Morgan Creek Blockchain Capital is tokenizing a private company’s equity, turning its existing shares into new security tokens.
The blockchain wing of Morgan Creek Capital Management, an investment advisor, announced Wednesday that it is working with Anexio Technology Services to convert all of its physical shares into an ERC-20 token. The ERC-20 standard allows for the creation of tokens on the ethereum network.
The company plans to raise $40 million by selling the tokens to accredited investors.
Morgan Creek chief investment officer Mark Yusko told CoinDesk that the investment firm partnered with Anexio because it was confident in the firm’s economic position, noting that it “is one of the 500 fastest-growing companies in the U.S.”
On its own, Anexio already qualified for financing through a bank, he said, which “gives a sense of the financial health of the business.” The company produces graphical processing units (GPUs) and will expand its production capabilities with the funds it expects to raise.
Anthony Pompliano, a partner with Morgan Creek Blockchain, explained that tokenizing Anexio’s shares allowed it to raise funds from a broader group of people, telling CoinDesk:
“By tokenizing the business, we took the cap table, the paper shares – every company in the world has paper share certificates – and we tokenized it. We swapped, one for one, the paper shares for tokens, which allow for a global investor base and trades on a security exchange.”
The benefit for investors, Morgan Creek Blockchain partner Jason Williams told CoinDesk, is that “It has all the benefits of a cryptocurrency, but the underlying asset is a company with assets and cash flow.”