Serial Entrepreneur, Marvin Steinberg, Explains Why STOs are Better than IPOsThe life of a startup has always been difficult. In addition to coming up with a revolutionary new idea that will make an impact and be profitable at the same time, they also have to ensure that they get enough funding to grow optimally at just the right strategic points in time.
Unfortunately, the reality is that startups often struggle for various reasons and the inability to push past these struggles can cause them to shut down even if they’re offering a genuinely good product/service.
German serial entrepreneur, Marvin Steinberg, explains that most startups do not anticipate all the upcoming obstacles and challenges they will face during just their first year, especially when it comes to making sure that they have enough funding to satisfy their needs. This lack of planning can be devastating for startups, and the room for error is really minor. They simply have to get it right from the start.
This also goes hand-in-hand with time management. Startups have to make hundreds of difficult decisions at any given time and no matter how much the team wants to work, there are only 24 hours in a day. Money problems hit startups hard, delaying the development of products or services as well as limiting growth.
Marvin Steinberg, an expert in marketing who has helped dozens of projects succeed, knows how hard it can be for startups to get started. Marvin explains that many of the problems startups face are rooted in capital constraints, and it’s no wonder.
Every business or marketing decision hinges on capital constraints: how much to spend on promotion, how many people to hire for the next expansion phase, invest in customer support or build another version of the product that might be able to be a good fit for another target audience. There are ample questions that – together with the sporading nature of funding – can create a lot of uncertainty for these ambitious companies.
However, there might be a way to significantly lower this uncertainty. According to Marvin, new technologies like the blockchain, cryptocurrencies, and new financial instruments are making it easier than ever for startups to raise funds.
As the most important thing for startups is to raise money, they definitely can’t afford to neglect these new promising technologies. And for a time, it seemed like Blockchain-based startups have found an easy way to raise funds by making use of ICOs, Initial Coin Offerings, a method alternative to the traditional IPO.
Initial Coin Offerings, a crucial development for blockchain-based startups
Over the last few years, companies realized that it’s getting harder and harder to reliably get the funding sources they need for expansion via traditional methods, so they started looking for new sources.
Fortunately, the timing was just right for an innovative solution. Blockchain technology was developing rapidly, and it quickly became obvious that it will serve as the basis for future innovation within the financial industry.
According to Don & Alex Tapscott, authors Blockchain Revolution (2016), “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
By allowing digital information to be distributed but not copied, blockchain technology created the backbone for a new type of internet that would allow the use of digital currencies, Bitcoin, and other innovations.
Shortly after, in 2013, the Initial Coin Offering (ICO) technology was developed.
These have been a tremendous help for blockchain-based startups. There were many benefits to launching an ICO, as opposed to a traditional IPO. For instance, ICOs didn’t need to comply with regulations, and this meant that everyone could easily launch an ICO and everyone could easily participate in them. There were no barriers anymore.
This made ICOs extremely attractive to high-risk investors and helped startups raise funds easily. ICOs have helped blockchain projects raise billions from 2013 until today.
Unfortunately, this didn’t last too long as the lack of regulations also meant a huge risk for investors. In fact, leading blockchain agencies that offer research, including Mesari, estimate that around 90% of ICOs have either failed or were scams. The freedom to launch an ICO made the method extremely attractive to scammers and fraudsters. Combined with the cryptocurrency boom in 2017, the unregulated nature of ICOs led to hundreds of failed ICOs as well as hundreds of scams.
The Evolution of Initial Coin Offerings
Investors’ trust diminished significantly and ICO’s were almost guaranteed to fail unless there was a great product or service involved in the token sale. Regulations were also harder on ICOs with some countries outright banning them completely.
IEOs are similar to ICOs but the token sale is launched by an exchange. This method became quite popular after Binance launched their launchpad platform for IEO’s.
Marvin Steinberg continues saying that because IEOs are conducted on cryptocurrency exchanges, people usually think this means the token sales are scam-free as the exchange itself has to make sure the project is legit. However, Marvin warns people that most exchanges are faking their trading volume through wash-trading and other methods and that they don’t necessarily care if they offer a token sale from a fraudulent project.
Marvin Steinberg is a keen believer in STOs, Security Token Offerings. as they are fully regulated. this gives investors an extra layer of security. Marvin asserts that STOs are the safest and most reliable ways of conducting a fundraise for tokenized projects.
The Reality of IPOs
Marvin Steinberg explains that the primary means of conducting a regulated offering remains to be IPOs, or initial public offerings of equity. However, this is at the disadvantage of startups.
