SGX-backed iSTOX lists unicorn fund with US$20,000 minimum investment

CAPITAL markets platform iSTOX has listed a unicorn fund in digitised securities form, paving the way for accredited investors to access such funds with a minimum investment of US$20,000.

iSTOX is backed by the Singapore Exchange (SGX) and Temasek Holdings' subsidiary Heliconia Capital Management.

Earlier this month, the ICHAM Unicorn Opportunity Fund concluded its initial offering period after raising close to US$20 million that it aims to invest in billion-dollar companies globally, iSTOX said in a press statement on Tuesday.

Unicorns are defined as private startups valued at US$1 billion or more. According to iSTOX, unicorn funds, like many other private funds, have up until now done traditional, non-digitised launches, with investors typically having to meet high minimum thresholds of US$100,000 to US$1 million.

"This is due to inefficiencies under the traditional issuance method that make it impossible for a fund to handle large numbers of smaller investors," the company said.

With the use of blockchain and smart contract technology, iSTOX enables the tokenisation and fractionalisation of securities and in this case, units in the unicorn fund.

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The creation of security tokens allows manual processes to be automated and minimum investment ticket sizes to be reduced to US$20,000, iSTOX said. This expands participation in unicorn investing to all accredited investors, it added.

The Monetary Authority of Singapore defines an individual accredited investor as someone whose net personal assets exceed S$2 million, or whose net financial assets exceed S$1 million, or whose income in the preceding 12 months is at least S$300,000.

The ICHAM Unicorn Opportunity Fund will invest in unicorns by buying equity from existing shareholders in the secondary market.

The fund will also build a portfolio of late-stage unicorns in the US, Europe and Asia. Specifically, it will target companies with "a well-defined business model, demonstrated sustainable growth, proven disruptive impact in their chosen fields, and 24 to 36-month visibility of an exit event, such as an initial public offering (IPO)", iSTOX said.

The fund manager is ICHAM, a Singapore-regulated wealth and fund management company chaired by former Thai finance minister Uttama Savanayana.

The fund has an initial charter period of four years. Thereafter, the ICHAM board of directors can extend the fund for up to two years. Investors who have subscribed to the fund will also have access to the proprietary exchange iSTOX has built to allow the secondary buying and selling of securities among the fund's investors.

Choo Oi Yee, chief commercial officer of iSTOX, noted that unicorns are one of the most in-demand investment types, though access has traditionally been limited to institutional investors, angel investors and other ultra-high-net-worth individuals.

"A lower investment threshold through the tokenisation of securities makes unicorn investing fairer and more democratic, which is important when we consider that unicorns experience their fastest growth in the pre-IPO phase," she said.

Ms Choo added that in the long term, unicorns benefit as well because their stocks are worth the most when they can be purchased by the largest possible group of investors.

"The enlarged pool of potential funds also enables unicorns to stay private for longer, and to focus on the growth of their business rather than the short-term profits that public markets will require," she said.