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The Tezos-based tokenization platform Fraktion is set to push forward the concept of fractional ownership for high-value assets such as real estate and precious stones after raising $1.1 million in seed funding.
Today’s round comes from a number of strategic investors, including Cabrit Capital and the Tezos Foundation. Vox Capital also participated in the investment, as did a host of angel investors.
Fraktion is building a platform that aims to facilitate the seamless tokenization of assets, so they can be fractionalized and sold on the blockchain as digital tokens. It’s an idea that aims to bring greater accessibility, liquidity and transparency to financial markets that currently exclude retail investors, due to the need for immense capital.
For instance, to invest in real estate, someone will need to buy an entire home or apartment, which means stumping up hundreds of thousands of dollars or taking out a multi-decade mortgage. It’s simply not something your average retail investor can participate in.
Tokenization changes the game. By creating digital tokens on the blockchain that each represent a small stake in a luxury rental home, apartment or holiday resort, it’s possible for retail investors to become fractional owners of that property. A home worth $1 million could be split into 100,000 tokens, each representing a 100,000th of a share in that property, significantly reducing the amount of capital required to invest in it. Those tokens can then be traded in a decentralized way, with transactions processed in seconds, eliminating the mountains of paperwork traditionally involved in such deals. It has the benefit of bringing more liquidity into the real estate industry, where transactions typically take many weeks to process.
“By providing a platform to securely tokenize and manage investments while maintaining regulatory compliance, Fraktion is delivering on one of the early promises of blockchain technology and democratizing investment in physical assets,” enthused Jean-Frédéric Mognetti of the Tezos Foundation.
Fraktion has built its tokenization platform on the high-speed Tezos blockchain, where it launched in mid-2023. It chose Tezos for its rapid transaction processing speeds and low costs, and with today’s funding, it’s now looking to expand its platform to support the emergence of private, decentralized financial markets.
Its platform has already seen some success, hosting a private network for French real estate investors called “Kapi Club” that enables members to become fractional owners of high-value projects. Kapi Club’s chief executive Lauren Dannay said Fraktion helped the network to launch its regulatory-compliant investment platform with full KYC/AML in a matter of days.
“Fraktion has enabled us to take a significant step forward in structuring our investment projects,” she said. “Their platform provides a modern and efficient solution to meet the growing expectations of investors for simplicity, transparency, and performance.”
Fraktion’s flagship white-label platform can also be used in other industries besides real estate, tokenizing the trade of precious stones, bottles of fine wine, luxury art and more. In addition, it has also created a crowdfunding platform that can be used by entrepreneurs to create and sell tokens in order to raise funds for their projects.
Having filled up its war chest, Fraktion has the money it needs to pursue key initiatives that will help to grow the concept of fractional, tokenized investing and bring more capital and liquidity to its efficient, decentralized financial markets.
The first thing it intends to do is scale the commercial deployment of its platform, targeting private markets companies searching for an efficient way to tokenize assets. It also plans to expand globally to reach new markets, focusing primarily on Europe and Asia. Finally, it says it’s looking at ways to better integrate traditional finance with decentralized finance, with features that support collateralization and tools for compounding interest.
Fraktion CEO Vincent Pastor said he sees his company at the forefront of efforts to democratize access to previously inaccessible investments. It’s a vision that’s shared by Cabrit Capital’s Omar Khalouti.
“Tokenization will see widespread adoption through B2B channels, with companies like Fraktion empowering businesses to seamlessly structure tokenized offerings,’ Khalouti said.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice
