The concept of crowdfunding is nothing new. The first known equity based crowdfunding platform – the Australian Small Scale Offerings Board (ASSOB) – was launched back in 2007. Since then the idea has expanded to Europe, North America and Asia. Many countries are now familiar with the concept of product crowdfunding on platforms such as Kickstarter and Indegogo. But what is crowdfunding, exactly?
Wikipedia defines equity crowdfunding as: A mechanism that enables broad groups of investors to fund startup companies and small businesses in return for equity. Investors give money to a business and receive ownership of a small piece of that business. If the business succeeds, then its value goes up, as well as the value of a share in that business — the converse is also true.
According to IBM, the crowdfunding market could be worth $1 trillion a year by 2027. But for all the buzz and publicity, crowdfunding has never reached anywhere near its full potential. Why? Because it lacks an efficient global system that connects entrepreneurs and investors, and enables funds to flow between the two obstacle-free.
The traditional crowdfunding model has five fatal flaws:
- No Buzz. As it stands today, equity crowdfunding is boring. It’s not exciting enough to attract the one thing it relies on; mass speculation from the crowd. As we’ve seen in crypto, when the FOMO buzz hits, the public races to invest. If crowdfunding can achieve crypto’s level of buzz, investors will come.
- Deal Confidence. Crowdfunding is ‘funder-centric’, not ‘investor-centric’. Due diligence by the investor is effectively impossible. Unless the investor already has an in-depth understanding of the industry, the investment is purely based on blind trust.
- Weak deal flow. There simply aren’t enough deals to attract a big enough crowd. And without no crowd, there’s no buzz.
- Limited Crowd Reach. Lack of buzz isn’t the only barrier to a bigger crowd. Crowds are currently restricted to their own local region or country, which also limits their size.
- Poor Liquidity. It’s currently too hard for investors to sell their shares when they want to.
How does the Dacxi Chain solve crowdfunding’s major flaws?
The Dacxi Chain uses the process of tokenization to unlock crowdfunding’sT enormous potential. It comes with five unique advantages:
- It allows opportunities to be easily offered worldwide, opening up a massive audience of global investors.
- It connects entrepreneurs with a specific audience of investors who have indicated an understanding of their industry and its potential
- It lets anyone invest from anywhere in the world, in any amount they choose (even small sums)
- It provides simple management of the investment
- It offers asset liquidity, because tokens can be sold on global exchanges quickly, easily and cost-effectively.
With these unique advantages and the scaling ability of blockchain, the Dacxi Chain tokenized crowdfunding system will empower innovators to raise more money, more quickly, from more investors – anywhere in the world.
How tokenization works.
The Dacxi Chain works by tokenizing company shares on a blockchain. This means investors own tokens that represent ownership of company shares. Every transaction is recorded on a blockchain database, so no other means are required to verify ownership. Financial assets (like shares) are ideal candidates for tokenization, because it makes them significantly easier to buy, store and sell independently and globally.
But the Dacxi Chain offers so much more than just blockchain tokenization. It also covers regulated deal origination, due diligence, promotion, investment, custody and liquidity. It’s a complete global crowdfunding network. And that’s why it will unleash crowdfunding’s full potential. Allowing entrepreneurs to access invaluable funding. Allowing investors to take control of their financial future. And allowing innovation to truly change the world.
Find out more or register your interest as an entrepreneur or investor.
