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Non-crypto company creates IPO token that converts to stock Non-crypto company creates IPO token that converts to stock

Non-crypto company creates IPO token that converts to stock

Companies outside of the crypto space are now moving towards crypto tokens to raise capital linked to a future IPO.

Non-crypto company creates IPO token that converts to stock

Cover art/illustration via CryptoSlate

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Oddity is a beauty company with a strong focus on tech. They have launched several innovative projects from hyperspectral imagery to micro-influencer apps designed to revolutionize the online beauty industry. Now they are creating a crypto token tied to a future IPO to incentivize interest in a potential future public offering. The tokens will go on sale on May 11 and only be available to accredited investors.

IPO token conversion

The security token will convert into realized traditional stock at a 20% discount to the IPO price should the company go public. The tokens will not be tradeable until the IPO meaning that investors will have their investment locked until that date. There is currently no information on there being a lockup after the conversion meaning there could be considerable sell pressure on the stock when it floats. Further, if an IPO never happens investors could potentially be left high and dry.

In addition, as tokens will be held in custody via Securitize, questions arise as to why blockchain technology is being used in this instance. Securitize promotes the ability of users to trade assets 24/7 via their platform so it seems that the Oddity tokens will be an exception to this rule. Therefore, as the tokens will seemingly be centrally controlled via a third-party provider it seems a strange use for a distributed ledger.

Security tokens

Oddity Chief Financial Officer Lindsay Drucker Mann believes that “security tokens could in the future become an important tool for companies looking to raise capital.” Security tokens are a “unique type of crypto asset designed to validate and ensure ownership rights and serve as value-transfer instruments for a specific asset, asset bundle, or set of rights.”

This appears to be the main focus of the choice to use a crypto token instead of another financial vehicle. Decentralization, non-custodial and free transfer is only part of the appeal of crypto. The ability to tokenize an as yet unrealized asset in a regulated security is the key to Oddity’s innovative move into crypto.

Oddity is the parent company of two well-known beauty brands, Il Makiage and Spoiledchild. Il Makiage grew to over $250 million in just 3 years. The success of the brand to date, along with its reputation in the tech space, could mean that the crypto token raise is extremely popular. There are no details on when the company may be ready for an IPO but there have been rumors as it continues to raise funds at a $1.5 billion valuation.

Is this the correct use case for blockchain?

Whether this is the most innovative use case for crypto or not, it is another step forward toward mass adoption. The use of blockchain technology by non-crypto companies is an important step in the direction of integration into society at large. It can only be hoped that we see blockchain used in places where it adds value rather than simply being a gimmick to attract attention.

Oddity has a history of finding ways to apply innovative technology to the beauty industry. Will this be a landmark move for tokenized securities or a public display of how not to use blockchain? Let us know what you think on Twitter.

Posted In: Adoption