Berlin-based Neufund has raised €2 million from Christoph Maire’s Atlantic Labs, Klaas Kersting and a group of superangels. Neufund will use the funding to build an open platform for investors to acquire startup equity in the form of tradable crypto tokens.
Blockchain-based startups can, in theory, raise funds within hours directly from the crypto community investors in initial coin offerings (ICOs). Last year, such companies have received more than $250 million in funding through ICOs. The issued coins (or tokens) can then be traded freely on cryptocurrency exchanges.
There remains, however, scepticism amongst many traditional VCs that this arrangement will lead to successful startups. That said, blockchain enthusiasts are heralding this type of development as a revolutionary way to raise money and realise value for startups and investors alike.
“In venture capital, both startups and investors have an almost illiquid asset position – transaction costs in and out of a company are very high. Money flows slowly – it takes about 5 years for a founder or a VC to capitalize on an exit, and about 10 years for an LP to get a return from a VC investment”, said Zoe Adamovicz, CEO and co-founder at Neufund.
Before Neufund, Adamovicz was one of the founders of the app search engine Xyo, acquired by NASDAQ-listed Mandalay in 2014.
Neufund offers a legal and technical solution that bridges company shares and blockchain-based tokens. “The transaction costs for issuing and managing such tokens are close to zero, investors can buy and trade equity in private companies and it makes essentially illiquid assets immediately liquid”, said Adamovicz.
The blockchain-based platform that Neufund is building creates a new type of ownership that is neither money nor stock, but crypto tokens which represent equity and at the same time are as liquid as a currency. Such tokens have an intrinsic value to the network, but at the same time they also represent value of the business operating in the real – off-chain – world.