ICO Analysis: Investx

The word on the web is security tokens are the next big thing. Until now, small and medium-sized enterprises (SMEs) could only practically raise funds from angel investors, VC or private equity firms. Blockchain and smart contracts revolutionize the access and cost of investing. Investx sees an opportunity to be the frontrunner in providing a platform for SMEs to launch different types of security token offerings (STOs) which will be offered up to all KYC confirmed crypto investors.

The Investx Platform makes investing in SMEs affordable and rewarding, providing access to shareholding at a reduced price for investors because of the value of its use and cost efficiencies it creates

“Investx is addressing fundamental gaps in the equity fundraising market by creating crowdfunding products that simply don’t exist. Our products will cut across Equity Capital, Lending and Merger & Acquisition Markets taking a slice out of all of them.”

Investx has identified several problems with SME investing, and have come up with the following solutions.

Problems for SMEs/Investors

  • There is no open secondary market for selling the SME shares. This makes selling the shares complex and expensive, and often impossible until the business is sold
  • Accurately valuing shares in SME’s is complicated, and requires financiers, accountants and lawyers.
  • Crowdfunding platforms are expensive and have limited investor base.
  • Crowdfunding platforms offer only minority interest and limited range of deal types.

Solutions for SMEs/Investors

  • Smart contracts and an easy to use platform for SMEs and global investors.
  • Blockchain powered secondary share market will provide liquidity to an illiquid market
  • Investx issued security tokens for every fundraise make transacting deals fast and cost-efficient, meaning lower fees.
  • Investx will transact a wide range of deals from minority growth capital to full shareholder exits.

A real-time up to date ledger of every company’s shareholders will be maintained without reliance on manual reporting or trust in central software. This provides an autonomous mechanism to pay dividends and exit profits directly to investors.

Token

Based on Ethereum, the INX security tokens will be used for automated legal contract execution, fundraising, share registry, dividend and exit payments. INX is a reserve-backed means of exchange for shares in SME businesses. INX tokens will be used as payment for shares in businesses on the Investx platform. Their unique mechanism for providing liquidity for reserve backing ensures real-world purchasing power keeps up with token value increase.

“The INX token enables a cutting-edge fintech solution for investors to trade shares of privately held businesses, for businesses to raise equity, or for business owners to sell equity while autonomously maintaining and executing the transactions via smart contract.”

INX is a payment token, used to purchase shares in businesses listed on the platform. Just holding INX does not give any returns based on the results of businesses funded through the platform nor does it offer a share in any profits of Investx Ltd.

The token will also be used on the platform for reduced transactions, premium access to investments at a lower cost, and access to investment not yet available. We have barely touched on the token mechanics, for all the details please check out their very professional currency-paper.

Distribution:

  • 91% Crowdsale
  • 6% Founders/Advisors
  • 3% Incentives

Use of Funds:

  • 7% Legal
  • 14% Business Dev/Marketing
  • 5% Early overheads
  • 10% Platform
  • 65% Investx Liquidity Reserve

Tokens will be minted upon purchase.

The founders’ tokens are locked up for 24 months.

Nearly two-thirds (65%) is set aside in GBP until holders invest their INX into an STO listed on the platform. They will act as a market maker and exchange those tokens for GBP to pay over to businesses that raise funds through Investx, avoiding fx costs and any reliance on liquidity.

Team

Investx Ltd is a UK registered company, incorporated in 2010 and their team is pretty impressive.

Peter Edgar – Co-Founder/CEO. Founded The Oxalis Group in 2010 successfully exited in 2015. He’s now an investor and non-executive director for 3 companies.

Dave Hewitt – Co-Founder/CTO.  Since 2013 has been Partner at Equal Experts, who provide tailored, end-to-end services in software development and delivery, and have 10 offices throughout the world with between 500 and 1,000 employees

Leon Sloyan –  CCO.  More than 3 years experience as International Commercial Manager at HSBC, then spent 3 years as Relationship Director for Santander UK (over 10,000 employees)

Richard Chambers- COO. Director of Finance team at Royal Bank of Scotland Senior Associate Director SBC.

Andy Gray- Blockchain & Smart Contract Consultant with 20 years commercial IT experience.  DApp/Solidity Developer at Barclaycard, Full-stack Developer at Globility Ltd.

Four advisors are listed, including a Partner and Head of Commercial Fraud & Risk at DWF, a Managing Director at Central Business Finance, and an Engagement Manager at Equal Experts. Also, global top 10 law firm CMS will advise them on legal/financial regulatory work.

Verdict

STOs can and most likely will cause a major disruption in the current ways small/medium equity businesses operate. Investx is positioning themselves to be the front-runners in opening this brand new market for investors.  The Investx platform allows crypto investors and holders to purchase shares in stable businesses, be paid any dividends and sell their shares all without using fiat on/off ramps.

Investx Platform fees.

Risks

  • Standard Ethereum platform risks. -1
  • Their pre-sale starts Nov 1, but they have not started marketing at all yet. Telegram has only 50 members so far. -1
  • In order to become an investor, holders must create a platform account and pass KYC checks. This most likely leaves USA, China, and possibly even Korea citizens from being able to invest in new projects on their platform. -1.5
  • Regulation concerns: they have yet to become authorized and regulated by the FCA.  the goal is for the platform to launch its first business listing on May 2019, and then they will work on launching a secondary market once they get FCA approval. -1
  • Major exchanges are afraid to list security tokens. Although INX token is utility, exchanges most likely won’t take the risk. -1

Growth Potential

  • A brand new way for SMEs to raise funds! +2
  • The team is full of value. +3
  • Perhaps the most professional whitepaper I’ve ever reviewed. They even made a separate 19 page Currency paper, that gets into every detail of their Tokenomics. +3
  • They have an elaborate game plan to become authorized and regulated by the FCA. According to the roadmap, the platform will be ready and listing the first businesses in May 2019. +2
  • From the whitepaper: “We are opening up a currently inaccessible asset class at discounted costs. Our focus on stable, growing businesses means greater opportunities for immediate and stable long-term returns.” +2

Disposition

This is basically Ethereum for SME STOs. It has the potential to be massive. Lots of bleeding-edge risks though. 6.5/10

Investment Details

Featured image courtesy of Shutterstock.

Author:
Joshua Larson is also known as the "Bullshit Man" for his ability to spot it a mile away. Avid ICO researcher and contributor. Former professional poker player/backer. Spent 10 years analyzing hand history, stats, and player data. Discovered blockchain in late 2016, and never looked back. He now uses his analysis skills to investigate ICOs full time. What a perfect match, because in today's crazy world of ICOs, information, passion, and diligence = dollar bills!