Investor Ready’s clients will be using Dusk Network to issue security tokens, raise funds and access the wider range of security token benefits. A perfect COVID-19 recovery for startups, scaleups and SMEs.
Business accelerator Investor Ready and blockchain technology firm Dusk Network join forces to combat the economic crisis caused by COVID-19, which impacts SMEs, startups, and scaleups. By providing token-based and alternative financing options, attracting capital will be easier and faster for companies in growth – or dire need: Token-based financing to bridge the SME funding gap.
In 2020, small-to-middle sized enterprises (SMEs) were responsible for 70% of the employment opportunities in the Netherlands, and 60% of the country’s added value. SMEs are often recognised as the engine of the national economy, and play an important role in creating job opportunities, whilst supporting regional economies and communities.
However, the elephant in the room is the looming €20-35 billion Euro funding gap for SMEs in 2019, as reported by the European Commission. While large multinationals are on the receiving end of billions of euros in support, the global COVID pandemic further exacerbates the difficulty for early stage companies to access growth-capital.
The partnership between Dusk Network and Investor Ready will broaden the alternative financing options available to Investor Ready’s clientele. In turn, Dusk Network sees increased deal flow towards its Confidential Security Contract Standard (XSC).
XSC works for SMEs and retail investors
Token-based and alternative financing are becoming increasingly popular amongst companies seeking growth-capital, and for good reason. Security Tokens on the Dusk Network are created at a fraction of the cost of traditional financing, and scale with company growth. Most notably, they provide the opportunity for retail investors to get involved; a welcome addition to the existing pool of Investor Ready’s 800+ angel investors. A quick rundown of the benefits of XSC-based Security Tokens:
- Automation of dividend payments, and secure online voting
- Ready to connect with P2P markets
- Fractionalisation of assets, enables precision investing
- Lower barriers to entry for retail investors
- Compliance can be hard-coded
- Scales along company life-cycle
“We are creating modern funding options and, with it, we aim to open up investment opportunities to a whole new category of investors,” explains Jelle Pol. “We want customers, superfans and the general investment public to be able to invest in the potential unicorn companies of the future.”
As an SME accelerator, Investor Ready, knows how important it is for early stage companies to have access to various funding opportunities matching their future plans. In recent years, Investor Ready has used their network of 800+ angel investors to guide hundreds of SMEs towards growth capital. Examples are Iwell, Vive, Fan Factory and Channex. And now the company is readying its clients for tokenization, making preparations for the first tokenized deals. Dusk Network is working on their mainnet rollout, and has their next big event scheduled for the 9th of April.
“SME financing is about precision. We need to select the right type of financing, for the right type of company. The first type of investment can have a long term impact on a business. By joining forces with Dusk Network, we can broaden our offering and meet the growing demand for alternative financing opportunities such as token financing” Said Pieter Vermeer, Managing Director of Investor Ready.
The deal with Investor Ready follows the recent news of Dusk Network becoming a shareholder of the NPEX Stock Exchange. Which “was a natural result of a successful partnership period, during which both companies developed pilot projects to further financial product innovation,” according to Dusk Network’s Business Director Jelle Pol.
? From ABC to XSC
Consider an early stage company ABC that has gone through the Investor Ready accelerator and is now ready to attract capital and grow its business.
- ABC can choose from various routes of attracting funding. As the traditional route via banks might take too long, and the owner is not willing to give up too much control to Venture capital investors, ABC decides that token-based financing best suits their business needs. It is easy, fast, and provides opportunity for all kinds of investors to get involved.
- ABC uses Dusk Networks’ XSC standard to issue tokenized shares (certificates), bonds, or any mix that best fits the owner’s preference. Now ABC can raise capital from angel investors, family, customers, or any other retail investor alike.
- As a bonus, the XSC standard automates all corporate actions towards ABC’s investors, like dividend payments or voting. This helps ABC to effectively manage its shareholders, even as their numbers start to grow.
- In addition, thanks to the digital nature of the security tokens in place, ABC can easily connect to peer-to-peer market infrastructure to enable liquidity for their shareholders, reduce liquidity risk for potential investors, making it more attractive to enter.
For the average SME these benefits mean that they can continuously attract new shareholders from a range of investors, customers and partners without incurring the time and cost-barrier of going through a notary deed for every transaction, or issuance. This allows the entrepreneur to focus on her business, without spending too much time on raising money.
