German fintech wevest has announced to launch an STO platform for small-cap SMEs. The firm has decided to use Stellar as the underlying blockchain.

Wevest Digital AG is a Berlin-based fintech that offers a range of banking services to small and medium-sized enterprises (SMEs), belonging maximally to the SDAX. The firm wants to provide a digital platform that combines investment banking services, wealth management, and corporate finance services.

To complement their services, wevest has now announced the facilitation of security token offerings. After, what the firm described as “extensive diligence and testing,” wevest has decided for Stellar as the most suitable platform for its new product. 

Simplicity, speed, cost efficiency: Stellar was “obvious choice”

Stellar is becoming increasingly popular. Recently announced STOs in Europe, for example Bitbond in Germany, or VMC in the Netherlands, are all using Stellar as their blockchain of choice. In March, IBM announced that World Wire – a global payments system that operates in real time– would be built on Stellar.

The Stellar platform is primarily known for the facilitation of cross-border payments, smart contract simplicity, fast transaction speed, lower cost, and built-in compliance features. Some argue these characteristics make Staller the ideal blockchain for STOs, superior to Ethereum. Wevest has now been the latest to join that line of thought.

Didier Goepfert, Head of Product at wevest, says, “Stellar was an obvious choice — it combines simplicity, speed, cost efficiency and met all our requirements. We are glad to join the Stellar ecosystem along with several other European companies, contributing to the adoption of blockchain-based products and providing SMEs with easy and efficient access to equity financing through electronic securities.”

Boris Reznikov, Director of Partnerships at Stellar, comments, “wevest’s investment platform takes advantage of what the Stellar network does best — facilitating the efficient transfer and exchange of value.”

Digital banking services on the rise: attractive value proposition for SMEs

Crowdfunding laws in Germany allow a company to issue securities of up to EUR 8 million before the issuer must submit a prospectus to the Bafin for approval – the threshold in Liechtenstein is at CHF 5 million.

Therefore, wevest sees an opportunity to serve the small-cap SME sector by providing STOs as a more simple and cheaper way of capital raising. The company will offer digital debt and equity issuances for SMEs starting by the second half of 2019.

wevest is by far not the only company that sees the potential for digital services in the SME segment. There is a growing number of digital first full stack financial services firms entering the market.

Last week, Geneva-based venture capital firm Blufolio announced to invest in Yapeal, a startup from Zurich. Yapeal plans to launch a digital bank based on blockchain technology that will serve small-cap clients on limited budgets. Like wevest, Yapeal also plans to go live in the second half of 2019, equipped with a fintech license issued by Finma.

As financing solutions such as Initial Public Offerings (IPOs) are too expensive for smaller SMEs, and banks often hesitate to provide business loans, STOs could become a cost-effective mainstream financing tool. Almost 99% of all German companies are SMEs. Thus, the growth potential is there. Expect more firms like wevest popping up soon.

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