Startup makes it easier to invest: Expensive investments for everyone

Investing has to be learned. ETFs, cryptocurrencies or real estate – the possibilities seem endless. A Berlin startup wants to give interested investors access to financial products that are otherwise only available to wealthy professional investors.

Investing is one of those things. While some invest in ETFs and equity funds, trade in crypto currencies or invest their capital in real estate in their early twenties, others did not even look at the stock market in their mid-30s. This is not necessarily surprising, because the possibilities to invest seem infinite – and infinitely complex.

Once you have an overview of the various investment options, there are suddenly other obstacles: the high level of capital employed, sufficient creditworthiness and the necessary expertise. These three prerequisites are essential, especially in the real estate sector. Not exactly easy for young people who also want to benefit from the stable and somewhat crisis-proof increase in the value of real estate.

This offers an interesting solution Berlin startup Tokenstreet. With an app, the young team wants to give small and first-time investors access to financial products that otherwise only wealthy professional investors or institutional investors can access. Co-founder Mona Feder says: “While small investors have a limited selection of financial products at their disposal, high-net-worth investors have a significantly larger selection of attractive asset classes.”

Marketplace for digital, alternative investment solutions

Feder is responsible for the product and design at Tokenstreet, and she is also a student at Berlin’s Code University. Together with three fellow students, she founded the company in January 2020 that can be described as the first German marketplace for digital, alternative investment solutions.

Feder and her founding colleagues are familiar with the frustration described at the beginning: They are all in their early 20s, are in the middle of their studies and have a penchant for finances. They dealt with investments early on. The fact that they are denied some asset classes due to a lack of assets and a lack of connections has spurred them on to build a platform that is supposed to remove the current hurdles. Because while a few are in the luxurious position of letting father’s family office handle the annoying investment matter for themselves, the interested layperson should also benefit from the market – and not be deterred by tech hurdles.

The whole thing works as follows: After in-app registration with video identification procedures, which are known from other investment apps such as Bux or Robinhood, users can state their previous knowledge and experience. You can then choose from the various investment solutions and invest immediately. Feder says that in the future you will be able to choose between investments in the areas of real estate, venture capital, growth and buy-out funds: “These are bundled investments. In order not to confront investors with a paradox of choice, we have chosen made a conscious decision to diversify within the respective asset class. “

Because in extensive user research, Tokenstreet found that little time, a lack of expertise and a lack of access are inhibiting factors in private investments. Your solution: just a few steps, simple and understandable access to alternative asset classes. Tokenstreet then selects the individual underlying investments in a special process. Interestingly, the aforementioned family office institution serves as a guiding star. Because they often invest in real estate because they stand for security and predictable returns. CEO and co-founder Vincent Amm says: “In the past, the stock market has experienced significantly greater fluctuations in value than the real estate market, which is why real estate offers greater value stability.”

Of course, Tokenstreet also has Clou in its name

There are also very obvious reasons for investing in concrete gold: “Real estate is a promising investment because it will always exist. People have to live and work somewhere. There will always be value because there will always be a need,” says Nurse But Tokenstreet doesn’t just focus on real estate because they want to diversify their offering as broadly as possible: “Furthermore, private equity and venture capital funds are also an attractive addition to any investor’s portfolio. The past has shown that the private -Equity market far outperformed the public market in terms of net returns, “says Feder.

Amm also says that you check different target investments with strategic investment partners and apply your own investment criteria. If this is an option for Tokenstreet, the company will then take a share. The aim is always a long-term relationship with the target funds. That is why you take a close look at the long-term strategy: “When selecting our target investments, we pay attention to the track record of the fund managers and evaluate the investment strategy in terms of clarity, consistency, effectiveness and investment motivation,” says Amm. So invest in high-class asset classes, even for small amounts: “Our goal is to make tickets possible with a very low minimum investment,” says Feder.

Tokenstreet’s name also bears the real highlight on which the company is based: This portion is tokenized via the blockchain and then passed on to the investors. In other words: The investors receive an indirect share in the respective fund.

