Now that “utility” tokens have become a popular and international way to fund major blockchain projects, a pair of investors are creating a new way to turn tokens into true equities. The investors, Jonathan Nelson and Laura Nelson, have created Hack Fund, an early stage investment vehicle that allows startups to launch what amounts to “blockchain stock certificates,” according to Jonathan.
“Our previous business model exchanged equity from startup companies for services, and wrapped that equity into funds that we then sold to investors. These fund investors have included family offices, institutions, and high net worth individuals,” said Jonathan. “However, Hack Fund represents a new business model. Because Hack Fund leverages the blockchain, investors all over the world at all levels can participate in startup investing by trading blockchain stock certificates. Also, its SEC compliant structure means that it is also available to a limited number of accredited investors in the US.”
The team originally created Hackers/Founders, a tech entrepreneur group in Silicon Valley, and they now support 300,000 members in 133 cities and 49 countries. Hack Fund is a vehicle to support some of the startups in the Hackers/Founders network.
“HACK Fund, through its Hackers/Founders heritage, has a large, unique global network,” said Jonathan. “This provides Hack Fund with unparalleled reach and deal flow across the global technology market. There are a few blockchain-based funds, but they are limited themselves to blockchain-only investments. Unlike typical venture funds, HACK Fund will provide quick liquidity for investors, leveraging blockchain technology to make typically illiquid private stocks tradeable.”
The idea behind Hack Fund is quite interesting. In most cases investing in a company leads to up to ten years of waiting for a liquidity event. However, with blockchain-based stock certificates investors can buy shares that can be bought and sold instantly while company performance drives the value up or down. In short, startups become liquid in an instant, which can be a good thing or a bad thing, depending on the founding team.
“HACK Fund is a publicly traded closed-end fund. The fund’s venture investments are valued on a quarterly basis by an independent third party, audited and posted to the blockchain for all token holders to review. There are no K-1 statements issued, there is no partnership/LLC, rather HACK Fund is an investment company akin to Berkshire Hathaway which invests in the same manner as early-stage venture capital,” said Jonathan.
The $100 million fund raise has already kicked off across Asia, Middle East, Latin America and to a small number of accredited investors in the US. The fund will be rounded out with $2 million from retail investors who will be able to buy some of the tokens on October 29th through BRD wallet.