Many investors are already engaged in private equity investing – shares of companies that are not publicly traded on the stock exchanges. However, the acquisition of giant companies’ shares in the secondary market is associated with a number of obstacles that make the stock market closed. Ambisafe, blockchain infrastructure provider, in partnership with US Capital Global, has allowed retail investors to own economic interest in Elon Musk’s SpaceX with its $31 billion valuation.
Since the company’s shares are not traded on the public exchanges like NYSE or NASDAQ, those who want to acquire them have to wait for the next round of investment or buy shares from their current owners by spending several hundred thousand dollars and a lot of time for paperwork.
There is also an option to wait until the company becomes public and its securities are available on the mainstream exchanges. Making the company public, though, may not be ever planned by Elon Musk. The owner of Tesla expressed regret that he had made the company public and even thought about making it private again. There are several reasons for this: the complexity of management and communication with a large number of investors, as well as increasing speculation with participants reselling securities at a higher price.
The seemingly obvious option to let large investors resell their shares, even with a significant surcharge, also associates with legislative restrictions and the complexity of administration. In the US, only qualified investors declaring a monthly income of $200,000 or owing assets starting at $1 million are allowed to acquire company securities. The EU’s laws also imply a number of similar restrictions. Additionally, in a situation with thousands of small investors, the complexity of administering, tracking documentation and maintaining transactions outweigh the profits of stakeholders.
Ambisafe, a company that specializes in asset tokenization and conducted more than 30 token sales for blockchain startups, together with the US Capital Global investment bank and Zegelman Law Group specializing in securities and blockchain technology, came up with an idea of token which represents an economic interest in pre-IPO companies like SpaceX.
They created a fund named Unicorn Equities to acquire SpaceX shares and distribute rights to receive income from them through the issue of tokens on the Ethereum blockchain. USPX tokens represent a share in the fund and can be sold by the holder when SpaceX’s value increases.
As Ambisafe states, administration and legality of the process are supported by a blockchain, a specially designed Regulatory Aware Protocol (RAP) and the decentralized Orderbook platform on which tokens will be distributed. This allows the fund to comply with legislation in various jurisdictions and fix the price of the token so that SpaceX does not need to worry about speculators, Ambisafe adds.
“We believe shares on the blockchain is the best option to allow retail investors globally to own economic interest in SpaceX,” Andrew Zamovsky, CEO Ambisafe says.
The model is so simple that it opens the secondary market even for those who are ready to invest as little as $100 which is the entry threshold declared by the token issuer.
The democratization of access to SpaceX shares is only the first step, the authors of the idea say. Next, they plan to tokenize the shares of other pre-IPO companies.
More information about the token and the upcoming token sale can be found on the website spacex.orderbook.io.