Tokensoft Uses Ethereum To Distribute $4M In Equity

Digital securities platform Tokensoft has become one of the few companies to tokenize its equity and distribute it to investors that participated in its $4 million Series Seed round, the company said in a blog post on 20 May.

According to the announcement, investors that participated in the firm’s July 2018 seed round have now received a digital representation of their investments on the Ethereum blockchain. The $4 million funding round was, at the time, co-led by Base10 and e.ventures, and also saw participation from Coinbase Ventures and Avon Ventures, a Fidelity affiliate.

As the original investments were based on a Simple Agreement for Future Equity (SAFE) model, the company decided to distribute ERC-1404 tokens, a standard used for accounting and compliance purposes, to its investors as a way to ensure that the SAFE agreements will be enforced on-chain.

Investors received their tokens in another Tokensoft product, the recently launched self-managed investment account. Meltem Demirors, Tokensoft investor who has been working with the team since 2018, said in the press release:

“While many in the industry speak of the benefits of digitizing private capital markets, Tokensoft has actually done this with their own shares. I have the ability to hold shares in my wallet, receive dividends, bid or offer shares, and gather real-time market data that facilitates price discovery.”

By tokenizing its equity, Tokensoft has brought one more benefit to its investors – real-time periodic dividend payments. In addition, the dividends will come in the form of U.S. dollars, thanks to an integration with Signet, Signature Bank’s digital payments platform, and DTAC, a SEC-registered transfer agent. This also means that investors can decide to go for a dividend payout through traditional banks.