🛎 KKR's Ringing the Tokenization Opening Bell

In this month's edition of The ReCap we'll be covering:

• Industry Updates: Institutional progress and partnerships

• Real Estate News: NFTs and Stablecoins in Real Estate

• Wall Street Adoption: KKR ($500B AUM) has tokenized a piece

• Vendor of the Month: BitGo

• Advisors of the Month: Peter Gaffney, Anayansy Hernandez, and Alec Beckman

• Client Spotlight: Updates on Security Token Market

• Marketing STOs 101: Finding Investors

• Crypto Corner: Kim Kardashian

• Announcements: Ask a Token Advisor tomorrow at 12pm EST

But first...

Hello Tokenizers!

It’s officially October and the final quarter of the year. Hopefully, everyone saw the strong conclusions to what is normally the slow season for any industry. Just last month we saw KKR partner up with Securitize and Avalanche (copying the STM playbook!) to tokenize a feeder fund to one of the most institutional healthcare funds on Wall street allowing anyone who is accredited to simply participate by investing online through Securitize Markets.

We also saw WisdomTree, yet another multi-billion dollar asset manager, jump into blockchain using Securrency’s technology stack. Big shoutout to the STA team for also launching a Virtual Classroom on Real Estate tokenization while maintaining quality services to the most clients we’ve ever seen!

This tells me that the industry is at a turning point, and we are going to see more and more Wall Street in this business, on top of traditional real estate turning to this new digital frontier. And with that, there is more incredible news and tips further below, so I wish you an incredible start to Q4 and wish you happy tokenizing!

Best,

Herwig Konings

Founder and CEO, Security Token Advisors

[email protected]

By Parker Hughes

KKR puts portion of Private Equity Fund on Avalanche Blockchain:

KKR put a portion of its Health Care Strategic Growth Fund on the avalanche blockchain via Securitize. This fund is being offered under SEC Reg D 506(c). Tokenization allows for retail investors to now be able to invest in a fund that would have been previously inaccessible. The tokenized feeder fund invests in innovative health care companies in North America and Europe with proven products and services that are looking to commercialize and scale.

Ownera announces partnership with OPM and then Tokeny

Oasis Pro Markets has announced a partnership with Ownera. OPM is partnering with Ownera to distribute digital assets over the Ownera network. Ownera operates a FinP2P open-source routing protocol which executes the instant exchange of digital assets held on any blockchain platform. The integration of Ownera’s network will allow Oasis Pro Markets investors with further improved liquidity of their tokenized assets. Following the Oasis Pro Markets Partnership, Ownera announced a similar partnership with Tokeny as well. This is their second partnership in past month. Ownera is working rapidly to help build the necessary infrastructure for this industry to grow.

Nasdaq Starts Crypto Custody Service for Institutional Clients

Nasdaq will now compete with crypto exchange Coinbase and crypto custodians Anchorage Digital and BitGo in holding bitcoin and ether for institutional clients in the US. Nasdaq Digital Assets will initially develop an advanced custody solution that will incorporate liquidity and execution services to address industry challenges around connectivity, availability, and efficiency.

By Alec Beckman

Sign up for STA Real Estate Tokenization Education Course brought to you by Oasis Pro Markets!

Origin Protocol and Roofstock to Tokenize Real Estate Assets

Origin Protocol, a pioneering Web3.0 protocol with a focus on Non-Fungible Token (NFT) and Decentralized Finance (DeFi) has announced its partnership with Roofstock, a real estate investment platform.

Origin Protocol will help in creating an NFT marketplace for Roofstock on-Chain, the subsidiary of Roofstock that makes real estate investments accessible through its NFT tokenization solutions. The offshoot makes its real estate investments accessible through a modified ERC-721 smart contract built by Origin Protocol.

The real estate industry has a lot of inherent challenges and one of these is in the cost of closing any transaction. Notably, property owners spend as much as 10% of the total cost of their assets when selling them off, as middlemen fees are often bogus. This is besides the time and delays experienced across the board.

Roofstock onChain is looking at changing this narrative, offering an avenue whereby real estate transactions can be closed with at most 2.5% expended in transaction costs. With Origin Protocol, Roofstock onChain will look to expand the utilities of NFTs beyond their current regular use as profile pictures.

As described in the shared press release, the property deeds are tied to a single-purpose limited liability company (LLC), which are then tokenized.

The exchange of ownership can then be carried out onChain and acquisition can take place legitimately. After the purchase, the necessary verification and documentation can then take place to suture the legitimacy of the entire deal.

Tokenization is considered the next frontier for digital collectibles, and with the real-world offering from Roofstock as powered by Origin Protocol, more value can be created for all users on a global scale.

