Last week the blockchain community celebrated yet another announcement after the rapper Lil Pump started accepting Bitcoin for merchandise: Streetlife International GmbH, one of Europe’s leading independent music, lifestyle, and events promoter said it’s going to launch an STO.
The company has teamed up with Switzerland-based BlockState. Both companies plan to launch the STO sometime in the second half of 2019.
Streetlife and BlockState: German hip-hoppers team up with Swiss tech nerds
Based in Berlin, Streetlife International was founded in 2004 as a privately owned promotions and event hosting company. It handles the entire event planning cycle and is mostly active in the R&B and hip hop space. Today, the firm has nine employees with yearly revenue of $600,000, according to Owler.
BlockState entered the market in 2018 and offers a digital fundraising platform for the issuance and management of privately owned assets through tokenization. The company is based in Zug, Switzerland and has an office in Berlin.
Streetlife will be BlockState’s first STO. Paul Claudius, BlockState’s CEO, explained how the company has numerous clients preparing to launch STOs in the coming months, but did not mention any of those other STOs by name.
One of the first non-blockchain firms to launch an STO
The Streetlife STO will be an equity offering. Similar to stocks with dividends, security token holders can expect to receive a portion of the company’s revenues. The exact details of the offering have not yet been confirmed.
The most exciting aspect of the Streetlife STO is that the company has no relation whatsoever to the blockchain industry or even the broader tech space. While the first STOs in Europe were almost all conducted by tech companies, Streetlife falls out of this pattern, indicating that STOs can add value as a financing instrument across all industries.
Claudius says, “This is not only an important turning point for BlockState, but it shows the significance of tokenization for the fundraising market beyond the crypto and blockchain ecosystem.”
That said, we don’t know the agenda of Streetlife. Although the company is unrelated to blockchain markets, their customer group is mostly young and tech-savvy. Therefore, Streetlife might be looking at the STO more from a marketing and branding perspective instead of using it as a primary financing tool.
STO’s value proposition is especially attractive for SMEs
Although a leading music promoter, with annual revenues less than $1m the company is a small-cap SME. The fact that the management looks at financing via security token markets highlights STOs value proposition for small businesses.
IPOs are too expensive, and private equity and venture funds often ask for voting rights, taking at least some control over the business. Therefore, STOs are an attractive, cost-effective financing alternative for SMEs.
It is likely that STOs will gain popularity in the SME sector over the next years. And it is also expected that many of them will come to Switzerland and Liechtenstein, as that’s where they can find the needed expertise and infrastructure. The recent introduction of the Blockchain Act in Liechtenstein will undoubtedly foster this trend.