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    Suitability review
    Fundamental preparation
    Capital structuring, valuation and modelling
    Demand and distribution analysis
    Issuance platforms, listing venues & legal

    Our Services. Security Token Advisory

    We assist issuers throughout all phases of planned security token offerings. Issuers who qualify to become clients of 01 Capital can opt to received advice specific to individual phases or let us carry out the execution of the STO end-to-end.

     
    Suitability Review

    The potential success of any STO depends ultimately on factors such as the quality of the issuer, its business plan, its capital structure, and the investor risk / return proposition. Also whether or not an STO should be chosen over other routes to raising capital will depend on a number of factors which require careful consideration. We therefore offer clients a low cost path to better understand what to consider before embarking on an capital raising and whether an STO is a suitable route. Our suitability review considers five key areas. 

    1. Business or project

    Review and SWOT analysis of the business/proposal to assess how suitable it is for capital raising

    • If it is a proposal, where this sits in the market and what makes it unique

    • If it is an established business where is it on the path to an MVP and revenue

    2. Management

    Review of the management team, its background and experience and motivation behind the business,

    3. Business plan

    Review of the management business plan, including projections, current runway and capital requirements. It is important that the business plan is clear on what new capital is required and what it will be used for and what milestones are achieved before management goes back into the market for further capital raising.

    4. Capital structure

    • Review of the capital table and current securities in circulation to ensure there are no restrictions on capital raising and/or restrictions on the use of funds

    • Assessment of the impact of the planned issuance on future ability to raise further tranches of capital and obtain bank financing 

    5. Investor considerations

    • Where a security or token has already been structured, we will review these to see if they will meet investor expectations and can be sold or require additional work

     
    Fundamental preparation

    We assist with the careful preparation required in any envisaged capital raise, including the preparation of virtual data rooms, white papers, business plans and investor presentations which are to the standard required for financial promotions.

    1. Virtual data room

    A virtual data room (VDR) is a digital store of all key company information. This will include, amongst other things:

    • Formation documents

    • Key legal documents including contracts

    • Financial information

    • Operational information

    • Management Bios

    The VDR forms the base of the preparation of the other documents and the basis for fuller DD by investors

    2. White paper

    For DLT related projects, investors will expect a white paper. A white paper will cover:

    • Principles of the project

    • How it will make use of the blockchain

    • Which DTL it will use

    • If a token will be involved and the structure and economics behind the token

    A white paper is not a standard document which in itself forms part of a securities offering.

    3. Business plan

    A business plan will be a financial overview of the business. A business plan should address:

    • Financial assumptions of the business with supporting evidence

    • 12-month detailed budget

    • 3/5-year forward financials

    • Funding requirements and UoF

    4. Investor presentation

    An investor presentation should capture the investors' interest both conceptually and financially. A good investor presentation will be vital in starting an engagement with potential investors. The presentation should cover:

    • What the business is about

    • Market overview and the gap in the market that it is going to address

    • Management team and experience

    • Progress to date

    • Key financial information

    • Proposed capital raising and potential returns  

     
    Capital Structuring, Valuation, and Modelling

    It is critical for issuers to ensure any capital structure used in a capital raise does not impede future financial and strategic flexibility. At the same time, the structure of a capital raise and valuation expectations must consider investor expectations and be suitable for the issuer's sector and stage of maturity. We provide capital structuring and valuation advice that balances real-world expectations with the need for financial innovation.

    1. Capital structuring

    • Capital structuring is about achieving a balance between a) raising the money required to finance the development/growth of the company, b) offering a proportion in the company for the capital, c) achieving a return that makes it attractive for investors

    • Capital structuring will look at different instruments that can be used and how these can impact the financial forecasts of the company

    2. Valuation

    • Valuation is an art rather than science and we use a combination of techniques to produce a fair valuation. Pre- and post-money valuations are important for investors as they will give an idea of the work that has been done and the value the market has placed on it

    • At the early stages in the life of a company, valuations can be difficult to substantiate, in most cases, a valuation will have to be set at levels to attract investors

    • As the business develops a fundamental approach to valuation can be used with more certainty

    3. Modelling

    • Financial modeling will bring together the business plan/capital structure and valuation

    • Modeling various capital structures over the business plan of the company will allow for analyses of the impact on current and future shareholders of the proposed structures

    • Building in the work on valuation will give an indication of the types of returns investors can expect

    • The modelling work will allow us to analyze different funding structures and evaluate the business plan from an investor's viewpoint

    Demand and Distribution Analysis

    There is a universe of natural investors and distribution channels for any given issuer maturity stage, subsector, and issuance mechanism which needs to be identified in advance of any capital raise. We assist clients with mapping potential demand and routes to market.

    1. Precedent transactions 

    • We are able to map which investors have participated in funding rounds in similar sectors and similar stages of maturity

    • In addition, we categorize those investors who have shown a documented willingness to hold digital assets

    2. What do investors want

    • Is there a sufficient number of identified potential investors willing to invest in the contemplated instrument if this is a token?

    • Alternatively, are traditional instruments more suitable and could they benefit from an option to tokenize in the future?

    3. Investor access

    • We focus exclusively on institutional investors and identify those to whom we have access and with whom we have existing relationships

    • When required, we identify whether our partner advisory firms or broker-dealers have access to a complimentary investor base in overseas jurisdictions

    4. Platforms

    • Crowdfunding platforms may be suitable in some instances depending on the size of the capital raise and the type of business of the issuer

    • Alternatively, distribution through private banking networks may be possible subject to successful precedents which need to be well understood in advance

     
    Issuance Platforms, Listing Venues and Legal

    The choice of issuance platform can depend on the ultimate intended venue(s) for the STO listing which in turn needs to be considered with the target investors in mind. The choice of jurisdiction for the STO will, in turn, drive the choice of law firms. We assist clients in evaluating appropriate options.

    1. Issuance platforms

    • There are numerous choices of issuance platforms which can be independent, linked to a trading venue, or part of a banking platform

    • Certain issuance platforms may be more suitable than others depending on the company’s sector, its geography and its offering and the listing venue which is the most appropriate

    2. Listing venues

    • New listing venues for STOs are emerging and the choice of venues is evolving

    • We are able to provide a comparative analysis allowing issuers to assess the pros and cons of different listing venues

    3. Legal

    • We do not provide legal advice but can recommend law firms once a platform, a venue and a jurisdiction have been chosen. In some cases, the legal work will be carried out by the issuance platform or venue

    • We will assist the appointed law firm with inputs into key offering documents

     
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    01 Capital Limited is a private limited company registered in England and Wales with registered number 12091097. 01 Capital Limited is an appointed representative of Laven Advisors LLP, which is authorised and regulated by the Financial Conduct Authority.

    © 2020 by 01 Capital Limited