Tokens are financial products that allow companies to make illiquid assets liquid and investors can take advantage of the unbanked opportunities to tap into peer to peer network blockchain, and secure potentially rewarding outcomes.
Liechtenstein-based blockchain investment fund company INVAO is after these businesses and has taken a strategic decision to move their operation to the UAE following strong backings from local partners.
Ahmed Jacob, Managing Partner and CTO of INVAO recently said: “Dubai is doing great work at embracing blockchain investments as a leading emerging technology. With such a diverse and international community, the Middle Eastern region is ready to invest in blockchain technology.”
In an exclusive interview with AMEinfo, Jacob, himself a Dubai based entrepreneur, with vast experience in software engineering and IT for the financial and services industry, makes his arguments clearer.
Who is INVAO?
INVAO, the digital investment fund company, is set to play a crucial role in the implementation of the Emirates Blockchain Strategy 2021 which is why Frank Gessner, Co-Founder & Chairman, and Frank Wagner, Co-Founder and CEO of INVAO, came to an exclusive arrangement with The Private Office of Sheikh Saeed bin Ahmed Al Maktoum, the SEED Group, as official international partners in the UAE.
The two entities started working closely as exclusive partners for blockchain investments earlier this year to help raise funds, and support and encourage the blockchain industry in the country.
INVAO is currently working on investing in blockchain products and raising funds for their IVO tokens whilst attracting more investors from the UAE.
Through INVAO’s blockchain asset pool, the UAE and global investors can easily gain access to a portfolio of blockchain assets and crypto currencies.
“As we planned expansion in the region, we saw lots of companies planning to build and grow unique business ecosystems. Having a lot of experience in Blockchain, we wanted to be part of this,” Jacob told AMEinfo.
He explained that despite the crypto market rising and falling continually, the company leverages a mixture of asset management and automated trading to provide a safe and convenient access to the market as an asset class.
INVAO aims to reduce the risk of blockchain asset trading across different regions and marketplaces by using tokens creating a single, aggregated global trading pool with large-scale liquidity, rapid execution, minimal counterparty risk, and price transparency.
But is now the time?
Jacob said that when one thinks of the sector, they have to ask tough questions. “Is it the right time to go in? Is it easy to pick the cherry from the market?
The blockchain hype that existed between 2016 and 2017 is over, so there is no easy money anymore,” Jacob acknowledged, though adding that Blockchain marketplaces are inherently more secure than conventional alternatives.
And INVAO has already been successful, raising over $5 million for crypto trading in the last year and has successfully managed to make a generous profit despite a tumultuous cryptocurrency market.
How does INVAO bring peace of mind to investors?
INVAO bridges the gap between investment options and market dynamics by providing an expert blockchain asset management platform to produce intelligent insights from a vast world of real-time data.
Jacob explains that what INVAO firstly does is asset management.
“If I am investing now as a private person, what should I buy, sell or hold? We perform this inquiry in-house with analysts and researchers and investment officers. But because of high volatility in the market, we also need a hedging strategy and so we built an automated tool for trading, where everything is backed by the dollar with a stop loss at 3% and proper risk management in place, allowing us to get entirely out of the position.”
But what type of assets are investors subscribing to?
“These are digital tokenized assets and not all of them are cryptos. They could be tokens in companies or shares and we’re enabling this by introducing IVO token as our own financial product using blockchain,” said Jacob.
What companies does INVAO invest into?
INVAO invests in tokenized assets.
“Supply chain is one of many cases for tokenized assets,” starts Jacob.
“One of my favorite projects is a marketplace for data, because the hardest thing is the authenticity of the data, and using blockchain for this could be very interesting. A couple of projects in this sector are doing very well and are listed publically on top of exchanges. And in the future we have tokenization of real estate. It’s the next big thing. Security tokens are not yet listed in exchanges but by year’s end they should be. And this will allow just about anyone to invest in real estate.”
How INVAO decides on what tokenized assets it invests in depends on a technical analysis it undertakes on the token that the target company uses.
After evaluating trading volumes of the token in the market, if these security assets can be liquid, and tradable then INVAO can have them in their portfolio.
INVAO does take into consideration utility tokens, as well, such as loyalty programs in real estate or travel markets, but with security tokens, there has to be an underlying asset. INVAO chooses to offer a security token as it’s providing its holders with a digital share on the bond representing the underlying assets.
“So we will conduct a security token offering (STO) for our digital bonds token IVO aiming for a valuation before listing it on an exchange,” said Jacob.
“If there is a good project out there, we will be invested in it. We are very conservative. We will not give the green light unless we see potential growth in it, following a careful due diligence.”
What happens to the profits?
Jacob said INVAO holds a lot of projects in their portfolio and consider themselves a representation of the goods out there, but the company doesn’t distribute dividends.
“What we do are two things: We take most of the money made in profits and we inject it in the basket of digital assets we do asset management for, and so we increase the capital under management, and with it increase the value of the token as a representation of this basket,” starts Jacob.
“Then we do another model where we do buyback and burn, using 20% of our profits. We basically buy back tokens from our investors and we burn them to decrease the number of total supply and increase the value of token shares.”
At any moment in time, token holders can exchange their token over the counter (OTC) in exchanges.
“The value of the token will be based on the amount raised by the private sale and revenues made before it is STO listed,” said Jacob.
ICOs a thing of the past
ICOs were plenty fashionable in 2018 and used for fund raising similar to a crowdfunding concept.
“It’s an approach of going public or fund raising utilizing blockchain tokenizing, but it’s not a representation of blockchain as a technology, which is tech for a lot of other things, such as making illiquid assets liquid, increasing digital security and so on, and ICOs have garnered a bad rep,” says Jacob.
Following the recent decline of ICOs, alternative methods of raising funds such as STOs and IEOs (Initial Exchange Offerings) have been gaining traction in the cryptocurrency community.
“It’s dangerous to invest when you don’t know what you are doing or without the right regulations. We are fully regulated by the Liechtenstein Financial Market Authority (FMA).”