In the last decades, the Startups that have been emerging, before they became public companies through an IPO (Initial Public Offering), were captured in their startup phase by a small and exclusive group of investors. In addition, in order to access certain investment offerings, it is necessary to be an Accredited Investor.
For example, according to the laws of the U.S. Securities and Exchange Commission (SEC) a natural person to be an accredited investor must meet at least the following two requirements:
- Have capital in excess of USD$1 million, alone or jointly with his or her partner, not including the value of the first residence.
- Have income exceeding USD$200,000 or USD$300,000 if as a couple, in the last two years and expect the same for the next year.
If we look at the European Union law, according to the Markets in Financial Instruments Directive, an experienced investor should:
- Have fulfilled a trading transaction for a minimum amount of €50,000 at least about 10 times for each four-month period of the year.
- Have a financial portfolio exceeding €500,000
- Have worked in the financial sector for at least 1 year in a professional position requiring knowledge of the transaction or service.
Consequently, restrictive rules prevent the Small Investor from accessing big investment opportunities. But today, Blockchain technology allows us to access a decentralized global platform, allowing the opportunity for access to non-accredited investors through Asset Tokenization.
Asset Tokenization allows small investors to access quality innovative projects without being accredited investors or having big sums of capital.