Fundwise, an equity crowdfunding platform, is announcing a partnership with Ignium, a global security token issuance and settlement firm. Together, the two Estonia-based firms are offering small and medium enterprises (SMEs) the opportunity to raise funds through the issuance of customized security tokens that can be sold to investors around the globe.
The firms report that Handies Solutions LLC, a new mobile app that allows its customers to order home repair and construction services on-demand, has already begun fundraising through the solution created by the new partnership.
“It is our mission to enable reliable, accessible and affordable capital markets where investors and companies could connect to one another globally,” says Ignium chief executive and founder, Reimo Hammerberg. He previously told Finance Magnates that issuing a security token through Ignium costs roughly 10-20 times less than the fees of competing security token issuance firms.
Hammerberg also explained to Finance Magnates that the partnership is an essential part of Ignium’s strategy: “Ignium’s collaboration with Fundwise is an important step. Along with Fundwise, we are demonstrating how two platforms as infrastructure providers for new markets are working together to offer better access to capital and investments in an affordable and reliable manner.”
“We are happy to offer the new international share registration for our investors,” said Henri Laupmaa, the founder and CEO of Fundwise: “It will make it more flexible to become investors or buy & sell shares no matter where in the world you are based.”
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The Partnership Followed an Important Regulatory Step for the Estonian SME Ecosystem
The partnership between the two companies closely follows a change in Estonian law that allowed for the tokenization of shares in limited liability companies (LLCs) in the country. As of August 1st, the law stated that LLC share ownership could be transferred through any means that can be reproduced in writing, including by way of digital tokens.
Ignium’s Reimo Hammerberg told Finance Magnates that though Ignium operates on a global scale, the partnership with Fundwise was formed in part as a response to the Estonian regulatory development, as well as a desire to provide the Estonian entrepreneurial community, which Fundwise primarily serves, with the option to issue and purchase security tokens.
Furthermore, Hammerberg said that the legal change is an important step forward for Estonian startups and the Estonian SME ecosystem as a whole, which is of considerable size. According to e-Estonia, the official website of the country’s e-Residency program, Estonia ranks third in Europe regarding the highest number of startups per capita.
“Therefore, we are proud to serve the Estonian entrepreneurial community. Ignium’s partnership with Fundwise allows LLCs to have access to an international pool of investors through security token issuance. Through this new partnership, LLCs in Estonia can tackle a larger, more global investor pool, securely and with real-time settlement.”
Security Tokens Are Growing in Popularity as an Investment Vehicle
Security tokens have long been heralded as the perfect marriage between pools of investor funds in traditional investor markets. However, regardless of all the expectations, the volume of security token offerings has remained modest to say the least.
Hammerberg explains that this is largely due to the absence of appropriate capital market infrastructure in STO space. Although blockchain networks are designed to span across international borders and its usage has many efficiencies, it will not be enough without appropriate infrastructure and “this is exactly what we tackle at Ignium,” he told Finance Magnates.