Security tokens are the next trendsetter after ICOs as means of digital fundraising. They represent a value, stake or voting rights in an organization. These tokens are backed by real-world assets and are completely SEC-compliant.
Before we go ahead with the topic, let us first introduce ‘General Solicitation’. What is it?
The General Solicitation, according to the Securities and Exchange Commission (SEC) permits issuers to broadly solicit and generally advertise an offering, provided that:
✔all the purchasers in the offering remain accredited investors.
✔the token sellers take all the acceptable steps to verify purchasers’ accredited investor status and
✔other conditions in Regulation D are satisfied.
What is Regulation D?
Regulation D Sec 506(c) prohibits token sellers from publishing any advertisements in any media such as television, magazines, newspapers, radio, internet, public seminars and more. This also includes a prohibition of meetings organized by the issuer whose attendees have been invited via general advertising.
Now that we have crossed the general solicitation path, here are the ways you can market your STO:
As security tokens are not supposed to be marketed directly, proxy marketing is your key. The token sellers can have any online or offline media do a special feature about their organization or ideas. Many organizations have been featured in magazines, newspapers or online media.
To sell tokens, you need to be truly prepared from pitching ideas to answering questions. The below steps are crucial to deal-marketing:
1️⃣ Keep ready your Confidential Information Memorandum (CIM) or Pitchbook
2️⃣ Prepare a generic teaser covering all the essentials in brief
3️⃣ Database of potential buyers and investors
4️⃣ Proper outreach
⭐️Knowing the target customer
Marketing of the security tokens means marketing to a mix of accredited and non-US investors depending upon Regulation D & Regulation A exemptions. For a successful sale of security tokens, one should target their marketing strategy towards the right income group.
⭐️Crypto natives and finance natives: Tailored marketing
Since Security tokens are SEC- sanctioned products backed by real-world assets, it hits the marketing sweet spot between conservatives and ICO tokens. Security tokens appeal to a wider range of accredited investors since it offers them lower administrative costs and higher liquidity.
⭐️Proper partner exchanges
Blockchain has simplified selling of tokens. But security tokens aren’t worth much without good exchanges to trade on. Safety oriented investors get easily scared off with news on massive thefts on some exchanges. Token sellers should screen their exchange partner carefully before committing.
⭐️Build trust via networking
For security tokens, trust is paramount. Earning trust from potential token buyers is a tedious task. Companies need to advocate their products in person. Part of networking, they need to attend crypto events and participate with the crypto community. Following these would help build their social capital and generate consumer trust.
Blockchain App Factory’s security token marketing strategy is built on three pillars which are Consultant, Research, and Strategy. Our consulting team of marketing specialists strives to communicate your vision to your investors. We work on the evidence-based market analysis where marketing is driven by expertise, meticulous planning, and expert analytical skills. And we do strategy reviews to get more insights from the market for future activities.