STOKR connects retail investors, “everyday humans” as they call them, with SME’s who seek investments in their projects. The Luxembourgish startup commercially launched their web platform on the 1st of May. We met Tobias Seidl, former lawyer, co-founder of the startup and above all passionate about blockchain and its endless possibilities. Just what we need to better understand the story of STOKR.
(Featured Image: STOKR’s team, from left to right: Tobias Seidl, Milena Nikolova, Brian Bovi and Arnab Naskar / Image Credit © STOKR)
Build out a new capital market
STOKR’s story started back at the beginning of 2017, when Tobias Seidl and Arnab Naskar, two of the first co-founders, met.
“I met Arnab in Munich at a blockchain conference. We exchanged on ways to simplify capital markets enabling ventures to take part in these in a transparent manner. We reached to the conclusion that we needed to come up with a transparent market place combining fundraising and blockchain” explained Tobias.
Tobias started this project on the side, from Luxembourg, with other co-founders located in Hamburg and Berlin. “At that time, we also helped 3 blockchain companies doing successful utility token sales in Switzerland. These are all successful companies today” proudly told us Tobias.
The STOKR team is now composed of 7 co-founders and 14 employees, from tech, economic and legal backgrounds. All of them being blockchain enthusiasts counting also academics from the Hamburg university and crypto-asset supporters from the early times.
“We want the investors to be able to grow with the ventures.”
How does this work?
“We are a startup for startups. Our intention is to create a digital market place for SMEs, seeking funding, where they can describe their value proposition in a very transparent way, allowing retail investors to make informed-decisions” started simply Tobias.
Until now all is clear, but what does blockchain has to do with it? Wait for it.
The investors receive in return for their investment Profit/Revenue Participating Token, granting them a fixed percentage in the profits or revenues of the venture seeking funding. “We want the investors to be able to grow with the ventures”. Contrary to crowd funding platforms which are mainly debt based, at Stokr the investors participate in the growth.
The token gives them exactly this incentive as those tokens represent the ownership of the participation rights and are peer-to peer transferable.
From pre-utility token to security token
The STOKR team with their first company SICOS has already experience with helping issuing tokens for blockchain companies. “However, utility tokens are a suitable instrument only for a very few companies as they are not representing any direct value in the underlying company but live from network effects” pointed out Tobias.
The co-founders started to brainstorm on security tokens. “Everybody back then was telling us that it was impossible to do. And all players tried to circumvent security laws rather using them. On the other side, companies (small and big corporations) were contacting us to do ICOs, but most had no use cases for blockchain or the possibility to create network effects at all” said Tobias.
The startup started from scratch with this simple question in mind: how can you create a security token complying with corporate and regulatory rules alike?
In April 2017, the team drafted a vision paper setting out the basics, that are still the ones of the current market place. The project was then in motion, with at first the programming of the Ethereum smart contracts. “The features of the participating instruments needed to be reflected in the smart contracts; such features being the profits/revenue participating element, its transferability and a KYC/AML automated process through a white listing contract. Finally, a key point was the connection of the investor’s public Ethereum address to the investor data in order for the venture to know at all times who their investors are and as such managing their cap table independently of legacy financial intermediaries. That is in our view the beauty of blockchain and one of its most important value propositions allowing to create a completely new age of capital markets” detailed Tobias.
“We chose to act from Luxembourg as it is a neutral cross-border place and we want to target the entire European market.”
Stokr makes use of the public Ethereum blockchain, where the transactions are stored on a shared ledger and transfers are verified decentralized. “The ventures know at all times who are owner of the participation rights and the investors hold these without the need of a bank or depository. Contrary to the current capital markets where you rely on an endless number of financial intermediaries who do not much more than registering in their own system who is holding what and sell these activities costly to other intermediaries who then sell these ultimately to the companies” explained the co-founder.
The instruments qualify as transferable securities under the MIFID and the ventures are required to disclose information in a transparent way to the investors in accordance with the European prospectus rules.
“The new European prospectus regulation is the ideal regulatory framework for these kinds of security token sales as it allows the ventures to approach all investors in the European Union when complying with the disclosure obligations. Harmonization of capital market rules is the key to success for structures like ours” said Tobias.
A commercial launch since the 1st of May
The startup launched their interface in May after more than a year of continuous development of the market place. “We have worked on the smart contracts and the user experience since end 2017 as it was key for us to propose an easy to use interface for all” told Tobias.
“We chose to act from Luxembourg as it is a neutral cross-border place and we want to target the entire European market. We do not want to be perceived as a national company but as a European company with the aim to foster the European idea of openness and cooperation rather than nationalism and protectionism”.
“We want to target people that are not yet familiar with investment and blockchain, and enable them to participate in something they always wanted to do but could not do.”
STOKR currently has already succeeded to onboard several projects, with the first being a mobility company from Italy, which will start offering end of July. Four new projects will be announced in the upcoming months and brought step by step on STOKR’s market place.
At the moment, the startup has decided to allow only for limited number of projects which will be able to reach the minimum funding amount. If, at the end of the offering period (around 30 to 60 days), the funds raised fall below such minimum cap, the money goes back to the investors.
Over time, any investors are welcome to fund projects, with no minimum investment amount imposed. “If you want to invest 1 euro you can! We want to target people that are not yet familiar with investment and blockchain, and enable them to participate in something they always wanted to do but could not do. It’s about investing but as well, education and fun”.
On the platform, the investors can search ventures projects according to their interests. Verticals are diverse such as proptech, food tech, authentic products, fashion, mobility, education.
The startup does not charge any investors using their market place but takes a success fee from the ventures of around 5% when successfully funded.
“The idea is not being a robot advisor but to empower people to better understand investing.”
An education purposes
Being a STOKR’s investor also mean becoming part of the STOKR community, in which investors get to understand better blockchain and exchange horizontally with other investors and vertically with the founders of the ventures who seek funding. The team has at heart to educate the investors. “We provide them with diversification and valuation tools to manage their investments and the risks. The idea is not being a robot advisor but to empower people to better understand investing”.
“As our team is not expert in all industries, we work alongside recognized experts in their fields. We have industry experts coming from classic asset management to space industry” emphasized Tobias.
The startup now wants to get visibility and is participating to events around the world and is creating a network of partners and supporters who are in Luxembourg namely the LHoFT, the Office and now also LuxFactory.
The startup won the LuxFactory.com prize at the Pitch Your Startup event during the last ICT, granting them a participation with the Luxembourg delegation to the next CES event in Las Vegas.
“We are really excited to have such great supporters as LuxFactory. We are looking for partners like them to also get more visibility in the Luxembourg ecosystem” concluded Tobias. Let’s spread the word out there!