Starting up a business is the dream of millions. After all, there’s nothing quite like being your own boss, right? But starting a company is a lot tougher than most think. The vast majority of them fail within the first year, with even more coming to a close inside of the first five years.
Part of starting a successful business is having the capital from the beginning. In the fast-paced world of business, there are new and enticing ways of gathering that capital. Tokenization for startups could be the way to go and there are some major reasons why.
Improved Liquidity
One of the major draws to virtual assets is their liquidity. Click here to see how the process of tokenization can provide adequate capital for business ventures. Being able to fractionalize assets means that it is possible for more investors to get involved, meaning more potential capital toward the business.
That improved liquidity is great for getting into new investment markets. Reaching a larger audience is the target of just about any business and offering the ability to own fractions of these tokens means that virtually anyone can get involved. It also means less of a financial commitment from the owners of the business, something that can lead to myriad issues over time.
Better Security
A major challenge facing startups is security. People are reticent to go with a new company because they don’t know much about them. By offering tokenization, startups can appeal to new investors by offering a safe, secure investment that reduces the need for sensitive data that can be compromised at some point.
There is no need to attach credit card information and transactions are totally anonymous. Improving security measures goes a long way to reducing potential fraud, making it less likely for cybercriminals to create a data breach. Stolen information is greatly reduced, providing peace of mind for those investing in the business.
Greater Speed and Efficiency
Speed is the name of the game in virtually all aspects of life these days. When it comes to transactions, it has to be fast. Tokenization is great because it allows for faster, more efficient transactions. This comes through the elimination of intermediaries, institutions like banks, that would have otherwise been required to validate transactions.
With the reduction of intermediaries comes far faster settlement times. Just as importantly, there is a reduction in transaction fees as well. Tokenization becomes more cost-effective and as efficient as ever for businesses.
Accessibility
One of the standout ways in which tokenization is helpful for startups is through its accessibility. Tokens can be divided into smaller pieces, making them more accessible to those who may not have been able to invest otherwise. That accessibility makes it possible to reach a section of the audience that may not have otherwise been attainable.
For large-scale projects, novice investors can get involved with lesser risk. It is also for businesses to deal with certain disputes and to streamline income distribution as well. Things simply become smoother with smaller transaction sizes.
Transparency
There is never a question about the transaction record when it comes to tokenization. Tokenization creates a transparent, immutable record of each transaction right there within the blockchain via a decentralized ledger.
Businesses are then able to more efficiently and confidently track those transactions. Audits become far easier and more accurate as well. That makes it possible for businesses to provide greater transparency to investors and to be accountable for transactions because they are far easier to keep track of. That’s just the tip of the iceberg as to why tokenization is so viable for startup businesses.
