Security Tokens are an Opportunity to Hit the Ground Running on AdTech Opportunities
We’re currently in a time of reckoning for cryptocurrencies and ICO projects. Research by Statis Group in 2018 found that in 2017 “over 70 % of ICO funding (by $ volume) to-date went to higher quality projects, although over 80% of projects were identified as scams.” The study recognized ICO death as “not listed on exchanges for trading and has not had a code contribution in Github on a rolling three-month basis from that point in time.” This research was further strengthened by research from Ernst & Young that suggested that only 13% of the companies that conducted ICOs in 2017 actually have a working product, with 71% having no offering in the market.
Commentators position STOs (Security Token Offerings) as drivers in the 2019 crypto market, 2019 as the year of the STO, and the new sexy after the end of the ICO party. The reality is perhaps is a little more stoic. Whether an STO is viewed as a legally compliant ICO or the digitalization of conventional securities, Security Token Offerings have created a space for tokenization of assets, commodities, and financial instruments.
Why we Decided on an STO
STOs provide the opportunity for smaller, early-stage businesses like HYGH to raise large amounts of capital quickly without needing to pay huge fees. STOs are highly transparent and democratise access to investment and capital. The middlemen are removed and tokenization results in reduced fees, faster deal execution, and potential access to a greater number of potential investors.
STOs also provide flexibility in terms of how you actually run your business – comparable only to a privately-held company. However, unlike a privately-held company, security tokens can be traded after the initial sale making them much more liquid investments. HYGH is effectively selling its future revenues now, with investors in the STO getting 9% of the total net revenue from within the platform with payouts issued quarterly.
Unlike ICOs, STOs require a high level of accreditation, ensuring projects are credible and likely to succeed. HYGH were pioneers in the space and one of Switzerland’s first companies to do a wholly regulated, officially registered STO - HYGH is registered with the Swiss Financial Market Supervisory Authority FINMA.
Accountability to a large group of commentators - and investors
Vincent Mueller and the HYGH team have eschewed the well-trodden path of incubators and accelerators combined with a series of pitching competitions in front of seasoned investors typically of most startups. Instead, the company is primarily crowdfunded via an award-winning Security Token Offering that is SEC verified and FINMA compliant. By investing as little as $500 in the HYGH platform, all investors receive a 9% revenue share in ad revenue.
HYGH has, in particular, proved popular with younger investors, with almost 25 per cent of investors under 21 and 41% under 45, located across Europe, Australia, Brazil and South Korea. It cements not only the relevance of digital advertising to young people but also a demonstration of responsiveness to platforms like WhatsApp, telegram and Instagram to source investment opportunities - many of whom first found the company through Youtube and Instagram.
HYGH has created a vast global community (over 9,000 on telegram alone) across telegram, Instagram, Facebook, and LinkedIn. This provides a level of scrutiny and accountability as the HYGH product develops. From basic MVP to product development, investors are part of the journey and available to critique the progress of the company.
The HYGH community help educate other potential customers, spruik the product and refer their friends and colleagues as investors and advisors. They are in effect ambassadors that bring more new supporters on board, their endorsements more credible than PR fluff, which drives people - especially those aged between 18-24 to invest. Without the need for the traditional lengthy mechanisms of due diligence favoured by private and investors, they think carefully yet act fast as they see an opportunity. Few could imagine traditional venture capitalists utilizing social media this way.
The company met a number of their advisors who include former Rocket Internet Director of Business Development Christian Schroeder and David Wang from Deloitte Consulting through their social network that discussed economics and entrepreneurship. Following the trend, HYGH Founders are very open to conversations and happily answer any question via WhatsApp - appointments can be booked in German or English.
A New Sector Means New Technology and New O pportunities
It’s worth considering HYGH”s value proposition in the still nascent industry of digital adtech. The first digital billboard was developed in 2005, and the following 14 years have seen the Out of Home (OOH) adtech sector grow exponentially, technologies due to the convergence of IoT, edge computing and data analytics .Digital out of home (DOOH) advertising is becoming ubiquitous - from large billboards in shopping centers , airports, and busy public spaces, to displays atop cars and pulled by bicycles.
According to HYGH Chief Marketing Officer Michael Bievetski:
“Digital out of home signage is eye-catching, and unlike at-home or online advertising, passersby cannot change the channel, skip the ad, swipe right or use an ad-blocker. Campaigns not only provoke discussion amongst viewers but are also filmed and photographed by passersby and shared by media outlets, increasing the reach and impact for the client. Digital out of home ads further, enjoy a recall rate that is far beyond that of static OOH advertising. The sector is at a critical point as emerging technological including AI, 5G, and big data intersect to bring meaningful value to screen providers and customers.”
DOOH media revenues worldwide increased by 13% in 2018 with the U.S. estimated to expand by more than 10%. In actual dollars, that’s more than $3 billion in the U.S. and $13.4 billion globally.
Unlike sector traditionalist OOH advertising, HYGH is also targeting SMEs as a critical underserved market, and some of these individuals who invest will be the very people who will use the HYGH platform and screen provider program for advertising their own businesses or creating passive income through becoming a digital display provider. So in effect, the company is not only building a community of investors but a community of future customers.