The Frankfurt-based blockchain startup Agora Innovation has secured a first investment of 750,000 euros. The sole investor in the seed financing round is the semi-state early-stage financier High-Tech Gründerfonds (HTGF), as the company announced today.
With the help of the new capital, Fintech intends to grow from the current nine to at least 15 employees by the end of the year, said founder and CEO Phong Dao in an interview with WirtschaftsWoche founder. In addition, the money allows the start-up to bring its software to market.
Agora Innovation helps other companies finance themselves through blockchain tokens. The Frankfurt-based fintech wants to win customers as start-ups who are looking for capital to further develop prototypes – provided that they already have their first sales. This is how the new type of financing works: The so-called Security Token Offering (STO) is comparable to the issue of a bond. Investors buy promissory notes and thereby provide the company with debt capital for its projects.
Agora specializes in special bonds – securities in the form of security tokens that pass through the blockchain. Investor HTGF sees potential for the future: many assets such as real estate, company shares, works of art and raw materials will be displayed in the form of tokens, HTGF Managing Director Alex von Frankenberg expects: “The solution from Agora Innovation will be an important element in this,” he says to quote in a press release.
Focus on legal security in the international area
The core task of the fintee, founded in 2017, is to develop technological support for corporate customers who want to be on legally secure ground in an STO.
For example, to avoid violating laws when trading in token securities, companies can use the Agora platform to control, for example, whether a token can be traded across borders. International transfer is currently the scene of most uncertainty, according to founder Phong Dao. For the use of the platform and advice customers pay a fee.
First companies already connect the start-up to the platform, but there are still fewer than five customers. In March, the 35-year-old CEO will present a first product version at the token conference “Token 2049” in Hong Kong.
A full version is expected to hit the market in May, kicking off at the consensus conference in New York. Until then, the founder, co-managing director Robert Malec, is looking for partners who can help with Jura know-how. Lawyers from the US, Hong Kong, Switzerland and Estonia have already won as consultants – the goal is to integrate legal requirements from the main jurisdictions in the program, so Dao.
The blockchain token market: For some potential investors, the issue was too hot, the Agora founder reports. Until a week ago, the future prospects for financing via STO were still unclear.
A decision by the financial regulator Bafin to allow Berlin blockchain start-up Bitbond to trade in digitized shares is likely to generate new momentum: “The fact that the Bafin has approved a first security token offering last week shows that the regulator is in Germany opens for the topic and a market is on the rise, “says Agora founder Dao. “We want to establish ourselves there as the first technological platform for internationally regulated and legally compliant security token transactions.”
Criticism of token financing
The managing director of the fintech sees lower risks with STOs than with so-called ICOs (“Initial Coin Offerings”), which have repeatedly been criticized in recent years due to a lack of regulation. “Unlike the ICO is not set purely on a promise for a future product, but there is a real asset behind the security token. This reduces the risk for investors, “said Dao.
There were negative headlines in connection with token financing again and again. Only a week ago it was announced that the financial supervision Bafin an ICO of the company Rise has precautionary stopped, as the Handelsblatt reported.
Also published on Medium.