Tokenisation has overtaken cryptocurrencies as the buzzword for the moment, but Idan Miller is convinced we are going to hear it a lot more in coming years.
Miller is chief marketing officer of The Elephant, a private equity group that has established a secondary platform for the sale of stakes in some of the most valuable private companies.
The Elephant, formerly private equity.biz, has adapted the platform to tokenise stakes in these companies so that they can be turned into cash (or liquid) almost immediately.
He says The Elephant is the world’s first tokenised secondary market platform that enables shareholders in unicorns – large privately held pre-IPO businesses – to easily liquidate some or all their holdings.
Companies on the platform are already substantial businesses and must have raised at least US$50mln in the past year. The Elephant makes its money from fees.
By tokenising the shares and giving their buyer tokens representing them, it enables them to get a liquid asset that is now tradeable, he explains.
“It is the second phase of the crypto-revolution and enables tokenisation of any asset in the world.”
Unicorns are companies worth US$1bn upwards, but Miller says the process can apply to other assets such as debt, art or land for example.
“Once we have a live platform, we can bring a lot of other assets to the table to tokenise as well.”
To develop the platform, The Elephant is now launching its own security token.
It wants to raise US$40mln to expand, for marketing, add blockchain technology and other layers to the platform.
The investment threshold is US$20,000, but this is a financial reward - buyers of the token receive 25% of the platform’s topline revenues.
“That is a real differentiator” says Miller.
As it is a security token issue, the ICO is also regulated and only available to accredited investors.
Tokens will be held in an Elephant Platform wallet, which requires a person to pass Know-Your-Client procedures and become accredited.
Elephant on the charge
Miller sees enormous potential for both the concept and platform.
There are 800 unicorns around the world he says, compared to just 23 currently on The Elephant’s platform.
Miller also wants to boost the number of accredited investors from 2,000 at present to 20,000 by 2019 and 50,000 by 2020.
“I think we have a very innovative idea. The timing is right because the security token revolution is just starting right now.”
People ask why they did not get into bitcoin in 2012 and they will be asking similar questions about security tokens in three years' time, Miller believes.
Now that it is fully regulated, big money from Wall Street will start to be attracted.
“In four years time, the entire financial ecosystem will have changed.”