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What is Robinhood Equity Token (RHET)?

RHET is a security token that derives its value from the late-stage, secondary acquisition of securities of Robinhood Inc. It gains its value from the price appreciation of Robinhood Inc. shares.

The process of tokenization was carried by the cryptocurrency startup called Swarm, proclaimed as “the blockchain for private equity”, with an aim to help crypto investors earn fractional ownership of private companies, i.e. companies that have not publicly listed their shares.

Swarm supplies the blockchain-based infrastructure for the tokenization of assets. Every tokenized asset is represented by a unique security token, created using the SRC-20 standard.

For each individual company’s equity tokens coming to Swarm, an entity is created for the purpose of holding this equity. The ownership of this entity is tokenized so investors could have access.

Their token holdings allow them fractional ownership of that entity, which in turn holds equity in a given company. Swarm’s SWM token itself is used for gas, governance, and incentives on Swarm, a lot like how ETH serves as gas for applications running on Ethereum. Its first effort is by promoting shares of the commission-free stock trading app, Robinhood.

Robinhood Inc. is a stock investment giant worth $5.6 billion USD. Through this tokenization, investors were given the chance to access investment into the company.

This is what RHET Token essentially is:

  • A fractional ownership stake in a fund with ownership in Robinhood Inc.;
  • A security token issued within a regulatory compliant framework;
  • The shares are held by an SPV, managed by a Syndicate Manager (Syndicate Manager will be appointed when the soft cap is reached)

Read more in the Token Sale Agreement.


Problem

There are several key problems preventing traditional investors from buying into late-stage, high-growth tech ventures. These problems include the limited availability of opportunities, long holding periods and limited liquidity, as well as restrictions for foreign investors.


Solution

Swarm has a mission to deal with these issues by the previously-mentioned tokenization. With this, they will help crypto investors earn fractional ownership of private companies.

The investment strategy is to invest in the next wave of multi-billion tech companies by top VCs before they go public, delivering 30%+ IRR to investors.

Syndicate managers will monitor the investment activities of top VCs to identify and require stakes in the late-stage companies.

Each prospective company will go through a rigorous selection process to identify the low-risk, high-payoff opportunities, and transact at the best possible time.


Team

The staffing behind this project is still to be determined, but the Swarm team itself includes a serial tech entrepreneur, Philipp Pieper (CEO and co-founder), who has held various private equity management positions, and Timo Lehes (co-founder and Chief Investment Officer) with 20+ years of experience in starting, running, exiting and investing in software companies.

For more about the Swarm team check Here


Community Around It

  • Telegram (Swarm): 4,610 members;
  • Twitter (Swarm): 10K followers;
  • Facebook (Swarm): 5,561 followers.

More information on Swarm can be found on their Medium blog.


Token info

  • Token Sale start date: August 15, 2018
  • Token Sale end date: January 12, 2019
  • Hard Cap: $1,000,000 USD
  • Soft Cap: $300,000 USD
  • Token Symbol: RHET
  • Token Sale Price: TBD
  • Blockchain Used: Private blockchain based on the Stellar protocol
  • Token Standard: SRC-20
  • Token Type: Security

After the tokens are purchased and distributed, they will become security tokens, which means they are subject to applicable regulation by security laws.

Holders of Equity Tokens will be able to:

  • Hold the token as an investment;
  • Govern the SPV (Special Purpose Vehicle) together, based on the Swarm Liquid Democracy Voting Module, which allows voting on decisions that require token holder approval based on the SPVs corporate charter;
  • Receive distributions from the SPV – distributions will either be made in crypto or fiat currency to token holders or the syndicate will buy back tokens (with token holder’s approval)
  • Transfer the token to permitted transferees either as a result of a private sale or a trade made on integrated and licensed partner exchanges.

Intended Use of Funds

Proceeds from the sale of tokens will be used for:

  • Investments in Robinhood Inc.;
  • Operating fee inclusive of administrative and operating expenses (including infrastructure fee for Swarm Fund).

Roadmap

There is no roadmap available yet.


Competitors

The RHET token doesn’t really have any competitors to speak of, given the fact that its function is to provide an ownership stake in a company. While investing in this kind of opportunities is not a new concept, the innovation here is in tokenization, adding:

  • The ability to scope interest of like-minded investors;
  • Fractionalize the opportunity and make it accessible to whoever is qualified to invest;
  • Following that, it creates an opportunity to bring liquidity to the token holders.

Verdict

Tokenization of private equity is a new thing in the crypto industry and Swarm seems to be doing a great job in it. It offers a world of opportunities that were so far non-existent for all those who wanted to invest in certain private ventures.

The idea is excellent and the team behind Swarm should have no problem in performing. That said, there is still too little detail available to the public and the fact that Robinhood Inc. wasn’t even aware of what was happening, is a bit concerning, so we advise caution (as with everything finance-related).


Contacts

By Sead Fadilpasic

6.8

PLAN

9.0/10

TEAM

5.0/10

MARKETING

2.0/10

MARKET GROWTH

9.0/10

COMPETITORS

9.0/10

Pros

  • Offers great opportunities for investment
  • A security token that adheres to the securities regulation

Cons

  • Still very little detail, no whitepaper
  • Robinhood Inc. apparently wasn’t aware of the tokenization at the time when it was announced