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How to close the gap between stock exchanges and equity crowdfunding? Increasing liquidity

Trading stocks and equity crowdfunding are both commonly used mechanisms to maximize your capital. On the first look they seem quite different to each others. But let’s have a look at the similarities.

Both of these two are methods to fund a company: Stock exchanges are for selected companies, who went through a process to trade their shares in form of stocks, publicly. These are often big companies (since an IPO can cost you well over a million dollars. Equity crowdfunding is mostly for startups or early stage innovative projects.

So what is the major common denominator? They are both addressed to the “crowd”. Stock exchanges are addressed to investors who want to take relatively low risk rates and get low rewards, while equity crowdfunding comprehends high risk investments, made for serial investors.

Does the size of the company define its risk?

The answer is no. Stock exchanges are easily accessible and liquid markets: investors have no difficulties to find information about companies, to invest in and to sell their stock almost immediately.

In fact, although investments on early stage companies can lead to higher revenues, people prefer not to invest, because it is a complicated, difficult and sometimes very lengthy proceed to exit from the investments.

This ability to quickly trade is defined as “liquidity”: the liquidity is the cost and the time that you pay in order to convert your financial instrument in cash.

To understand this, let’s make an example: A friend of yours has launched an incredible start up of crop-sharing in your city and you have invested 1000 euros in it. In three years this start up has expanded in your whole region and it has increased its value ten times.

Now you want to make use of that money and exit from your investment. So who is going to buy your share?

Said project is not on a stock exchanges and not known on a national level. This means that you have to find the buyer yourself. You can try the effort to sell your equity door-to-door. But requires more than just time and effort. This is why many investors do not make this type of investments

Photo by Markus Spiske

How to close the gap between stock exchanges and private equity?

What if the equities of a small companies are listed on exchanges like stock exchanges and are liquid as a currency? This is what TaoDusts project is going to solve.

The shares listed on our platform will have more visibility and they will be more appealing, because there will be a global market, accessible to the whole world population.

How can this become possible?

We do this by tokenizing (digitizing) the equity on a blockchain. In this way the equity will be treated like a token and, as a consequence, it will be easily transferred and easily listed on an exchange that will give visibility to the project.

Keep up with the TaoDust experience!

  • For the latest events from the TaoDust platform, please follow our blog.
  • To learn more about the TaoDust tokenized crowdfunding platform please visit our website.
  • If you wish to chat with the team about your questions please visit our telegram channel
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