Interested in listing your company on Red Matter? Find answers to common questions here.
Red Matter’s user-friendly application allows you to create and publish your investment offers through a regulated platform and offer them directly to investors, who purchase a digital security token representing your physical assets (e.g. shares in your company).
You receive financing according to the terms you set in your investment offer and the underlying Blockchain smart contracts that issues and manages the securities purchased by investors.
Investors have different reasons for investing in a project depending on whether the investor is an older experienced investor or a tech-savvy Millennial who wants the opportunity to invest in projects that are aligned with their interests and beliefs. In both cases, investors are looking for innovative, high value potential companies at early-stage of development.
Investors coming to Red Matter will see your project investment offers and your public-facing project and creator page with marketing materials. Discussions, news and events you create help engage fans and convert them into investors. We encourage you to use our marketing tools to draw investors to your project.
Once you register as a creator, the wizard and its toolkit hints will walk you through the steps to list your project and create investment offers in the form of digital securities. The information you enter in the wizard is displayed on the project page and in an Offering Circular.
Investment securities are a tradable financial assets such as equities or fixed income instruments. Typically, securities can be Equity securities (stocks and a share of ownership in a company), Debt securities (a note obligating a borrower to pay the lender on fixed terms) and Revenue Share securities or rights to a share of the company’s future revenues/profits.
Digital securities are a digital representation of an asset, creating a tradable instrument and bringing liquidity to a non-tradable asses. Pre-IPO company’s shares, intellectual property, a company’s physical stock, real estate, collectibles and digital content are just a few examples of assets against which a regulated digital security can be issued.
When a company creates securities on the Red Matter portal, they are issued as tokens on the Ethereum Blockchain. Those tokens are backed by your physical assets, for example shares on your company registry, and are purchased for fiat or crypto by investors.
When tokens are purchased, payments in the issuer’s chosen currency are deposited into an escrow account managed by Red Matter on behalf of the issuer, as specified in the Issuer Agreement with Red Matter. When funds are transferred to the issuer’s bank account according to the agreed schedule, you register Red Matter as the custodian of the assets sold (e.g. shares) on behalf of investors. The use of Blockchain for ditransactions does away with prohibitively expensive legal costs that prevent small investors from purchasing non-publicly traded securities.
Crowdfunding typically raises financing for new businesses in exchange for a product or service to be delivered at some point in the future. Securities issued for a project provide the means for investors to purchase an asset backed security token, for example shares in a Pre-IPO company.
Red Matter focuses both innovative companies with proprietary technology, media content and products that disrupt traditional industries as well as companies that need liquidity by collateralizing hard assets they own (e.g. accounts receivable, metals, real estate).
A company may issue three types of financial securities: equity, revenue share and debt. An equity-based security provides the investor with a number of non-voting shares in the company that owns the project. A revenue share security grants the investor, rights to a percentage of revenues that the company receives. A debt security is a loan for a fixed term and interest percentage that the company commits to pay to the investor when the obligation becomes due. A Debt security may be represented as a fixed income note or a convertible note where the investor is able to convert the note to shares at the date of maturity. Each of the different security types are transferrable and sellable to other investors on Red Matter’ secondary market exchange.
The waterfall position indicates the investor’s order of priority in the disbursement of funds from recouped revenues. For example, after ‘soft’ government funding indicates that the investors will recoup after the government funding is paid off. When filling out the revenue share offer, you need to indicate the waterfall position to tell investors at which point they will recoup their investments.
Yes. Securities issued by film companies are subject to laws and regulations under the Capital Market Authority of Montenegro, aimed at protecting investor rights with respect to securities purchased.
A significant advantage with Red Matter is that an investor may sell securities to another investor on Red Matter’s primary exchange, thereby increasing liquidity on their investments and reducing their investment risk. Additionally, an issuer may place his security tokens on a DEX market like Pancake Swap for crypto investors to trade against other crypto tokens, as well as staking into a liquidity pool to earn yields from their investment. To know more on DEX market trading and how it can create liquidity for a security token, go to this page
Red Matter provides its own centralized primary exchange for peer-to-peer trading of security tokens as well as integration with DEX markets for trading of a security token as a synthetic token. To know more on synthetic tokens and DEX market trading, go to this page
When purchasing securities, the costs are paid for by the project issuer who pays for credit card fees, wire transfer and bank fees. Issuers are recommended to factor transaction fees into the security offer price and in the minimum investment amount.
There are no listing fees. You pay only a 5% fee on the amount raised from investors. There is a fee for physical assets (e.g. shares) under custodianship and a management fee for the escrow account, altogether 1% of the funds raised.
Red Matter provides marketing tools to give reward tokens to fans in exchange for actions that help promote your project. For example, a fan may write a review, post a story or provide referrals that help to build a fan base. In return for those actions, the fan/follower receives free reward tokens. Reward tokens are stored in an encrypted wallet that are provided to both the fan and project owner.
Projects listed on Red Matter can offer rewards in the form of vouchers that are priced in tokens. For example, an issuer may give a discount on your securities in exchange for reward tokens. The reward possibilities are limited only by your creative thinking.
Blockchain represents the next evolution in achieving efficiency, transparency and authenticity of financial transactions. It is an immutable ledger that registers a content creator’s securities and the investors who purchase them. Red Matter protects your intellectual property with a blockchain registration which records and verifies all financial transactions on ledgers to confirm the transaction and transfer ownership.
Security tokens are a digital representation of the value of a security, which is recorded on the blockchain ledgers. On the Red Matter platform, each token is equal to 1 unit in the default currency of the project (e.g. 1 token = USD $1). Each project has its own unique token, similar to a company’s symbol on a stock exchange. When a security is offered, the price is shown both in the project’s default currency that was selected by the issuer company.
Reward tokens are a type of ‘utility token’, which can be exchanged for rewards such as a discount on security tokens issued by a company. Reward tokens are not securities.
Your wallet is stored with encrypted keys on the blockchain. When setting up an account, you will be asked to choose whether you wish to store those keys yourself (cold wallet) or to store your keys on Red Matter’s wallet (hot wallet). Whereas the cold wallet is absolutely secure, only you will have the encryption keys. If you lose the keys, you will not be able to recover your wallet to re-install it.