RISE, a developer of AI-based trading strategies for institutional and retail investors, launched the next STO in Germany. The company offers a profit participation right and guaranteed repayment over 25 years.
Munich-Based RISE Wealth Technologies has launched a $120 million Security Token Offering. The company provides software technology for the implementation of trading strategies based on machine learning and artificial intelligence.
CEO Stefan Tittel explains, “RISE has an ambitious goal – to revolutionize the trillion-dollar asset management industry with our AI-based technology.”
RISE business model: trading strategies for institutional and retail investors
RISE develops AI-based trading strategies which it will license to financial services companies, investors and institutions and will receive fees corresponding to the sums managed with the solutions.
The company has launched two core brands: RISE Pro, for institutional investors, and RISE Retail, for retail investors. According to the company, its flagship strategy “Volatility Opportunities” has generated 4.5 times higher returns than its benchmark indices.
There is also the RISE app, which enables retail investors to manage their crypto portfolios. Users have to pay a subscription and transaction fees.
The RISE Crypto Scanner, a wholly automated tool for monitoring and analyzing the performance of over 1,000 cryptocurrencies on more than 50 stock markets, is in beta testing with 2,000 participants.
STO structure: profit participation and full repayment over 25 years
The token sale is open to professional investors since July 15th and will close on September 15th, 2019.
CEO Tittel says, “The STO offers investors the opportunity to participate in the success of AI technology in the financial industry, with a repayment claim, profit share and an additional entrepreneurial opportunity to participate in an exit.”
The RSE Token includes a profit participation right, which entitles investors to 20% of profit before interest and taxes (EBIT). Profits will come from the company’s business lines for institutional and retail investors, including all revenue streams of the platform, which are mainly trading fees and licensing of the technology to 3rd parties.
The company will pay out dividends quarterly and token holders will receive 4% annual payback in addition to their profit payouts for 25 years. As the token has a nominal value of $1, the full investment will gradually be paid back over the next 25 years. If the company undergoes an IPO, investors are entitled to the proceeds.
The STO’s hardcap is $120 million, one of the largest STOs in Europe so far. Maximum token volume is set at 170,000,000 RSE tokens.
In the first STO phase, tokens are sold at $0.50. Investors will have to buy tokens worth at least EUR €100,000 for European investors and $50,000 for US investors. The public sale will start “as soon as the regulatory requirements are met,” according to RISE.
Funds will be used to further develop and expand the platform
RISE will invest the STO funds in the continuous improvement of their existing trading platform and the development of new technologies. The largest share of the raised funds will be used for a global expansion to attract institutional investors. According to the company, this will “result in license fee revenues and thus increased token holder dividend payments.”
It’s positive that the STO funds will be used to expand an already existing product that has already seen first successes. Another positive is that RISE will work with Coinbase-backed Securitize, which has already helped several companies through the tokenization process.
At this point, however, the offering is only accessible for professional investors.