One of the greatest challenges of equity crowdfunding is the time investors need to wait before exiting a project, and cashing in on their investment.
The industry suggests an average wait of five to seven years. And while this timeframe might be expected for professional venture capital investors, for the average Joe, it’s simply too long to wait.
Inequity crowdfunding or private company investing, you can generally only exit when everyone else does.
This means that a company could be booming, and its value could be sky-rocketing – but you’ll be stuck, unable to cash out, until it’s sold or listed.
Plus, as many companies seek investment during a phase of hyper-growth, dividends tend to be unlikely.
This ‘illiquid’ nature of private company investments is a major block to mass investment, and to crowdfunding.
Lack of liquidity is holding crowdfunding back from reaching its true potential.
IBM estimates that the global crowdfunding market should be worth $1 trillion by 2030. Yet today it’s only worth $10 billion worldwide (or about ¼ of Jeff Bezos’s divorce settlement!).
When you make an investment, you should be able to sell whenever you choose to. That’s why ensuring liquidity is such an important part of the Dacxi Chain tokenized global crowdfunding solution.
The Dacxi Chain is poised to solve the issue of liquidity in crowdfunding.
The Dacxi Chain’s tokenized crowdfunding platform includes an exchange where people can sell the equity stakes in projects they’ve invested in.
This means investors will no longer be locked in for time periods beyond their control. They can sell at any time for market value on the Dacxi Chain exchange.
And once their investment is liquid again, they can either reinvest it in another project on the Dacxi Chain, or cash it out in their local currency.
Tokenization of shares makes their purchase and sale easy, and simplifies the process of making and receiving payments.
What’s more, the market for projects on the Dacxi Chain will be global, which will vastly increase the number of buyers and sellers. Think of it as the difference between selling something through your local free newspaper, versus selling it on eBay.
For the founders of a new venture, liquidity is critical.
Founders and entrepreneurs whose own shares are tokenized by the Dacxi Chain also stand to benefit from enhanced liquidity.
In business, liquidity measures the ability of a business to convert assets (in this case a founder’s shares) into cash.
When liquid assets can be quickly and easily sold and changed into currency, projects are able to overcome financial challenges and gain the flexibility needed to adapt to changing conditions.
This form of liquidity is particularly useful when there are changes in key people at a project. Founders can dilute some of their own shareholdings to attract new talent.
Or if one of the founders wants to move on, they can easily and transparently sell their shareholding at market value.
While no one likes to think of selling shares, a clear and simple exit strategy is always a good idea. And paradoxically, a solid exit strategy makes it easier to commit to an investment in the long-term – because it gives shareholders a sense of control.
This is what the Dacxi Chain will achieve, by introducing genuine liquidity to the crowdfunding market.
For the latest information on Dacxi Coin and the Dacxi Chain, visit dacxicoin.io. You can download the Lightpaper, and join the Dacxi Coin telegram community.
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