Advanced Blockchain AG is the first blockchain development company to be listed on Deutsche Boerse’s Xetra. The company has not issued tokens and instead goes the traditional route of financing.
The company says, “This additional trading venue will further facilitate the development of new investor groups, especially with an international background. Existing listings on the Duesseldorf Stock Exchange and the Frankfurt Stock Exchange will continue.”
Land & Schwarz, a German financial services holding firm, facilitated the listing as designated sponsor and market maker.
Advanced Blockchain AG is a Berlin-based Blockchain-as-a-Service firm
Advanced Blockchain AG is based in Berlin and develops DLT software for businesses. Its project peaq, which was developed together with its subsidiary nakamo.to GmbH, provides a blockchain base layer for enterprise applications.
The company is also developing a directed acyclic graph (DAG)-based blockchain called “DAGchain,” which is intended for use in a wide range of industries.
According to a recent announcement, the company has signed a Letter of Intend with a leading German telecommunications provider – the name has not been disclosed – to jointly develop a blockchain protocol for billing in IoT networks.
Traditional stocks instead of security tokens
Most blockchain companies have opted for ICOs or STOs to raise funds, instead of going the traditional route of financing. Advanced Blockchain AG has not issued any tokens. Instead, the company is listed on the stock exchanges in Frankfurt and Duesseldorf, and now also on Xetra.
While STOs come with lower costs, lower barriers to entry, a more global reach, and some additional marketing buzz, they also have a range of downsides.
The biggest issue is the lack of liquidity, at least in the current market environment. While traditional stock markets have lots of liquidity, there is technically no liquid secondary market for security tokens yet.
Security token exchanges are just launching and it’s not clear if and when they will attract sufficient liquidity to provide a viable secondary market. Until that happens, investors face the issue that they can buy a token, but they can hardly sell it.
Moreover, as STOs are a new concept, investors are still skeptical. The stock market, on the other hand, has been around for long enough that folks understand how it works.
Stock markets still the superior fundraising tool for established companies
For companies like Advanced Blockchain AG, that need capital now to develop and market their products, the traditional stock market might be the better option at this point. In their last financing round for their peaq project, the company raised a seven-figure sum from German and international investors. While some STOs have successfully raised similar amounts, most have not succeeded.
That said, listing on a traditional stock exchange is no guarantee for success either. However, considering that the infrastructure is much more developed and investors understand the concept, chances of success are higher, at least for bigger and established companies.
With more digital exchanges launching, regulations progressing, and more tokens being issued, STOs will provide a promising fundraising tool at one point. They could even become more important than IPOs, but that’s still far out.