Cryptocurrency startup Swarm is determined to democratize venture capital and has recently taken a bold move toward that goal by listing tokens that permit investors to buy fractional shares in privately-owned fintech darling Robinhood.
Robinhood a known commission-free stock trading app that recently earned $5.6 billion valuations, is not holding a security token offering (STO) neither has it revealed intentions to make its shares accessible to the general public through a traditional public listing.
Those challenges, however, did not hinder Swarm from seeking a way to make Robinhood shares to the public.
This is how it operates. Through partnerships with brokers and syndicate managers, Swarm has obtained equity from previous Robinhood employees trying to cash out before the firm’s final IPO. That equity is owned by basically a shell company, whose shares are then listed on the Swarm platform as SRC-20 tokens.
According to Swarm, all of this can be achieved without Robinhood’s approval.
Anyway, these tokens are now available on the Swarm platform, with a hard cap of $1 million in contributions.
“Secondary equities transactions and refinancing of legal entities which hold private company equity are not new in the United States. What’s new here is the tokenization of these assets, and the doors opened by this innovation,” said Philipp Pieper, CEO of Swarm Fund, in a statement.
“One of the key innovations of tokenization is that token owners can participate in the value creation of the very network they are part of. Swarm is bringing this paradigm shift to companies that are key players within this movement, but have yet to permit the network to participate.”