Tokenization in private equity is an innovation that utilizes blockchain technology to divide a financial asset into multiple digital units called tokens.
In few steps
A startup can raise funds by tokenizing a portion of its equity. This would allow a wider range of investors to acquire shares in the company, while also providing greater liquidity to existing investors.
Distressed companies can tokenize a portion of their equity to quickly raise funds. This could help them avoid bankruptcy and give the company a new opportunity for success.
Social enterprises or non-profit organizations can tokenize a portion of their equity to raise funds while engaging their supporters. Token holders could receive non-financial benefits, such as free products or services, in addition to a share of the organization’s profits. This approach allows for a more inclusive and participatory form of fundraising, where supporters become active stakeholders in the social enterprise’s mission.
A non-publicly traded company can tokenize a portion of its equity to enable its employees or other stakeholders to acquire ownership stakes in the company. This can serve as an incentive mechanism for employees or strengthen the ties between the company and its community.
A franchise company could tokenize a portion of its business to allow its franchisees to own a share of the overall business. This could reinforce the franchisees’ commitment to the success of the business.