Startups have dramatically increased their use of initial coin offerings (ICOs) to generate funding and have been ditching venture capitalists in the process. One Toronto-based startup, Polymath, is aiming to make it easier for companies to raise funds via tokens.
Polymath is a platform that helps companies launch regulatory-compliant securities tokens on the blockchain. The platform will also assist non-technical entrepreneurs in creating financial securities that keep up with evolving regulations, while facilitating secondary market trading.
They envision a world in which all financial securities are tokens, available anytime, anywhere, with no time constraints, no friction and offer instant settlement.
Keeping up with regulations
Polymath Chief Executive Officer Trevor Koverko recently shared his thoughts on why he started Polymath and how one day, investors will trade global securities instantaneously, with near zero transaction fees, 24/7. In short, a disruptive financial system with far fewer middle men.
“I’ve been involved in the cryptocurrency space for a number of years and I had always wanted to start a company that utilized blockchain technology,” explained Koverko. “I run a private equity fund and I thought it would be a great idea to tokenize the shares in my fund.”
Koverko soon realized what a long, confusing, and expensive process tokenizing could be. So, instead of launching securities tokens for his fund, he founded Polymath to help launch the “next 10,000” securities tokens.
Koverko predicts that a stampede of securities to the blockchain is imminent and that Polymath will be the missing infrastructure needed to safely make that happen.
Banks need to take heed
“The regulatory and legal issues are key challenges [for ICOs],” says Koverko, pointing squarely to a lack of clear regulations. “A recommendation to ICOs would be to retain a top quality law firm.”
Imagine that someone will soon create the next Ethereum or Dash, a tech marvel that was poised to make a difference in the world, only to have a legal hiccup force them to close operations.
This is one of the risks that Polymath will mitigate. The VC and investment landscape is about to change, and companies like Polymath are pushing to modernize our systems.
“We are offering companies a better way to raise capital that will be cheaper and faster than traditional routes,” Koverko said. “Blockchain technology has provided us with an amazing way to cut down on administrative overhead, as well as time, in an industry where not much has changed over the last 50 years.”
Finding product-market fit
When asked about what advice Koverko would have for other crypto entrepreneurs, Koverko is all about having a laser-like focus on deliverables.
“Find an idea you are obsessed with where you have a competitive advantage over others and constantly reaffirm product/market fit,” he said. “People will tell you your idea is good, but all that really matters is if they will give you money for your product or service.”
Companies need to raise money and raising money by issuing tokens on the blockchain is growing in popularity. As the space grows, so does regulatory oversight, and Polymath is aiming to help with the technological, legal, and liquidity hurdles standing in the way of entrepreneurs.