First Protocol To Launch Tokenization Of Real Estate Worth USD 250 Million Upon Launch Of SUMOTEX Presale

The innovative coin SUMOTEX is presently available for pre-purchase. The project is based on the cofounders’ goal of introducing web3 to institutional finance and real estate. Sumotex, which began as an NFT project on the IoTeX blockchain, rose to become one of the top projects after gaining traction and acceptance within the ecosystem. Liquidity, one of the biggest and most important problems that has long plagued institutional finance and real estate, is resolved by the protocol.

This level of almost instantaneous liquidity is unprecedented in the blockchain ecosystem. The world’s first over-collateralized Real Estate back stable coin will be issued by Sumotex, according to the company’s roadmap, and its owner will have the option of tokenizing their assets or choosing to deposit them in the stablecoin vault of Sumotex in exchange for stablecoin issuance at a discount.

Off-chain assets including stocks, bonds, investment funds, and real estate are tokenized through the Sumotex AssetFi protocol. Everyone will be able to tokenize their real estate and other physical assets on the system, which Sumotex refers to as “Tokenise-to-earn,” achieving INSTANT liquidity. It has already been demonstrated in a case with Sumotex, who will tokenize a portfolio of real estate in Malaysia valued at 2.5 million US dollars.

With the intention of introducing web3 to conventional real estate and institutional finance, SUMOTEX has the vision, capacity, and potential to do so. This presale, where Phase 1 sells for 0.07 USD per SMTX while the listing price on Uniswap is 0.10 USD per SMTX, is not one to be missed.

Sumotex was founded in 2021 with the goal of revolutionizing the long-stagnant real estate sector. We believe that web3 real estate should take over because traditional (Web2) real estate is considered to be opaque, expensive, and illiquid. Our NFTs are unique in that they are owners of our investments (metaverse or off-chain assets). Additionally, customers will be able to mine tokens from the Ethereum Network while staking their NFT on the IOTEX blockchain.

By Peter Gaffney

As perhaps one of the more exciting names to enter the game, KKR graced the industry with a potentially blockbuster product. KKR, one of the original Leveraged Buyout firms with almost $500 billion in assets under management, decided to tokenize a feeder fund to their flagship $4 billion Health Care Strategic Growth Fund II.

This is a very feasible and foundational model for asset managers of all kinds to follow. Nothing about the original Health Care fund is changing - the LPs, GPs, and capital structures are the same as they were prior to this September announcement. The new change only comes through the feeder fund; specifically, through the portion of the feeder fund that will be tokenized, the amount of which will likely depend on how much is raised through the primary offering on Securitize.

The feeder fund, which can now raise capital from investors onboarded to Securitize’ platform, will simply co-invest with the main fund or act as an LP in the main fund. This is both unique and relatively groundbreaking because it shows the new reality: that traditional investors and digital asset investors can play nicely together.

The goal is that KKR’s tokenized fund does well on the capital raising standpoint, lists on Securitize Markets or a comparable Alternative Trading System (ATS) after a likely 12-month lockup period, and rolls the technology playbook out to a greater share of the Health Care fund or to other feeder funds and standalone products. A successful proof-of-concept here will likely draw attention and resources from The Carlyle Group, Apollo Global, Blackstone, and other competitive groups.

The STA team will be covering other comparable, institutional-caliber offering structures in more depth this quarter. There is no lack of ammunition on that front, as big-time players like Hamilton Lane, abrdn, JP Morgan, and Goldman Sachs continue to expand their range of investments into tokenization, and will likely make use of these new portfolio companies to bring their own tokenized products to market.

Check out John Wu from Avalanche speaking about this on Bloomberg!

By Peter Gaffney

STA would like to highlight BitGo as its vendor of the month. BitGo is an institutional-caliber digital assets platform that offers services across custody, prime trading & lending, and portfolio management. The firm already has mutual integrations with other custodians and trading platforms, making BitGo a near seamless integration and complement. BitGo also expanded into NFT storage and capabilities, which is a precursor to additional blockchain-based assets like security tokens.

We are excited to be working with BitGo to support our own clients and vendors in the space under the common mission of growing the tokenized asset ecosystem.

By Jessica Burns

What Are Our Advisors Up To? 

The talented Peter Gaffney has blessed us with his First Half of the Year in Review report and it's packed full of industry goodness!

The security token industry commenced 2022 at $1 billion in market cap and saw $20 billion increase to that within just a few months. 

The team at Security Token Advisors compiled all major developments that led to this growth through issuers, investments, and institutional adoption, among other factors and broke it down in this report. 

