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FAQs

Interested in direct investments in innovative early stage companies? Find answers to common questions here.

THE BASICS

Explore the Pre-IPO projects and listed financial securities on Red Matter and follow the steps to open an account as an investor. Securities regulations allow for both accredited and non-accredited investors to purchase investment offerings on Red Matter’s portal.

Anyone from any country (excepting internationally sanctioned countries) can create an investor account and proceed to invest in a project.

INVESTING

Pre-IPO

Our team includes a number of industry veterans who have worked together to create the criteria a project must meet before being accepted on Red Matter. These criteria are straightforward and widely accepted. Projects include a formal investment officer, which sets a higher bar for the amount and type of information that creators must provide.

A security is a negotiable financial instrument that holds some type of monetary value. It represents either an ownership position (e.g. shares) in a company, a creditor relationship represented by owning a debt obligation, or rights to a share of the company’s future revenues/profits.

Red Matter focuses on innovative companies with proprietary technology, media content and products that disrupt traditional industries. We showcase talented content creators, game developers, media and tech companies and let loyal customers and fans become investors.

Companies on Red Matter sell shares and securities directly to investors, cutting out investment banks and Wall Street middlemen. Typically, early-stage investors are limited to VC’s, brokers and banks, with individual investors unable to access potentially valuable deals. Red Matter allows individual investors to directly invest in companies they believe in.

Any start up or early stage companies have a significant risk and you may loose all of your invested capital Although the risks are higher than an established business, the potential rewards can be higher as well.

Crowdfunding typically raises financing for new businesses in exchange for a product or service to be delivered in the future. Securities issued for a project provide the means for investors to receive a share of the project’s financial success, either through shares in the company or a share of revenues/profits.

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’s secondary market exchange.

The waterfall position indicates in what order investors receive funds from revenues that are recouped. For example, if the investor’s position is after ‘soft’ government funding, this indicates that the recoupment for investors happens after the government funding is paid off.

An investor may sell securities to another investor on Red Matter’s Primary Market exchange. Transactions on the exchange are executed by Blockchain smart contracts that enable peer to peer transactions. Additionally, if the Pre-IPO company issued a synthetic token, an investor is able to convert the security token into a synthetic token and trade it on a supported Decentralized Exchange.

When purchasing tokens, the costs are paid for by the project issuer. If you pay in a different currency than the project currency, you receive the amount of securities after converting into the issuer’s currency.

When trading securities on the secondary market exchange, buyers pay a 1% commission.

Contrary to other forms of investment like crowdfunding, securities issued by companies are subject to the laws and regulations of the Capital Markets Authority of Montenegro, aimed at protecting investor rights with respect to securities purchased.

Depending on the investor’s domicile, the purchase of a security is regarded as a capital investment, in the same way as purchasing a company’s stock on a stock exchange. When an investor sells the stock, it may become a capital gain (in case of an increase in the price of the security) or a capital loss (in case of a decrease in the price of the security at the time of sale). In various domiciles, a capital gain or loss is declared against taxes to be paid. Please consult a tax specialist in your jurisdiction.

Red Matter operates an exchange where securities maybe traded on a secondary market. The exchange allows investors to offer their securities for sale and for buyers to bid to purchase them.

Red Matter smart contracts settle the transactions directly between buyer and seller. In order for the smart contract to settle the transaction, only crypto payments are allowed. Investors need to open a wallet on a crypto exchange of their preference in order to have crypto to trade.

Listed Financial Securities

Yes, you can. There are no restrictions for you to purchases financial assets on Red Matter unless your domicile is an OFAC country. For orders exceeding USD 10,000, Red Matter will request additional information on your personal details including ID, proof of residency and address.

When you create a buy order for a stock or commodity and pay for your booking, you receive a booking confirming your purchase and a status field on your order. When the status changed to ‘Filled’, it indicates your order was processed, indicating that your order was accepted.

After your order is filled, you are issued digital securities on a Blockchain smart contract that are backed by the stock/commodity which you purchased. The digital securities are pegged 1 to 1 against the assets you purchased and allow to easily trade them on decentralized exchanges or investors in the crypto community.

For now, we accept only LTC coin as a means of fast booking unless you proceed to fund your account in advance with fiat.

When buying or selling a security on a publicly listed exchange, the following fees apply to your order:

  • .30% transfer and conversion cost from LTC to USD
  • $1 per share

To view more information, go to this page Fees

Transfers on Blockchain smart contracts can be credited in seconds using crypto whereas fiat may take days to be received which makes the limit order price you placed no longer valid by the time your fiat is received. When Red Matter receives your LTC transfer, we can convert to fiat, transfer to our broker account and execute your order within 1-2 hours.

