While traditional methods of raising capital have been used for centuries, many are beginning to see major problems with these systems and are looking for alternative ways to raise capital without giving up ownership or taking on unnecessary levels of risk. This is where INX comes in. It offers a digital securities platform that allows entrepreneurs to raise capital through the use of blockchain. Many believe this could be the start of a new way to raise capital.
Traditional capital raising
In the traditional method of raising capital, debt and equity markets are accessible. However, both traditional forms of capital raising raise problems.
When you raise capital using equity, the main problem is that you are giving up ownership of the business. This process usually involves the sale of shares, or small shares of the company, in exchange for capital. Partial ownership gives investors the ability to make decisions and realize the profits of the business. Additionally, the process of selling shares, sometimes through an initial public offering (IPO), is often an expensive process as it must be done through an investment bank. The process also carries the risk that the investment bank may not be able to sell all the shares and lead to a failed IPO that will ultimately backfire on the company.
Raising capital with debt comes with its own set of problems. To begin with, you will owe the capital lender more than what you withdraw in the form of interest. If you don’t make these payments, the lender has the right to foreclose on the business. While raising capital through debt allows you to retain ownership, it also comes with high levels of risk, especially in the form of default.
Capital raising with INX
INX is a cryptocurrency and digital securities platform. It offers services to investors and institutions. INX offers a complete nose-to-tail solution for public and private companies looking to raise capital and list digital securities on the only 24/7/365 digital securities ATS. One of these digital securities allows for the tokenization of assets, such as businesses, allowing a business to be funded using the sale of tokens.
These tokens can represent a variety of things, ranging from direct ownership to a profit-sharing mechanism. For example, INX released its own digital security in July 2021, which helped it raise over $84 million. The tokens she sold accounted for ownership of 40% of the company’s operating cash flow. The fundraising process with INX allows for many choices regarding what is given up when capital is raised.
Additionally, INX adheres to US security law and has a legal team in place to help ensure smooth token issuance. Additionally, it is an SEC-registered broker and member of FINRA.
By using blockchain, INX also avoids all intermediaries such as banks, but still maintains all checks and balances. This aspect not only allows for a more streamlined process with much more direct access to investors, but also helps issuers avoid the high fees incurred along the way. It also makes profit or revenue sharing initiatives much smoother and more cost-effective, as issuers can send funds directly to all token holders.
How to raise capital with INX
Now that you have a basic understanding of traditional capital raising methods and INX’s blockchain innovation in capital raising, you might want to check it out for yourself. Fortunately, the process is simple and the INX team is ready to help you every step of the way.
Once the legal documents are prepared and approved, the INX Securities team will work directly with you to help you select a smart contract that will automate processes, such as profit sharing. After that, the asset will be listed and anyone on the INX platform can start trading it.
Overall, INX hopes to change the way companies and individuals raise capital. Its innovative process could drive a new wave of economic and technological growth by facilitating connections between ideas and investors. Through a simple and effective process, INX seeks to change the way people invest and raise capital.
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