Blockchain equity ‘bridging’ platform Neufund has announced it has raised €2 mln for its new startup funding tool.
Neufund, which formed in Berlin in September 2016, is seeking to create a one-of-a-kind arena for securing investments for startups via tokens which are both tradable as currency and represent off-chain equity.
Neufund’s co-founder Zoe Adamovicz said in a press release issued Wednesday:
“This is completely new because it allows tokens to not only represent ownership in a Blockchain network but also equity in off-chain companies.”
Sifting through the hype
The flood of crypto-based funding platforms to hit the market over the last year has led to numerous initial coin offerings hereinafter ICOs for investors. The phenomenon is growing so quickly that it practically formed a new submarket within the cryptocurrency industry.
Adamovicz and fellow co-founder Marcin Rudolf said however that it is the right time for an alternative which provides greater exposure and ease of use to investors and businesses not directly involved with crypto or Blockchain technology.
Cointelegraph caught up with them to ask more about the platform, its potential in an already crowded market and what will allow the Neufund model to stand the test of time.
Cointelegraph: What was the inspiration behind starting Neufund?
Neufund: The idea for Neufund was born when we realized that Blockchain-based tokens are a very flexible and liquid proof of ownership, smart contracts are trustless and cheap to enforce and that funding process via token sale actually works. Technically, conceptually and financially we have seen evidence that ICOs have become a viable funding strategy. We thought it would be great if existing and new off-chain startups could use it!
Neufund is an answer to that. Neufund is building a platform which bridges the worlds of cryptocurrency and equity. In essence, through Neufund it is very easy for any business to convert part or all of their equity into tokens and get funding via a process similar to an ICO. On the funding side, anyone can easily become an investor with full limited partner rights via the Neufund token or to become a shareholder of any business through ownership of its tokens.
Cointelegraph: How do you view the other investment raising options on the market currently, for example, ICOs, crowdfunding platforms and DAO-based solutions?
Neufund: We think that ICOs are the future of funding. In fact, you can say that Neufund will become a DAO that lets any project to do their own ICO in an easy way - providing technology and investment community. Crowdfunding platforms like Kickstarter are just eBays for not-yet-existing goods, there is no equity involved so this is not an investment - it’s shopping.
Cointelegraph: You founded the project in September, but already have €2 mln secured. What kind of feedback have you had about Neufund from investors?
Neufund: It seems that all financial investors who are dealing with innovative projects, be it venture capital or more risky projects in private equity, are aware that the time has come to innovate in the financial ecosystem. When we think about innovation we focus too much on flashy trends like mobile phones and autonomous cars and we forget that the metal coins we keep in our pocket are nearly 3000 years old. It cannot be more obvious that something must change and that the change will be for the better. Our investors realize this and that is why they bet on Neufund.
Cointelegraph: What kinds of startups are you focusing on attracting to the platform?
Neufund: We are interested in all projects that create value. We think broader than just about classical startups. A startup is, in fact, quite specifically defined. On the one hand, there is a wide variety of projects in the startup’s ecosystem, but on the other, there are pretty clear patterns for business plans and investors expectations for development trajectories of startups. There is a seed, A, B, C etc. round, there is a break even after 1-3 years, there is a hockey stick growth and there is an exit.
But what if someone has an idea for a business that would reverse climate change, or for new security algorithms that could prevent mass surveillance, or for an art project that redefines the art market, but which would follow a very different trajectory than a classical Silicon Valley startup? Such projects would find it hard to get Venture Capital funds, yet this does not mean that they are not innovation that creates value. We would definitely look at projects like this and Neufund would be able to finance it. Thanks to the flexibility we have because we are not just a Venture Capital fund but rather a Blockchain-based investment ecosystem.
Cointelegraph: What future functionality do you intend to incorporate as the project grows?
Neufund: We are starting with features that will allow Neufund VC to capitalize via ICO, elect delegates to manage the fund, to perform ICOs for startups that seek investment on our platform and to distribute proceeds from investments.
There are more features coming:
- Startups can be governed on-chain: this includes voting on shareholder resolutions, reporting to token holders, getting more funds and deciding on token trading;
- We open our platform for other investors to take the lead: independent investment proposals, due diligence, investment decisions, etc. will be allowed;
- We launch a platform to trade startup tokens.
Cointelegraph: In terms of security, how do you ensure that data and funds are protected against the kind of threats that compromised, for example, The DAO last year?
Neufund: The DAO was hacked because they kept their Ether in smart contract, we’ll keep our assets, not just Ether we plan to diversify, in cold storage. We will have proper procedures involving hardware wallets etc. to access the funds. We will have an ongoing educational part. We do not want our users to get hacked and we will incentivize them to use hardware wallets and cold storage for assets they own.
Furthermore, we will open source our critical code like smart contract and funds processing components to have an audit from the community.