Yes you can. Send an amount in Euro or USD that you wish to fund your account. Once received, you may go to your dashboard to book your order and receive confirmation within minutes.

You can sell your financial securities by selling its security tokens on the Primary Market Exchange. You can also place a cash out request to Red Matter as a Sell Order, subject to terms and conditions.

Decentralized Exchanges (DEX)

Some digital security tokens on Red Matter have underlying smart contracts that can be converted 1 for 1 into a synthetic token that can be traded and staked on a secondary DEX market, such as Pancake Swap or Uniswap.

On listed securities such as Pre-IPO, stocks and commodities, the summary view of the security tells you if its available to trade as a synthetic token. Also, you can view all listed assets available on DEX markets by clicking on the DEX tab on the financial securities page.

Go to the Portfolio tab on the investor dashboard and view the ‘Holdings’ token list. If you are holding a security token that has a synthetic token linked to it, click the button ‘Convert to Synthetic’ to trade it on a DEX market.

Go to the Trade tab on the investor dashboard and click on Exchange. If your security token has an available synthetic, it will be listed as a Secondary Market asset. Click on the ‘Trade’ button next to the asset to trade on a DEX market or the ‘Add Liquidity’ button to add the synthetic to a liquidity pool that can earn farming yields.

On Red Matter, synthetic tokens are backed by underlying real assets that protect the value of tokens traded on DEX markets. For example, if you own Telsa stock and have digital security Tesla tokens, you can convert them into synthetic tokens that get traded on DEX markets. If the DEX market synthetic token price becomes lower than the security token, you can sell the synthetic back into the security token without incurring a loss on your original investment.

If you invested in a Pre-IPO company, your security tokens get liquidity when trading them on DEX markets where liquidity pools are staked by investors. If you invested in a publicly listed financial security, you can earn additional returns by trading the synthetic on a DEX market.

HOW IT WORKS

First you register as a user on Red Matter in order to view investment offers. When you are ready to invest in a project or financial security, you will be asked to set up an account in order to provide further details about yourself and to get approved.

Once your account is opened on Red Matter, you are able to start investing. You do no need to fund your account in advance. However, SWIFT and SEPA transfers will take 1 to 3 days to be received on your account and allow you to be credited with digital securities. Some time sensitive purchases such as listed financial securities on public exchanges may need advance funding. Please review the Listed Financial Securities section to know more.

Purchasing a security is done fully online. When you view an investment or trade offer on the Red Matter platform, click the Invest or Trade button which will take you to an order page to confirm the type and amount of securities you are purchasing. You will be asked to Accept a Subscription Agreement that explains the terms and conditions of purchase. Thereafter, choose the payment method from the list that included credit card, bank wire transfer and crypto wallet transfer.

THE Red Matter PLATFORM

Blockchain is an immutable ledger that registers an issuer’s securities and the investors who purchase them. All transactions that are made on Red Matter’s platform are recorded and verified on the ledgers to confirm the transaction and transfer ownership. Blockchain represents the next evolution in achieving efficiency, transparency and authenticity of financial transactions.

Tokens are a digital representation of the value of a security, which is recorded on Red Matter’s blockchain. On the Red Matter platform, each token is equal to 1 unit in the default fiat currency of the project (e.g. 1 token = $1). Each project has its own unique token, similar to a company symbol on a stock exchange. When a security is offered, the price is shown both in fiat and tokens, which are identified by a ticker symbol.

Reward tokens are not securities. They are a type of ‘utility token’, which can be used to access rewards such as experiencing a live interview with founders of a project, obtaining an executive producer credit for films and more. Reward tokens are not securities, but more like reward points.

Reward tokens are given by the projecdt company in exchange for actions that you take to help promote the project. For example, as a fan, you may write a review that helps to build a fan base and in return receive free tokens. As an investor, the higher the amount invested, the more free reward tokens you might receive. Reward tokens are stored in an encrypted wallet that is provided to you by Red Matter.

Film projects offer rewards in the form of vouchers, where each voucher has a token price. Fans and investors use their wallet to transfer to the project creator in exchange for vouchers. Reward tokens can also be freely transferred to another wallet at no cost.

Your wallet is stored with encrypted keys on the Blockchain. When setting up an account, you will be asked if you want to store those keys yourself where only you have access to the keys (cold wallet) or to store those keys on Red Matter wallet (hot wallet). Whereas the cold wallet is bulletproof, if you lose the keys, you will not be able to recover your wallet if you need to re-install it.