My Startup: Smartlands
Smartlands was started in 2017 by a small team of entrepreneurs with a background in banking, finance and technology.
Back then, cryptocurrencies and ICOs were top headliners in the news; everyone was talking about blockchain and how it’s poised to disrupt every industry. On the wave of hype, Smartlands started looking into this technology to see how it can help transform traditional investing.
They developed a blockchain-based platform for crowdfunding investment that provides an opportunity to buy (and subsequently trade) fractional ownership in virtually asset class.
Founder: Arnoldas Nauseda
We spoke to Arnoldas to find out more about the startup...
Why did you start Smartlands?
Initially, we built Smartlands on top of Stellar blockchain because it ensured better speed of transactions and fees were close to zero, compared to other popular platforms.
To have a shot with institutional investors, we had to make sure that our security token offerings were compliant. So we developed a regulated segment on the Stellar network mainnet and gained the status of an Appointed Representative registered with the UK’s Financial Conduct Authority (FCA).
Tell us more about the company?
Smartlands is a London-based global digital security investment platform. We’re one of the pioneers in the field of regulated asset tokenisation. We were the first to tokenise a property in the UK – a purpose-built student accommodation in Nottingham valued at over £12 million.
Converting shares of real economy assets into digital securities makes them highly divisible, allowing investors to buy fractions of properties – say one square meter in a multi-million building. Blockchain removes bureaucratic complications which traditionally accompany any investment deal, together with multiple intermediaries such as banks, attorneys, brokers and other intermediaries making fees sky-rocket. Altogether, this approach dramatically reduces the buy-in threshold and potentially unlocks billions of retail capital to infuse the market.
Crowdfunding on blockchain brings numerous benefits to asset owners as well: the fact that potential investors can now avoid complicated structures and can invest with cryptocurrencies erases geographical borders opening access to an international pool of investors and ultimately bringing liquidity to the asset.
Where’s the business at right now?
Currently, we’re an international team of technologists, entrepreneurs, advisors, marketers, financial and real estate market specialists with HQ in London and offices in Vilnius and Kyiv. We chose to incorporate in the UK because British regulations are quite friendly towards blockchain businesses.
First, we have closed our first STO – the public sale of digital shares in the Nottingham PBSA, which is the first of many projects in the Smartlands pipeline. We’ll announce new offerings soon. We’ve decided to start with real estate because this market is known to be highly illiquid, and this is where blockchain can demonstrate its beauty at work.
Next step for us is the launch of secondary trading to spur liquidity. We already have a partnership with Archax, a forthcoming regulated institutional-grade digital assets exchange, and security tokens issued on our platform will be traded there by the end of the year. We also plan to launch our own decentralised security exchange.
What are your aims for the next year?
We’ll continue building a global investment ecosystem and plan to increase our portfolio of tokenised assets up to $100 million by the end of 2020. Currently, we’re considering tokenising 15 other assets around the globe.
Among the front-runners are a £500 million residential high rise property in the UK, a smart city in Brazil and a vineyard in the US, as well as private shares of a pre-IPO billion-dollar company in the US Besides these sectors, we’re looking at agriculture, green energy and sustainability projects.
What’s been the hardest thing about getting Smartlands off the ground?
Right now we’re on the verge of a new era of investing. This is an evolutionary process resulting in similar seismic changes brought by the adoption of cashless payments or the way eCommerce businesses disrupted brick-and-mortar stores.
Investing and finance are one of the most conservative markets; it takes time to realise the benefits of blockchain technology. We’re developing infrastructure, devising legal frameworks, building awareness, fighting stereotypes and creating use cases. Once it’s all in place, we’ll reach a truly global, financially inclusive society. This is our biggest struggle and biggest advantage up to date.
Why should more people be using Smartlands?
For retail investors, it’s a window to higher-yield institutional-grade investment opportunities that have either been out of reach before or required to go through complicated procedures with multiple intermediaries. Importantly, for any potential investors, it should be noted that these investments are currently non-readily realisable securities. For institutional investors, digital securities are a smart way to hedge risks and diversify with the next generation of private equity that is easily tradable and liquid.
For asset owners, tokenisation is a new efficient way to raise capital from a broader circle of international investors.
Generally, asset tokenisation dramatically reduces the friction involved in the creation, buying, and selling of digital securities – a win-win for all market participants.