Small and Medium Enterprises (SMEs) are the backbone of economies worldwide, particularly in Africa. SMEs can be described as businesses with a limited number of employees and revenue (usually fewer than 250 employees and under $50 million in revenue), SMEs account for the majority of economic activity in many African countries. These enterprises are responsible for job creation, economic diversification, and encouraging innovation. Despite their potential, African SMEs face significant challenges that limit their growth and sustainability. Tokenization-as-a-Service (TaaS), is an emerging solution that enables businesses to tokenize assets, offering new fundraising opportunities, cost efficiencies, and global reach.

Tokenization transforms real-world assets into digital tokens that can be bought, sold, and traded on blockchain platforms. With TaaS platforms, SMEs can harness the power of blockchain technology to raise capital, streamline operations, and expand their market presence in ways that were once only available to larger enterprises. This article explores how TaaS empowers SMEs, shares examples of companies leveraging tokenization, and highlights case studies that demonstrate the benefits of this technology.

How TaaS Empowers SMEs with New Fundraising Options

One of the primary challenges for SMEs is accessing capital. Traditional fundraising methods, such as bank loans, venture capital, and public offerings, are often difficult for smaller businesses due to high barriers, stringent regulatory requirements, or limited investor interest. TaaS offers SMEs an innovative alternative by allowing them to tokenize assets and raise funds through Initial Token Offerings (ITOs) or Security Token Offerings (STOs).

Lower Barriers to Entry

Tokenization lowers the entry barriers for SMEs by enabling fractional ownership of assets. Instead of requiring investors to buy entire shares or large amounts of assets, SMEs can offer fractional tokens, making investments more accessible to a wider range of investors. This democratizes fundraising, allowing small businesses to reach a global pool of investors who might only need to contribute small amounts to support the business.

Enhanced Liquidity

Tokenization also provides liquidity for traditionally illiquid assets, such as real estate, intellectual property, or inventory. By breaking these assets into smaller, tradeable tokens, SMEs can offer investors an exit strategy through secondary markets, which is rarely possible with traditional equity investments. This enhances the attractiveness of the SME’s offering and can increase the pool of interested investors.

Speed and Cost Efficiency

Traditional fundraising methods can take months and incur significant legal and administrative fees. Tokenization, through TaaS platforms, reduces the time and costs associated with raising capital. Smart contracts, which are self-executing digital contracts, automate much of the process, removing the need for intermediaries such as brokers or financial institutions. This allows SMEs to raise funds faster and at a fraction of the cost.

Examples of SMEs Utilizing TaaS for Business Growth

Across industries, SMEs are beginning to recognize the value of tokenization as a fundraising tool and business accelerator. Below are a few examples of how SMEs are leveraging TaaS:

1. Real Estate SMEs

Small real estate developers are turning to TaaS to tokenize property assets, enabling fractional ownership of buildings and rental properties. By selling tokens tied to a portion of future rental income or property value, these developers can raise funds to finance new projects without relying on traditional mortgages or large investors. This model allows smaller investors to participate in real estate markets, which were previously only accessible to high-net-worth individuals.

2. Creative and Entertainment Startups

Startups in the creative industries, such as film production or music, are also utilizing TaaS to monetize intellectual property (IP). By tokenizing rights to future royalties from movies, albums, or digital content, artists and content creators can secure upfront capital to fund projects. This offers investors the chance to benefit from future earnings while supporting creative ventures at an early stage.

3. Tech SMEs Developing Decentralized Applications

SMEs in the tech industry, especially those developing decentralized applications (dApps), are leveraging TaaS to raise funds through the sale of utility tokens. These tokens give investors or users access to the SME’s platform or services, creating a new form of capital that directly ties into the business's success. Many tech startups have raised significant capital through Initial Coin Offerings (ICOs) to fund development, marketing, and expansion efforts.

4. Global Reach and Expansion Opportunities

One of the key benefits of TaaS is its ability to provide SMEs with access to global investors. Traditional fundraising methods are often geographically limited, but tokenization enables businesses to reach a worldwide audience through blockchain platforms. This global reach is crucial for SMEs looking to expand beyond local markets and tap into a diverse base of investors, partners, and customers.

Moreover, by offering digital tokens that can be traded globally, SMEs can attract investors from regions with more favorable regulatory environments or higher demand for tokenised assets. This opens up new opportunities for international growth and partnerships that would have been difficult to achieve through traditional means.

Conclusion

Tokenization-as-a-Service is a game-changer for SMEs looking to overcome fundraising challenges, cost inefficiencies, and limited market access. When SMEs leverage TaaS platforms, they can raise capital more easily, tokenize assets to unlock liquidity, and reach a global audience of investors. As more SMEs adopt this technology, we can expect tokenization to play a pivotal role in shaping the future of business growth and innovation, democratizing access to investment opportunities for businesses and investors alike.

Article by: Mana Lamja