REUTERS/Issei Kato
Tokyo businessmen are reflected in an electronic board showing exchange rates between (from top row to third row) the Japanese yen against the U.S. dollar, the euro, Australian dollar and (fourth row to bottom row) indices of Dow Jones, the NASDAQ and Hang Seng Index, outside a brokerage in Tokyo April 14, 2014.
- Templum, a New York-based trading technology company, has raised $10 million in a fundraising round with a Japanese investment giant.
- Templum says it could provide private companies with an alternative to the timely and expensive traditional initial public offering process.
New York-based trading technology company Templum has snagged $10 million in a fundraising round involving Japanese investment giant SBI Group, the company said on Monday.
The firm, which launched its alternative trading system this year, will use the funds to attract accredited investors and institutions to its security token trading platform.
Traders on the ATS, which is a type of non-exchange trading venue, will be able to negotiate directly with one another on the platform. Notably, it supports secondary trading of venture firm Blockchain Capital's security token.
The ATS also allows companies to launch a security token, which can be best thought of as a cryptocurrency twist on the initial public offering process.
SBI Group, which has made a number of investments in cryptocurrency companies, led the round alongside previous investor Raptor Group.
"This investment underscores our belief in Templum's team, technology, and vision for using blockchain technology to transact in digital assets as securities," Yoshitaka Kitao, chief executive of SBI Holdings, said in a statement.
The investment comes as security token offerings gain popularity over initial coin offerings, which helped crypto companies raised over $4 billion in 2017. An STO represents actual ownership in a business or asset, providing investors access to dividends and governance rights, in certain cases. With an ICO, investors are guaranteed only the future value of a token they purchased (which can go to zero). A number of companies are in the space, including Securitize and Polymath.
Templum chief executive officer Jim Pallotta told Business Insider STOs could provide private companies with an alternative to the initial public offering process, which has fallen out of favor among tech companies.
"I think we are at a really unique time period," Pallotta said in an interview. "There's a real opportunity to provide liquidity to the private markets."
Many high profiles startups like Uber, Lyft and Airbnb are opting to stay private longer, in part because private capital has become abundant. The IPO process is also known for being timely and expensive, costing some firms tens of millions in investment banking fees. That's on top of listing fees charged by an exchange.
Notably, music streaming company Spotify in April listed its shares via direct listing to avoid the cost of going public via an IPO.
An STO could be another, much cheaper, alternative to an IPO, according to Dave Weisberger, the chief executive officer of crypto technology firm CoinRoutes.
"I believe that we will live to see a day where all equities are tokenized," Weisberger said. "In the short term, however, there are issues with how such things will trade, in order to have global liquidity."
