Blockchain-based fundraising is changing the way startups and businesses can raise capital to power their projects. By eliminating intermediaries and bypassing unnecessary paperwork, it is becoming popular among entrepreneurs.
One of the top crowdfunding models is Security Token Offering or STO. This model is recognized by a number of regulatory authorities such as the US Security and Exchange Commission. By focusing on following regulations, STOs are viewed as reliable mediums of investment. Only accredited investors can purchase these tokens and they receive an equity stake in the project.
When floating an STO, the project goes through the following stages:
- Primary Stage: Here, the entrepreneur comes up with an idea and does the basic groundwork. They also use this time to assemble a team, publish whitepapers and launch product website.
- Secondary Stage: At this stage, the startup will begin the process of creating the token and introducing it to the market.
- Marketing Stage: The entrepreneur will begin promoting the product and organize crowd sales to attract investors.
- Development Stage: This is the final stage. After reaching the hard cap, the startup will begin using the funds to develop the product and build value for the token holders.
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