund will follow the fastest path to secure investments from abroad.”
Such regulatory framework has taken time to develop, and is still being developed by most— if not all— major regulatory bodies.
Yet once again, we see a prime example of how security tokens are transforming traditional finance. Even in the midst of stalling regulatory agencies, the benefits seem to be too great to hold businesses back.
What do you think of the SpaceFund security token? Will funding with increased liquidity and overall efficiency bring serious competition to the space projects of Jeff Bezos and Elon Musk? Let us know what you think in the comments below.
Image courtesy of Pixabay.