Let’s take a simple example: Tokenstreet opts for an investment of 1 million euros. This is then broken down into a million tokens. If an investor acquires: for example 500 tokens, he holds 500 shares in the investment. In this case at a value of 500 euros. The promise and the bet are, of course, that the tokens will increase in value as soon as the value of the underlying investment increases, regardless of whether it is a property or a growth product.

NFTs hit the headlines week after week

The token economy is one of the most promising economic trends of our time. Tokens represent positions that cannot be manipulated and that can be assigned to specific holders. Put simply, tokens are “a kind of digital twin for material goods or even immaterial rights”, as the banking association soberly explains on its website.

Interestingly, it is a completely different industry that is the first to attract attention across the board in this area: the art world. There, non-fungible tokens (NFTs) are making headlines week after week, even beyond the industry, because new top prices are constantly being achieved in auctions of digital art.

In addition, NFTs in the art world have already arrived in the establishment: It is not small and new auction houses that rely on the auctions, but among others the venerable top dog Christie’s. Just recently, an NFT work of art by the artist Beeple was auctioned for a staggering 69 million dollars. A signal that shines far – and also shines on new types of financial products. Pen on the technology: “Tokenstreet is based on blockchain technology because it is the most cost-effective option at this point in time.” Makes sense: Since it is a financial product, cost efficiency in terms of attractive returns is of course only desirable.

Ignorance meets low entry barriers

Another task that Tokenstreet has given itself: to do educational work. “Our job is to educate investors. There is a large learning section in the app and a chat over which you can contact us at any time,” says Amm. Educational work is particularly important with a financial product like Tokenstreet. Everyone: r must understand that there are total losses with investment products, even with relatively safe classes such as real estate.

When the concentrated ignorance of curious young people meets low entry barriers, responsibility is required from the makers. It was only last year that the trading app Robinhood, available only in the USA, took care of it internationally for an inglorious sensation when a young user used risky leverage products – and killed himself because of a display error in the account balance.

Feder is nevertheless confident: “The risks depend on factors that cannot be foreseen in advance. However, by diversifying our portfolios, we can reduce the risk for our investors within an investment offer.” Nevertheless, she advises you to have a basic understanding of various investment options. A good rule for beginners is that with long-term investments it makes sense to diversify your own portfolio across different asset classes in order to achieve maximum risk diversification. “In this way you can offset losses and potentially maximize profits,” says Feder.

Amm says he always knew that he wasn’t just at Code University to study – but to start a business. And with his co-founders: Feder, Lenny-Campino Hartmann and Alexander Borowski, he quickly found three people with whom he could talk more deeply about his passion for finance and investment solutions. The team receives support primarily from its own university, which is keeping the promise to release motivated talent into digital entrepreneurship.

The app should then go live in summer

Also important: Feder and Co have a large network of investors, from whom they regularly obtain feedback. Feder explains why they cannot do without it: “The expertise and the network that you have acquired over 30 years of capital market experience cannot simply be made up for quickly.” That is why Tokenstreet works with experts who have years of experience.

The four-person founders build the product themselves: the internal team, however, independently. To do this, they have brought four young engineers on board. At the moment, every minute is still being plugged into the app. Anyone interested in testing the beta version can be placed on a waiting list.

The app should then go live in summer. When exactly is not yet certain at this point in time. But the message remains: “Regardless of whether I invest 1 euro, 10,000 euros or 10 million euros: everyone should have the same opportunities to invest their money in the capital market,” says Amm.

Feder’s personal wish is to encourage more women in particular to invest independently, because they often start investing later than men, on average several years. Or even worse: often not at all. “Investments seem like Pandora’s box to many,” says Feder. “They don’t know exactly what to expect and are therefore afraid to open them. We want to change that with Tokenstreet.”

In any case, one thing will soon no longer be able to be said: that investing in assets apart from ETFs, futures and individual stocks is too complicated – or that you need at least seven-digit amounts in your account.

This text is at first “Business Punk” published.