Throughout modern history, many companies have raised money by selling shares of ownership to members of the public. When a company sells shares of stock to the public, it has traditionally done so with an “IPO.” IPO stands for initial public offering. With an initial public offering, any member of the public can buy stock in the company.
The First IPO
The first IPO in modern history was conducted by the famous Dutch East India Company. This company sold shares in order to raise capital for its expansion. The IPO was very successful, and the Dutch East India Company went on to be the most valuable company in the world during the 1600s.
Noticing the success of the Dutch East India Company’s success, many other companies soon followed suit and launched IPOs of their own. The first IPO in North America took place in the year 1783. This IPO was conducted by the Bank of North America.
IPOs Through the Ages
Over the centuries, IPOs became an extremely popular means of fundraising, and thousands of companies have used them. IPOs fueled the growth of major stock exchanges such as the New York Stock Exchange and the London Stock Exchange. Some of the most important IPOs of all time were UPS, VISA, Facebook, Apple, Microsoft, Alibaba, Ford Motor Company, and Goldman Sachs.
The Introduction of STOs
From 1602, when the first IPO was launched by the Dutch East India Company all the way to the recent launch of the Facebook IPO in 2012, IPOs have not changed that much. However, in the past few years, a new type of fundraising has developed. This new type is called the security token offering – STO. Security Tokens represent Digital Assets (or Tokenised Assets), which act as securities.
These assets are offered via cryptocurrencies or digital tokens. They are designed to be a similar, but a different form of ICOs (initial coin offerings). Initial coin offerings utilise digital tokens but are not securities. STOs, which are also referred to as Tokenised Asset Offerings – Taos, allow investors to access actual assets such as shares of ownership of a company, dividends, voting rights, interest, etc. They are considered securities for regulatory purposes.
With STOs, companies can get access to fundraising in a transparent, measurable and reasonable manner. STOs are dealing with actual securities, as known as asset-backed digital securities, it brings a reliable environment to the crypto community. However, STOs are still in their infancy.
It is entirely possible that they could one day replace, or at least compete heavily with traditional IPOs due to their many benefits.
Yuree Hong is a CEO and Founder of Ampliv, blockchain consulting firm focusing on the Asian market access and tokenisation for enterprises. She initiated the first women in blockchain community in Asia, SHE Blockchainers. A deep tech geek and content creator, and a frequent speaker in blockchain and female leadership. Currently based out of Singapore.
(This article is originally posted on Ampliv.io.)