The Bafin has approved yet another STO: StartMark’s Venture Capital token. The digital bond share enables investors to participate in the profits of a diversified startup asset pool.
The German financial markets authority Bafin approved StartMark’s €50 Million Security Token Offering (STO). The prospectus was approved on 15th July and the STO will launch in early August.
StartMark resembles a Venture Capital fund and will invest in a variety of promising startups. Managing Director Ralf Heine says the potential for startup financing in Germany is enormous and the company will at first focus on the State of North-Rheine Westphalia, where its home-base is located. Heine believes there are opportunities in Fintech, Foodtech, and e-commerce.
He says, “To actually invest professionally in new business ideas has so far been reserved for very few large investors. You can put money here and there into a single start-up via crowd-investing money, but there is a need for risk diversification.”
With the StartMark token, the investor acquires a share in a digital bond and can participate in the profits of the underlying venture capital portfolio. “We offer a modern form of crowd-investing,” says Heine. “But not in stand-alone investments, but a pool of startups.”
Bafin process long and tedious; 17 pages with questions and comments
Getting an STO prospectus approved in Germany is no easy undertaking. In arecent blog post, the company shared their journey:
“It all began when we submitted our whitepaper to the BaFin. That was kind of a preliminary test for the business model. After that, the actual work started on the securities prospectus. Legal and technical precision work was necessary to fill the content framework provided by BaFin with facts.
Several months passed before the first upload of the draft at BaFin, with numerous rounds of discussions, each involving a dozen employees and external consultants. [To show] how thorough BaFin is, [the regulator’s] first response to the 77 pages prospectus draft: There were 17 pages with questions and comments back. “
Considering the history of ICOs and the lack of clear regulations regarding digital securities, the approval process takes time. Other Germany-based STOs like Bitbond or Fundament have also reported a long and tedious process.
StartMark predicts 10% to 20% annual return, but no details regarding its portfolio
StartMark’s token is a digital bond share with 15 years maturity. The company predicts a 10% to 20% annual return and a tripling of the token value throughout its lifetime.
The issue price is €1 per token. There will be three sales rounds:
- In the first round, which lasts until September 30th, investors need to buy a minimum of 1000 StartMark tokens and will receive a discount of 30%.
- In the second round, from October 1st to November 30th, buyers can purchase a minimum of 500 tokens at a 10% discount.
- The third round will start on 1st December and everyone can participate with at least €100.
In the first round, investors can buy a maximum of 1 million tokens, the limit in the second round is 2 million tokens.
StartMark has so far not revealed any details regarding its portfolio. According to a recent article in WirtschaftsWoche Gründer, StartMark is still building its portfolio and is currently negotiating deals with three startups in the food industry, retail, and logistics.
Venture Captial investments are a risky business. Even though StartMarks portfolio will be diversified, investors still face the risk of a total loss. Investors will want to know where exactly the money goes.