Tokenize your assets on top of our infrastructure
Our Tokenization SaaS platform is a software-as-a-service solution that enables the issuance, trading, and custody of security tokens for private market assets. We have been granted a Capital Markets Services and Recognized Market Operator licence by the Monetary Authority of Singapore to deal in and operate an organised market for securities respectively. Our service offers a one-stop solution for all your security token needs, including seamless banking integration, thorough user verification with a KYC module, flexible OTC trading options, primary issuance services, cutting-edge blockchain technology, and smart contract deployment.
Introduction
My name is Julian Kwan, I’m the co-founder and CEO of InvestaX. I’m also the co-founder and Managing Partner of IX Swap, which is the first liquidity provider and DeFi platform for security tokens. I founded a real estate development company before and raised a bunch of money for real estate projects, and then spent a couple of years trying to work out where the marriage of the internet would meet with private equity and real estate deals, which essentially hadn’t had any innovations for many years. The first monumental change was the first real estate crowdfunding platform that started in the US in about 2014-2015. We set up one in Singapore where we were one of the first ones to get a license, and list and fund a number of deals.
Problem with the first generation
The problem with the first generation of those crowdfunding platforms was that they were not very high tech. When you peel off the crowdfunding websites, people were investing in no more than pieces of paper, and a lot of the pain points of investing haven’t actually changed. There were certainly some good upgrades, looking at these global deals, being able to invest in different types of assets, and being able to do it online. But there wasn’t much change to the structural value of the deals and there wasn’t any liquidity created. You still often invest in these projects, and you’re stuck for a long time.
Our platform then evolved as we went deep down the rabbit hole in 2017, and the ICO (Initial Coin Offering) boom was happening. My partners and I looked at the technology stack and went to hundreds of cryptocurrency events and built a thesis that blockchain and smart contracts would become the underlying infrastructure that all real assets use. If people are willing to send lots of value around the world with non-asset-backed tokens, why wouldn’t they want the same system for real assets? So, we embarked on a mission to build InvestaX and build an end-to-end solution for anyone who wants to issue customized digital securities.
You can watch this interesting video to know more.
Our belief was that in a world of tokenized assets, you’d have a whole basket of currencies, cryptocurrencies, stable coins, unstable coins, and potentially central bank digital currencies, that would then marry with all these different types of digital security tokens and NFTs.
We firmly believe that with technology-driven investment vehicles, you will see an explosion of value and create the next kind of boom for the private markets.
The above image is just a very simple history of the traded securities and it illustrates every significant expansion of the public markets correlated with the introduction of new technologies and infrastructure, from a dedicated marketplace (London Stock Exchange), to the first electronic trading floor (NASDAQ), to introduction of new investment products such as the ETF.
The current ETF market is somewhere between USD$6 to $7 trillion. Then when you think about the private markets, up until recently, nothing’s really changed except maybe Docusign. You can see from the analogy used in the public market, we believe that there’s now going to be a paradigm shift in what will happen.
Publicly listed REITs have clearly proven that there’s a lot of appetite for tradable, digital, institutional real estate. The publicly-listed REITs are great. However, they have several issues.
First of all, size is a big issue. You don’t try to move into a publicly listed Singapore market unless you have $500 million to $1 billion assets; that costs a lot of money. Also, REITs are generally not development projects or single asset REITs. It’s predominantly commercial real estate. You don’t participate in equity upside; the REIT must distribute typically 90% of income. But again, the point is that it’s a liquid form of real estate. That’s where we think the high-level value of tokenization for this kind of real estate is.
There are many different ways people try to use it in real estate. The concept of tokenizing a house and putting it on a blockchain is happening via Propy, the platform that’s doing an NFT representation.
When you start to think about shares of real estate funds and collective investments where you tokenize shares of a fund, the fund itself owns buildings as assets and it doesn’t matter if those buildings have ever heard the word “blockchain” or not. It’s a much better way to issue and hold shares, and that’s essential.
What you’re doing when you’re buying a share of Apple on Interactive Brokers is that you’re not just buying in a trusted environment, you’re buying so you can sell. You don’t necessarily care about voting issues. You care about the economic interest of that asset and you trust the system. You trust the platform, and you trust Apple’s doing the right thing, and therefore, people are buying and selling these things all day.
We’re at a point now where if we look at what’s been the problem today, the problem for private real estate, for those in the industry, is that it takes a lot of time and energy to raise the capital. It’s very slow and very inefficient when you’re investing in deals which are often stuck for a long time.
Sometimes, liquidity is not there in most of the private real estate funds, and is instead a fixed fund, which makes no sense in cyclical asset classes, but people don’t want to give you the money forever.
