“Tokenization” is pitched as an efficient way to securitize small deals, under $80M. However, it suffers from a deep underlying problem, which is that small cap deals make bad security investments. They don’t consistently deliver profits for passive security buyers, and investors are not buying. If there is no way to package small offers for passive investors, then the current “tokenization” pitch is a dead end. Is your deal dead? In this article, we examine the size of the problem and propose some enhancements.
The traditional private investment market works well. There are a lot of private deals under $80M, in which 1–20 fairly active buyers buy stakes and hold them indefinitely. The volume of offers that are “securitized” and distributed to less committed investors is vanishingly small in comparison.