Mr. Steinberg continues that the reality of IPOs is that they are expensive, time-consuming, and studded with bureaucratic jargon that covers the process with red tape. In the hyper competitive nature of startups today, pursuing an IPO can often be a path to destructive decision-making as the limited team members will be constrained to fulfilling the IPO needs for an extremely long period of time, rather than the development of the company.
Despite these problems, IPOs raise far more capital than ICOs as they are regulated and thus offer a safe investment channel for investors. Marvin Steinberg asserts that this aspect draws the interest of important institutional investors who can enable not only access to more funds, but also great growth networks.
Thus, startups are at a tough choice. They need funds but should they do so with an IPO that could potentially also be the cause of their end?
The Real Solution is STOs
Marvin Steinberg, with his company Steinberg Invest, is the co-founder of CPI Technologies and one of the leading Security Token Offering (STO) experts and top-recognized crypto entrepreneurs in the industry. He’s helped hundreds of companies collectively raise over 250 Mio $ so far. He also has direct contact with family offices worldwide and his influential network includes almost all licensed companies that sell tokens internationally.
In a recent interview with Bitcoin Magazine, Marvin Steinberg explained how he also helped drive mainstream adoption for tokenized bonds and tokenized buildings like hotels with regulators across Europe, and how he’s the leading the largest STO project in the world, the Times Square project.
Marvin Steinberg explains that what startups truly seek is a security token offering, something that has all the positives of an IPO, without the negatives.
Marvin goes on that STOs are used for the issuance of security tokens, which are regulated offerings that offer investors the same rights and protections that would be delivered with an IPO. However, Marvin Steinberg continues, STOs do not involve the same amount of red tape as IPOs do.
And that’s because STOs completely changed the game by fixing all the problems with ICOs, in addition to offering even more flexibility. In fact, the tremendous experience accumulated by investors during the ICO boom made everyone realize that it’s crucial to always comply with existing regulations on securities.
Therefore, STO technology was specifically designed to open the door to safe global investments, revolutionize capital markets, change the way conventional securities circulate, and provide businesses with a simple yet efficient tool to access the global capital market.
Not only that but it also enables much more productive relationships between entrepreneurs and investors, thereby fixing another big problem that ICOs had: not enough protection for investors.
That fact of the matter is that IPOs are still dominated by traditional investment banks and an IPO demands massive bureaucratic hurdles. Marvin Steinberg explains that this is not the case with a STO. Marvin describes that security tokens allow both startups and enterprises to tokenize assets, including equity, and issue them on a blockchain, while retaining the legal safety that would otherwise attract institutional investors to only IPOs.
In addition, STOs have a number of extremely valuable benefits compared to anything else. For example:
- The ability to raise more funds in record time without the hassle & uncertainty of traditional fundraising
- A cost-effective way to get instant access to a worldwide pool of investors and virtually unlimited funding opportunities (hundreds of times larger than the ICO market)
- Unprecedented freedom because – in contrast to stocks – STOs are globally liquid and not anchored to any trading platform
- Peace of mind and lower risk because of cutting-edge blockchain technology and comprehensive regulatory controls that make scam almost impossible
- The flexibility to raise funds not only for blockchain-based projects, but also for traditional enterprises, IT companies, and even general startups
- Measurable and regulated investment risk, with guaranteed respect for the rights of investors. In contrast to utility tokens, a security token (Type #2) is a full-fledged instrument investment, since it’s secured by a particular asset
- Instant online access to investment markets, and the ability to become “globally liquid”, thereby not being anchored to any trading platform (unlike traditional stocks and stock markets)
- Better protection for both the issuing company and the investor because of verified investor eligibility and automatically secured investor rights
Marvin Steinberg is the co-founder of CPI Technologies, a company that is leading the market for white label STO solutions. In fact, the company has completed over 40 projects and its upcoming flagship venture is a $700M tokenization of a part of Times Square itself. Marvin explains that the tokenization of real estate makes it accessible to anyone, making way for opportunities that never existed before.
Marvin Steinberg, a successful serial entrepreneur, asserts that businesses that seek capital raise can dodge the jargon involved with an IPO and simply pursue the future of fundraising: STOs. He believes that much of the media does not yet reflect on STO news, but that is only due to the novelty of this technology.
In order to draw fresh exposure to security tokens, Marvin has created a short 2-minute quiz on STOs which – once completed – reveals whether starting an STO can help you secure more funding and grow your business, without the hassle of traditional fundraising.
This lets anyone get a quick footing of their knowledge about the most advanced solution on the market today for raising the essential capital they need.
This simple quiz only takes 2-minutes to complete and you don’t even need any special knowledge or skills for it.