To­kenMar­ket tar­gets $350m in fund­ing for re­gional start-ups

The National - News - - BUSINESS - ALKESH SHARMA

Global in­vest­ment plat­form To­kenMar­ket aims to raise $350 mil­lion (Dh1.2 bil­lion) in fund­ing for re­gional tech start-ups and small to medium en­ter­prises out of its Dubai of­fice by 2021, ac­cord­ing to the com­pany’s chief ex­ec­u­tive.

The UK-head­quar­tered en­tity, a to­ken sale and blockchain crowd­fund­ing plat­form, opened its lo­cal of­fice at Dubai In­ter­na­tional Fi­nan­cial Cen­tre in Au­gust, af­ter se­cur­ing an in­no­va­tion test­ing li­cence from the Dubai Fi­nan­cial Ser­vices Author­ity.

“The Mena [Mid­dle East and North Africa] re­gion has huge un­tapped po­ten­tial when it comes to non-tra­di­tional ways of rais­ing cap­i­tal,” Ransu Salo­vaara, chief ex­ec­u­tive and founder of To­kenMar­ket, told

The Na­tional. “We will help lo­cal start-ups and growth-stage com­pa­nies to raise money by is­su­ing se­cu­rity to­kens.”

Spend­ing on blockchain in the Mena re­gion has been grow­ing at a com­pound rate of more than 70 per cent since 2016, and is set to reach $307 mil­lion by 2021, ac­cord­ing to the US-based In­ter­na­tional Data Cor­po­ra­tion.

To­kenMar­ket has a net­work of more than 170,000 in­vestors in over 150 coun­tries, said Mr Salo­vaara, adding, “We have raised close to $350m for over 30 com­pa­nies since last year and our aim is to raise the same amount in the Mena [re­gion] in the next cou­ple of years.”

Se­cu­rity to­kens are is­sued to in­vestors as a form of dig­i­tal bond us­ing blockchain tech­nol­ogy that re­duces ad­min­is­tra­tive costs and time. Blockchain, the tech­nol­ogy used for ver­i­fy­ing and record­ing trans­ac­tions, is a dig­i­tal chain of trans­ac­tions linked us­ing cryp­tog­ra­phy, a mech­a­nism for se­cure com­mu­ni­ca­tions, on an open ledger. The data­base is a real-time li­brary of records that are dif­fi­cult to tam­per with as each change cre­ates a record.

“There are clear ben­e­fits to to­kenis­ing bonds,” said Mr Salo­vaara. “We can reg­is­ter lots of data on the blockchain and bor­row­ers can demon­strate a trans­par­ent his­tory mak­ing fu­ture debt rais­ing eas­ier and cheaper.”

The com­pany has helped some of the “most no­table blockchain-ori­ented com­pa­nies evolve from sin­gle em­ployee start-ups to hun­dred mil­lion dol­lar en­ter­prises … we aim to repli­cate the same in the re­gion,” he added.

Founded in Gi­bral­tar in 2017, To­kenMar­ket was cre­ated to pro­vide fund-rais­ing tools to blockchain-ori­en­tated busi­nesses. It later moved its head­quar­ters to the UK, where it is reg­u­lated by the coun­try’s Fi­nan­cial Con­duct Author­ity.

“We chose Gi­bral­tar be­cause at that time no other Euro­pean coun­try had reg­u­la­tions to gov­ern blockchain. But it suf­fered due to Brexit and we de­cided to move to Lon­don,” said Mr Salo­vaara.

To set up in the UAE, the com­pany spent 18 months se­cur­ing an in­no­va­tion test­ing li­cence – a tem­po­rary li­cence is­sued to FinTechs al­low­ing them to op­er­ate in DIFC un­der reg­u­la­tory su­per­vi­sion from the DFSA.

“The DFSA’s li­cens­ing will au­to­mat­i­cally con­vince many global in­vestors to join us in Dubai. Af­ter some suc­cess­ful is­suances, we will be is­sued a li­cence of a full-fledged fi­nan­cial com­pany … [I am] ex­pect­ing that within few months,” said Mr Salo­vaara.

Ear­lier this month the UAE’s Se­cu­ri­ties and Com­modi­ties Author­ity sought in­dus­try and stake­holder feed­back on the reg­u­la­tion of cryp­tocur­ren­cies in the coun­try.

The reg­u­la­tions will en­com­pass all as­pects of the crypto as­set in­dus­try in the Emi­rates, from to­ken is­suance re­quire­ments to trad­ing and safe­keep­ing prac­tices.

As well as the UAE, To­kenMar­ket plans to open of­fices in Saudi Ara­bia, Bahrain, Egypt and Morocco.

“SME lend­ing is al­most 50 per cent less in this re­gion than in Europe. But tech­nolo­gies like blockchain that are cru­cial in our in­dus­try are at [a] very ad­vanced stage,” said Mr Salo­vaara.

The com­pany re­cently ditched a plan to es­tab­lish its Asia hub in Hong Kong.

“Af­ter the re­cent tur­moil in Hong Kong, we aban­doned our plans and de­cided to fo­cus all our en­ergy on Dubai ... [that] will act as a link be­tween Europe and South East Asia and also Aus­tralia,” said Mr Salo­vaara.

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