A lot of the 2000 vintage real estate funds were wiped out in 2009, 2010, and 2011 when they were forced to sell at the end of the seven years due to the fixed life cycle.
With tokenization or digital asset securities, the promise coming down the pipeline is that you would have greater efficiencies and enhanced liquidity, which would depend very much on your asset, its performance, and where these assets will trade.
From an investment manager’s perspective and a real estate manager’s perspective, your relationship with your investors is typically binary. Each dollar you make, the client doesn’t invest. It’s a static relationship, which is not very exciting. Then 5-10 years later, you get paid up.
What we’re seeing from Web3 in the NFT world is a very different way to distribute value through an investment community. We’re bringing some of those concepts of Web3 across into the securities market by starting to launch NFT projects for investment groups, and the reason is just like in Web3. We are creating communities with common interests. If you hold one of these NFTs, you might have first access to the next deals, you might get a lower trading fee and lower management fees. But what it does is that it creates a really good, interesting use of bringing both of these two worlds (TradFi and DeFi) together.
Birth of Defi decentralized finance
The second really important point is that up until 2017-2018, your cryptocurrency was probably purely a highly speculative play, which certainly wasn’t being used as currency. But the so-called birth of DeFi (decentralized finance) in 2018 brought the banking services, such as lending, borrowing, and collateralization, to crypto. So, it was just Wall Street services and banking services brought into the cryptocurrency market. What that meant was an explosion of value because it made the actual assets a lot more usable.
So, in the same instance, we’re now in Version 1.0 tokenization of real estate where people are looking at tokenizing a fund (a piece of paper). So, it’s a digital representation of a share. There’s still this two-step process. In some projects in certain jurisdictions (where regulations have evolved), blockchain native security tokens are recognized, which is a paperless-based offering, removing this two-step process.
The investment structure is tokenized
The entire investment structure is tokenized. These decentralized applications are coming out where it’s basically an investment vehicle which is completely tokenized from Day 1.
The next evolution of this will be taking a share of your real estate fund that you previously couldn’t do anything with except putting it in a drawer for 10 years, and taking it on the platform to lend, borrow, collateralize, stake, etc., to extract a whole lot of value out of it. That’s a fundamental Zero to One change. It’s the same thing you can do with your public market stocks. You can lend them, take a margin, and borrow because they’re digital. People can see trusted metrics because it’s tradable. In the same instance, what we are very excited to be working on is taking all these private market assets that are very static and putting them into this new format, being able to make them much more usable for investors in a world of digital currencies. If you’re not digitizing your real assets, you’re missing out on that connectivity.
Issuance of Tokens on InvestaX’s Platform
So how does tokenization and the issuance of digital asset securities, like real estate security tokens, happen? Our platform provides you with exactly the answer. InvestaX is a Singapore-licensed digital securities online investment platform that focuses on private market investments and is able to deliver end-to-end solutions for such assets. For issuers, this would include primary market issuance, advisory, capital raising, listing, bilateral trading and lifecycle management of digital securities. On the other hand, private market investors will now be able to hold (in their own Web3 wallets), invest and trade private securities in a digital token format, all on one integrated platform.
We’re blockchain agnostic, and we’re very pro-public blockchains. I think the world of Wall Street in the last couple of years was heavily focused on private blockchains. With private blockchains, you’ve made yourself more efficient, and you’ve created a better system internally; but you’re missing out on all the value of touching cryptocurrencies, NFTs, and other security tokens.
In our case, we have so far integrated with public blockchains such as Polygon, Algorand, Tezos, Hedera Hashgraph, and Ethereum. When other platforms like us around the world that have licenses are also integrated with these blockchains, and if business terms are agreed upon between these platforms, an issuer could launch on three, four, or five platforms around the world simultaneously; that’s powerful and increases liquidity for those tokens. So, you’ll start to see private market real estate offerings coming in a security token format, launching in multiple countries on platforms like InvestaX and partner platforms, and investors will be able to hold and trade those tokens in secondary markets with a shared liquidity pool (check out IX Swap’s AMM liquidity pool solution for security tokens).
At InvestaX, we offer the leading Singapore Licensed Tokenization Service-as-a-Software (SaaS) platform for Real World Asset Tokens (RWA) and Security Token Offerings (STO). We provide a one stop shop for tokenized assets for global investors, including real estate, private equity, venture, ESG, startup, private credit/debt and more. We also provide IX Swap, the first legal and compliant Automated Market Maker (AMM) for RWA and STO.
If you are interested to learn more about how you can build your business on top of our infrastructure and what we can offer you as your tokenization partner, then contact us here. Thank you.