Bank by bank, asset manager by asset manager - capital markets are shifting towards #tokenization for their digital assets play, especially as regulation begins to raise the 'crypto security' question regarding prominent cryptocurrencies and tokens.

The deep dive into tokenization covers a wide range of topics ranging from high-level education to previous and existing cases and significant developments, in both private and public markets. 

Tokenization is applicable to nearly all industries, making this publication an agnostic read for all.

To read Peter's 2022 half year tokenization report click below

Real Estate Tokenization Course 

The talented Anayansy & Alec Beckman have been working hard on our Real Estate Tokenization Course sponsored by Oasis Pro Markets!

The course was created by innovative entrepreneurs in real estate looking to take advantage of ownership technology or want to learn more about how blockchain will change the real estate industry forever. 

Only module one has been released but so far it's been a hit! It covered how real estate and blockchain intersect, the benefits tokenization offers & a market overview of the industry. 

The on-time purchase of our Real Estate course will include: 10 hours of materials, monthly live webinars with industry leaders and one year full access to the course. 

To learn more or to sign up, check out our website

Don’t forget to follow us on Twitter! 

By Jason Barraza

This month we're happy to present an update on one of our favorite clients: Security Token Market!

STM went live with their capital raise on July 6th, 2022. They used RegCF to be able to accept investment from both retail and accredited investors.

So what's happened since then?

• STM has seen investment come in from loyal followers, partners in the space, and even secured a lead investor: SPiCE VC!

• Multiple firms have joined the STM Data Partnership Network such as Aktionariat, Stobox, and most recently Texture Capital to name a few

• They now have a strategic partnership with Benzinga to broaden and educate the rapidly growing digital asset community

And last but not least something is coming real soon... make sure to check out STM.Co on October 11th for a surprise to celebrate STM's 4th birthday, you don't want to miss it!

In the meantime, check out part of a Twitter Live below between STM CEO Kyle Sonlin and SPiCE VC Managing Partner Tal Elyashiv

Join the 84 people from 14 different countries and 5 continents that have invested in STM below!

By Jessica Burns

Finding investors is one of the most important things you can do to have a successful Security Token Offerings. However finding the right investors is one of the most significant decisions you can make and there are many advantages to having the right investors. 

So let's get started. 

There are different types of investors, let's break those down:

Institutional investors: Institutional Investors could be many things such as family offices, pension funds etc. These investors understand the benefits of crypto investing lie in two factors: liquidity and high returns.

Individual investors: In the last few years, a new colossal pool of capital became available to private corporations. Previously, most individuals could not invest outside stock markets in non-traded companies, but they entered the game thanks to tokenization and fractional ownership. You can divide them by interests and demographic characteristics to discover those who will find the risk-return profile of a given investment the most attractive.

Crypto-investors: These investors tend to invest in more crypto focused assets and prefer blockchain/crypto projects to invest with traditional assets. Real-world assets in the form of tokens are suitable for this type of investor to secure their money.

Venture capitalists: VCs invest millions in a company by securing a share in the company known as equity capital. The investment is predicated on the idea that the equity capital will increase in value over time and they'll receive a return on their initial investment. This type of investor typically works with companies who have a solid business plan and have already displayed some measure of success. You'll need to show a solid business plan and high-profit return.

There are many ways to attract and find these types of investors. Here are a few strategies to find those investors: 

• Detailed Investor presentation/ Investor deck

• Have a person of contact for investors to speak to or hire Investor Relations person to help navigate investor questions & process

• Proactively network with Investors & start developing relationships 

• Have your own event + selectively invite industry leaders

Remember: Before approaching investors, develop your own term sheet that details the investment terms that make sense for your business, rather than passively accepting the investor's term sheet. Legal advice from a trusted source is invaluable during the investment process.

There are many ways to find and attract the right investors and that is an important part of having a successful STO launch. 

For more information on Investor Relations for a Security Token Offering please contact: Jessica Burns, Head of Investor Relations at [email protected]

By Adrian Alvarez

This week, the SEC announced a lawsuit against one of the biggest celebrities in the world, Kim Kardashian, for her role in promoting a crypto project. The SEC went so far as to send a tweet out by their own Commissioner, Gary Gensler, which announced the lawsuit, along with the penalty of around $1.3M, and posting a video of Mr. Gensler speaking about how investors should be cautious about listening to celebrities regarding investment advice.

ANNOUNCEMENTS:

Ask a Token Advisor 

Have questions around tokenization, securities laws, blockchain, STA, or anything Web 3? Great, we have answers!

Join our Head of Consulting Adrian Alvarez and Head of Research Peter Gaffney tomorrow at 12pm EST and ask away on Twitter Spaces. Set your reminder 👇

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