We saw in a previous article that fundraising, a fundamental mechanism for the development of startups and companies, involves several painful points. These manifest themselves in a difficulty to onboard and manage investors in a demanding regulatory framework while offering them the possibility to resell their shares.
What solutions are available to these companies?
How do new technologies simplify the whole process?
The world of fundraising is made up of an entire ecosystem of investors. The onboarding and governance of them are currently a major challenge… An additional layer of difficulty should not be added in the search of these investors, neither should it be so when it comes to the inclusion of them in the company’s life cycle. The establishment of standardised mechanisms, where all the verification procedures are carried out automatically is therefore essential.
The complete digitalisation of the share ledger using blockchain technology is proving to be a particularly effective solution. This register can then be updated and secured without using traditional intermediaries. Blockchain is recognized as constituting evidence which makes it possible to completely eliminate the need to update a paper copy of this ledger. As a result, a company’s capitalisation table will be updated in real-time and automatically. The same goes for the life cycle of the company: all attendance, votes, signatures, and documentation are saved on the blockchain to allow traceability and permanent access to information. The smart contracts that accelerate and secure the entire legal process, play a key role here. They ensure proper verification of the different stages while safeguarding the fundamental legal documents.
It is, therefore, possible to welcome and manage a large number of investors, without neglecting compliance with the regulatory framework.
Fulfilling all the requirements put in place by the State to control the identity of investors, the legislation in forced in their country of origin and the source of the funds they wish to invest, represents a considerable amount of task research, verification, classification, and safeguarding of information.
The combination of two technologies provides a particularly effective solution. On the one hand, the use of artificial intelligence makes it possible to automatically control the identification documents of individuals and companies wishing to participate in fundraising. These procedures also take into account all the restrictions of their country of origin and verify all the supporting documents related to the source of their funds. Blockchain, on the other hand, makes it possible to maintain this information and allows its re-use for additional fundraising. Now, the barrier to the number of investors disappears, whether it is a question of 100 or 100,000 investors, each of them will be rigorously controlled and the restrictions correctly applied, in an automated and secure manner, since they run on a database opposable to third parties.
These solutions constitute the heart of the Equisafe platform. They bring fluidity and an opening of the scope of each fundraising while allowing the creation of a healthy investment ecosystem. But what about the ability to resell these titles?
The possibility of accessing a securities exchange space was previously reserved for the world of listed securities, leaving unlisted securities to undergo the need to use intermediaries, resulting in poor traceability and resale prices revised to drop.
Share ledger digitisation, along with blockchain technology has a direct impact on the secondary market for these titles. This innovation completely changes the level of traceability of securities. Their whole journey is engraved in the blockchain and is accessible to all shareholders who may wish to resell their title(s) to interested investors. This benefit then makes it possible to setup an exchange space. The connection space between investors and shareholders offered by our platform is based on the use of this technology to record the exchanges of securities. It is no longer necessary to use the services of a lawyer to update documents or an intermediary to put shareholders and investors in touch.
Blockchain completely transforms the management of the share ledger for unlisted companies. From their fundraising to their governance, through to the resale of their titles that it suffered from its paper legal form. This new technology makes it possible to unclog the investment process in a secure environment, where information is traceable without the need for a controlled intermediary.