Digital Securities + Blockchain Development
Writing a bukket list

Digital Securities

Security Token Offering (STO) Checklist

Writing a bukket list

What You Need To Know Before You Get Started

Security Token Offerings (STO) represent a new and alternate source of funding for financial offerings based upon digitization of securities, tokenization of assets and other complex financial vehicles. While it is a new tool in the tool belt of potential funding options, a high-tech approach does not trump the basics. For a company to have a successful STO it must have a proven management team, product or service with a strong track record, pass all due diligence and compliance tests with flying colors and beyond everything else, have a project that resonates with the investment community and has better than average chance of success.

A STO offering is generally not appropriate for a small-cap raise (under $5M) as the expenses involved do not easily scale. There are also significant up-front costs from a variety of vendors placing an STO out of reach for all but the best-funded startups. Your investment is also at risk if the offering fails to meet its funding goal.

The cost of capital for an STO is generally under 10%, slightly higher for smaller offerings and less for larger offerings or projects carrying a great deal of potential and market anticipation. High-profile projects tend to do well, less flashy projects are going to have to prepare to climb a steeper hill, and this is via increased budget for the offering marketing campaign.

Current secondary markets have lean order books - this is an emerging market and should expand considerably over the next 18-months. See our list of current Secondary Markets.

Regulatory and compliance is in-flux in many jurisdictions, the only constant is change for the immediate future.

All STO’s are complex, far beyond the technological aspect, especially when a multi-jurisdictional offer is being listed.


Getting Your Team Up-To-Speed

Primary Goal: Getting your core management team and key stakeholders up to speed on state of the market and options available to them to make informed decisions going forward.

☐ Executive Education
☐ Technical Deep Dive
☐ Management Consulting
☐ Technical advisors and consultants as appropriate

Project Evaluation & Discovery

Primary Goal: Determining if your project is a good-fit for an STO offering and identifying any shortcomings that need to be solved prior to moving forward.

☐ Technical Critical Path & Functions Specific to Planned Jurisdictions and Compliance
☐ Financial Analysis
☐ Major technical requirements
☐ Stakeholder Team Sourcing, Interviews and RFP’s
☐ Roadmap through Technical Issuance and Post Issuance
☐ Technical Architecture Review if required
☐ Issuance budget and timeframe +/- 20%
☐ Technical Security overview
☐ Technical Risk Review

**Sharkaroo credits the discovery stage investment to the full project if you decide to use us to manage your offering.


Primary Goal: Critical path methodology employed - successful project launch.

Pre-issuance is the most frantic stage of your project. Everything is going to happen at once with many new vendors coming on board , all of them competing for your limited time and attention. With a project managed service such as Sharkaroo, we handle the herding of cats, and keep everything on track. If you are attempting an STO internally, you should dedicate an experienced and versatile project manager and support team with direct access to key stakeholders in your organization.

☐ Project passes Know Your Business (KYB), Ultimate Beneficial Owners (UBO), AML/KYC, and other due diligence processes.
Due diligence is a legal requirement for all financial service providers and each has their own due diligence process which may overlap and potentially duplicate efforts.

☐ Assemble Key Stakeholders
☐ Project Manager
☐ Securities Attorney
☐ Primary Broker-Dealer or Investment Bank
☐ Auditor
☐ Issuance Platform
☐ Secondary Exchange(s)
☐ Marketing Team or Agency
☐ Prospectus Creator
☐ Custodian &/or Trust Agent
☐ Primary KYC/AML Provider
☐ Escrow Agent

☐ Create project roadmap
☐ Create project final budget
☐ Create project management plan and identify critical path
☐ Business model analysis
☐ 3rd-party valuation or appraisal
☐ If a property, standard investment requirements (survey, appraisal, conditional use plan, environmental review etc.)
☐ Audit financials for 2 years
☐ Onboard with payment processing firm
☐ Broker-dealer sales team preparation and supporting documents (if required)

☐ Assemble Secondary Stakeholders

☐ Legal Documentation
☐ Prospectus review
☐ Shareholder agreement
☐ Tokenholder agreement
☐ Review interaction of jurisdictional securities laws
☐ Regulatory body interaction (if required)
☐ Regulatory filing (typically due prior to offering or upon first investor in the event of an exemption).
If advance filing and regulatory approval is necessary, example a Reg A+ in the US, then nothing can move beyond planning until this is approved.

☐ Marketing Materials & Campaign Plan
☐ Marketing budget (typically cost per acquisition)
☐ Campaign project plan + calendar
☐ Branding and design
☐ Website & CTA’s
☐ Investor portal design and user/admin testing
☐ Email and CRM
☐ Advertising
☐ Institutional investor outreach
☐ Social media
☐ STO media listings
☐ Crunchbase profile
☐ Print matter
☐ Renderings or AR/VR (as applicable)
☐ Video, drone footage (as applicable)
☐ Pitch deck, prospectus, one-pager
☐ Road show
☐ Legal review of above
☐ Regulatory review of above (as applicable)

☐ Smart Contract
☐ Financial review and modeling
☐ Development and deployment on Testnet
☐ Revisions if required
☐ 3rd-party AI security audit
☐ Revisions if required
☐ 3rd-party manual security audit
☐ Revisions if required
☐ Deploy smart contract
☐ Forward audits to primary insurer & include with tokenholder documentation
It is crucial to get your smart contract 100% correct and secure, as it is equivalent to launching a rocket into space, once it’s gone, it is gone for good, and correcting an error or security hole is a painful and expensive process post issuance.

☐ Obtain crypto insurance (there are several international insurance brokers in this market)
☐ If building a complex application, penetration testing (PEN)
☐ Select primary KYC/AML provider & arrange non-compliant (failed) KYC checks with legal team review
☐ Crypto Custodian + Wallets (if crypto currencies are being supported)
☐ Integrate cap table (as applicable)


☐ Begin institutional investor outreach
☐ Begin marketing campaign and direct sales efforts
☐ Hybrid sale begins (convertible equity, as applicable)
☐ Token sale begins
☐ When milestone reached close offering, custodian or transfer agent issues tokens, escrow transfers funds to your account, success fees/commissions paid to broker-dealer, broker-dealer syndicate.
☐ If milestone exceeded, and within regulatory framework, mint additional tokens or stop offering when goal is met.
☐ If milestone is not reached
☐ Extend marketing campaign —or—
☐ Cancel offering and issue 100% refunds
☐ If in the US, can file a Reg D, or A+ annually, so may want to consider a follow-up offer 12 months from now.

Secondary Listing

☐ Upon restricted trading being lifted, list tokens on one or more exchanges. The groundwork was laid during preissuance.
☐ Pay annual listing fee
☐ In the event of a framework mismatch - convert to multi-token (this is quite complex, so it is important to design for secondary exchange from the start).

Post Issuance

Sharkaroo does not currently support post-issuance shareholder maintenance and reporting, this is a service best performed by an internal investor relations team, or a third party service provider.

☐ Create investor relations team—or—contract third party provider.
☐ File financial reports as required, in all relevant jurisdictions.
☐ Tax documents.
☐ Tokenholder notification and annual meeting.
☐ Tokenholder management and communication.

This checklist is for informational purposes only and does not constitute an offer or solicitation to sell securities in any jurisdiction. In all events, you should use your own securities attorney or financial advisor, most importantly perform your own due diligence and research prior to making any financial decision to invest. Sharkaroo is not a registered broker-dealer, investment advisor or lawyer, and the above checklist is based on our experience and not a legal opinion.