By Nancy Dahlberg
Long before Miami blockchain companies were making headlines and a “crypto capital” was rising in the Magic City, Security Token Group, a venture studio, was quietly building the infrastructure to support the development of the security token industry.
“Security Token Group’s mission is to foster the adoption of blockchain technology across capital markets,” said Herwig Konings, CEO and co-founder of Security Token Group in an interview with Refresh Miami. “We do this through our consulting division, our media division and our investment products division.”
This week, the Miami-based startup announced the closure of its $3 million Series A round, led by Blue Bay Ventures, and including strategic investments from Blizzard Fund (the VC fund of Ava Labs / Avalanche), Exodus, and about a dozen individuals from the Miami tech community, including Ted Lucas, founder of Slip N Slide Records, Marc Powers, former SEC attorney and an FIU professor, and Tyler Wagner, a local entrepreneur.
Security tokens are tokenised shares of an asset, such as a business, fund product, real estate and other alternative asset classes. Now with the Series A backing, “we can’t wait to work with these strategic partners in building the rails that will reduce the pain points for the industry to scale to an institutional level where even Wall Street can participate,” Konings said.
Konings and Kyle Sonlin, both University of Miami alumni, co-founded Security Token Group in 2017, and began focusing on its consulting arm in 2018, which is led by Konings. That year they also raised a million dollars in seed funding from a local family office and launched Security Token Market, led by Sonlin. Security Token Market has become the largest repository of security token trading data and news, with a live-trading data feed for over 200 security tokens currently valued at $20B in market capitalization. Security Token Market also produces podcasts around the larger blockchain industry, including The Security Token Show, Spilling the NFTea, Open Tab, and the Spanish-language Crypto Con Leche.
Much more recently the startup launched Security Token Capital, led by STG Partner Mike Lingle, to help support the industry by creating institutional investment products designed to introduce more professional investors and retail traders to security tokens. Series A funding will support the expansion of Security Token Capital.
Security Token Group also plans to start launching more data products and analysts reports – think Bloomberg but for the security token industry. Goldman Sachs recently purchased one of its reports. “We of course have the retail and the international investors who can now invest in these opportunities, but what legitimizes everything is when Wall Street starts to get interested. That’s when we told ourselves, we need to double down on the data, on the technology, and really make it possible for everybody from retail to institutional to participate,” Konings said.
Today, the startup employs 25, has passed $1 million in ARR and is poised to grow fast, Konings said. “And we are eating our own dog food — we are launching one of the first tokenized Reg CF offerings for our own company, Security Token Market.”
That crowdfunding campaign is in the Testing the Waters period, which means the company can accept pledges. Now 90 days in, over $6.5 million has been pledged by over 1,000 investors from over 25 countries, he said. The crowdfund will be in the form of a security token, meaning that investors in the campaign will receive a digital token representing the investment in the company. “It was also important for us to lead by example in issuing a token the right way—by embracing securities laws and creating an offering that supports the new benefits of tokenization,” Sonlin said.
PHOTO AT TOP OF POST: Security Token Group co-founders Kyle Sonlin, at left, and Herwig Konings.
Follow Nancy Dahlberg on Twitter @ndahlberg and email her at ndahlbergbiz@_lepii
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