What’s the big deal about STOs?

Interview with Yael Tamar, CMO, SolidBlock

By Tzivia MacLeod

If you’re like me, you’re seeing the term STO in financial papers everywhere and wondering what exactly it means.  And of course, the question on everybody’s mind is always how it’s going to affect you and your money.  With that in mind, I sat down to chat with Yael Tamar, CMO of SolidBlock, an Israeli company that’s looking to change the way people invest in real estate—and really the whole meaning of property.

Tzivia:  Hi, Yael.  Maybe you can start by telling me a little about what SolidBlock is doing?

Sure.  It’s pretty simple, really.  We’re giving asset owners – people who own real estate, in this case commercial real estate, with a new fundraising vehicle.  And we’re offering them a compliant global platform for the issuance and trade of digital securities backed by real estate and other assets.

Tzivia:  What was your background before you started doing all this?

I have over a decade of experience doing marketing in the fintech, finance, telecom and energy industries and a long track record as an entrepreneur. I founded the Women in Block global network, advancing women influencers in the blockchain industry. And I’ve also just been named a regional co-chair of FIBREE, the Foundation for International Blockchain and Real Estate Expertise, the leading international network for exchanging knowledge between the real estate industry.

Tzivia:  Wow.  That’s very impressive.  Okay, let’s get into it – tell me why real estate investing needs to change.  What was the problem with the old model?

In the old model, real estate has become a very closed off industry.  On the one hand, it’s a desirable investment because it has solidity, stability, and real-world value.  On the other hand, it’s inaccessible to most people because of high investment thresholds or restrictions on qualified investors.  The old model also has numerous layers of middlemen, meaning it’s by definition slow and inefficient.

Tzivia: So what is SolidBlock doing differently?

Old models for funding CRE projects include commercial loans, private equity and REITs.  These processes are usually manual, paper-based, and inefficient.  SolidBlock is challenging these by offering an efficient way to reach more investors, and more types of investors, creating unprecedented liquidity and freedom.

Tzivia:  It sounds great, but lots of people are out there making promises in this space.  What’s the big idea, how are you actually going to make it happen?

The big idea is that blockchain technology creates trust and security, eliminating layers of middlemen, and also increasing the speed with which transactions are possible.  It is also an opportunity to create more democratic investment platforms in which things like crowdfunding for real estate assets becomes possible.

Tzivia:  But aren’t many companies promising the exact same thing?

They are.  But we like to point out that our major point of difference is that our model is tried and tested and it works in the real world.  Unlike most people out there – we’ve actually done it successfully.  

Tzivia:  Tell me more about that STO.  It was a resort property, right?

It was actually the first commercial real estate tokenization project in the world.  In 2018, we helped the prestigious St Regis Aspen, a AAA ski resort in Colorado, raise $18 million through tokenization on a crowdfunding platform.  It had never been done before, and we were the ones who did it.  They got to fund their renovation and we got to prove the viability of our tokenization blueprint.

Tzivia:  So what’s unique about SolidBlock’s approach that makes if more viable?

SolidBlock’s approach is unique in that it makes the entire process of tokenizing all or part of a real estate asset as simple as possible.  You set the terms and control all the conditions—raising money quickly and easily.

Tzivia:  A minute ago you mentioned blockchain.  I want to swing back to that because there’s been so much hype.  I think investors aren’t totally trusting anymore.  There’s a perception that it’s not quite ready for prime time.

That’s why what we’re offering is different – because we’ve done it already.  Lots of people are out there selling something that’s going to work in the future.  But we’ve already done it.  We see blockchain as a tool—if you hire a carpenter to build a cabinet, you don’t care what kind of hammers or screwdrivers he uses as long as at the end of the day you have a gorgeous cabinet.  Blockchain is the tool that makes it possible, but it wouldn’t work if our model wasn’t successful.  

For example, blockchain offerse smart contracts functionality, which takes the place of the traditional middlemen in real estate investment.  Blockchain ensures the security of the ledger in which transactions are registered and gives us the speed and transparency to make verifying these transactions possible.  But those things are less important than the end result – meaning the impact on our customer’s business.

Tzivia:  Okay, then – what would you say is the main impact on the customer’s business?

The biggest impact is that our clients can raise as much money as they are looking for without jumping through all the hoops that traditional methods, such as an REIT, might require.  And they can go to non-traditional investors who might otherwise be discouraged by high investment thresholds.

Tzivia: What are the main ways you’re doing that?

First, by offering an end-to-end platform that for the primary market (issuance) onboards projects and investors into the system, presenting them with projects based on their requirements after they pass KYC/AML/accreditation checks.The platform has built-in regulatory compliance features with smart contracts accounting for jurisdictional requirements, such as the maximum number of investors or amount of funding per project, lock-up, accreditation and any other limitations. All these features make it easy to issue the STO and ensures the highest possible chance of success.

But SolidBlock’s services don’t stop there.  First, before the STO we’re highly involved in asset valuation.  That means we make sure the project valuation is actually up to par with the acceptable methodologies as well as provide machine-learning algorithms to establish periodic valuation per asset, as well as indexing, benchmarking and price and market movement prediction to ensure the maximum spread of value.  And then we’re also focused on the secondary market, meaning trading tokens for crypto or even fiat currency.  That gives investors the greatest possible liquidity for their investment.

Tzivia: Sounds like you’re busy addressing lots of the items from the tops of asset owners’ wish lists—a simplified STO process, full regulatory compliance, investment liquidity.  What would you say is at the top of SolidBlock’s corporate “wish list”?

Right now, we’re actively seeking partners such as real estate developers to work hand in hand making their projects a reality.  And we’re looking for partners in the traditional real estate investment world so we can help guide and steer what that’s going to look like over the next five and ten years – and beyond.

Tzivia:  Amazing.  Well, I can’t wait to hear more from you and the whole team at SolidBlock.  Thanks for sitting down with me today.
For more information about SolidBlock, please visit http://solidblock.co

Tzivia MacLeod

Jennifer Tzivia MacLeod, an award-winning Canadian-Israeli author, journalist, and marketing/tech copywriter. And with a range of technical skills and numerous disciplinary interests and areas of expertise, along with decades of freelance experience, she bring a wealth of experience in a variety of technical, persuasive, and marketing fields to any project

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