There are no two ways around it – raising money for just about anything is incredibly challenging. It takes a certain kind of perseverance, ambition, and above all, complete and total patience if you plan on having any sort of career in the financial sector.
It doesn't even matter what the venue, whether it's working with private investors or companies hitting the public markets in a bid to raise capital. But technology is always evolving and offering us new, efficient, and possibly even improved methods for doing the things we've considered a part of our everyday lives for decades.
Among those new and exciting advancements is the evolution of blockchain technology. This innovative platform has been instrumental for ushering in the dawn of the cryptocurrency, the strange and intriguing digital format of monetary worth that financial pundits, experts, analysts, and even the government is still trying to figure out.
But in addition to challenging the way we think about money, blockchain technology has given flight to a new method of raising capital and provided smaller investors with an entry into those markets that were once reserved solely for the super-wealthy elite.
Chief among these exciting new twists in the markets is the emergence of the tokenized fund and it's a brand new way to use the blockchain technology that continues to surprise and amaze those who really understand how best to harness its potential. What makes it so fascinating is that blockchain allows accredited investors fast access to investment opportunities that don't stick around long and companies are able to attract these investors directly, without the need for any middlemen.
Investment opportunities like the tokenized fund or tokenized security offering are only increasing in popularity as they are leading the way towards pioneering a whole new method for getting into capital markets. In the process, the world of investing is quickly expanding and opening up new vistas through which people who had never before considered investing in the past are now less intimidated and more encouraged to get into the game.
So what's making these opportunities so popular and how does someone like you or me get involved in the tokenization of funds and assets? At first glance it might seem like a rather complicated scenario, one that requires a prerequisite knowledge of Wall Street and trading stocks and bonds. The very opposite is actually true, anyone can get in on this and they need not be the second coming of Warren Buffet to appreciate the benefits of buying into tokenized funds.
In fact, tokenized funds don't work all that differently from any other sort of fund run by a venture capital firm or organization of managers who supervise investors' assets. Tokenized securities are even bound to comply with the current securities regulations that are now on the books and recognized worldwide.
Advantages of a Tokenized Fund
Blockchain technologies are not just a fast and easy way to move digital assets, but also a less expensive access point for reaching the capital markets.
However, one of the biggest misconceptions about tokenized fund when compared to that of a more conventional makeup is that the former operates very differently from the latter in just about every aspect. This isn't true. The tokenized fund is still a fund. It retains all of the basic attributes as any venture capital or similar type of fund that investors might put their money into. The tokenized versions are still run by managers who manage the assets in the fund in order to seek out lucrative investment opportunities on behalf of the investors who have opted in.
The investments that are ultimately executed are also strategized for the maximum diversification of investors' portfolios since a tokenized fund can be used for funding a wide array of startups and well-established companies alike. Just because the fund is utilizing blockchain technology does not automatically make it exempt or restricted from investing in the same types of areas that a conventional fund might find intriguing. Tokenization of the fund has no impact whatsoever in that regard.
The managers of tokenized funds also analyze and evaluate risk with the same careful consideration and due diligence as they would with a traditional venture capital fund. On the other hand, the very nature of tokenized funds supports the notion that fund managers might feel a little more comfortable by climbing out a bit further on the limb when it comes to those investment chances that might prove slightly more risky.
Best of all, perhaps, tokenized funds don't force investors to commit large sums of money to the fund for a decade before they can expect to see that money back at a profit or not. That's one of the greatest advantages of this kind of fund, they're not solely reserved for the participation of multimillionaires and financial gurus.
Tokenization allows for everybody to invest while giving them a chance to tap into the global markets. After all, not everyone can put a large sums of money for incredibly long periods of time. Ten years may not seem like very long to someone who can afford to squirrel away a few million dollars for the next decade, but for many working class folks who would like to invest, a tokenized fund can be the ideal way for them to participate.
When fund managers find an opportunity they like, they will make a capital call and the investors will fund the investment. When the time comes to eventually sell, the investors are expecting to get their money back with a profit. But it requires them to make that long-term commitment that might push out the smaller investors.
Not with a tokenized fund. In this case, the fund delivers investors securities that may then be resold after as little as one year. This ability to leave the fund in a much shorter period of time can bring in a much wider spectrum of possible investors to put their money into the fund and maybe see a modest return on that investment in the process.