Similar to the fledgling on-chain lending markets and the debt-token ecosystem, on-chain equity-linked token solutions are seeing development, interest and capital flows. In 2018, 3000 investors registered on an early stage equity issuance platform named Neufund. They recently announced a partnership with Ledger. The platform (arms-length?) operator, Fifth Force, looks to compete with Polymath. Neufund aims to reduce friction in legacy venture capital market micro-structure.
“If you look at the inefficiencies and transaction costs that firms incur in the way capital is raised in the venture capital market, it can cause a lot of friction and costs which this technology disruption (blockchain) can really help fix,”
Philipp Freise, head of the technology, media and telecommunications industry team at private equity firm KKR
Healthy Activity
Earlier this December, Fifth Force completed their first issuance of blockchain-registered equity-proxies, for their own equity, raising €3.4M in what appears to be 46 transactions. An example €250,010 investment, shows the EUR-pegged tokens being minted by the platform and then both FTH and NEU tokens being minted.
The FTH equity-tokens come with features including voting and information dissemination. They are actually a claim on legacy system government registration and legal artifacts. The Investment Memorandum and Term Sheet have more information.
The NEU tokens seen in the transaction are grants included as part of an incentive program designed to align stakeholders in the ecosystem. Their issuance is part of every deal done on the platform per a pre-determined schedule.
Past & Present
From their marketing materials, a history of the firm:
- September 2016: Neufund founded
- January 2017: Whitepaper 1.0 released
- May 2017: Employee Stock Option Plan
- July 2017: Blockchain Policy Report published
- August 2017: ICO Transparency Monitor Released
- September 2017: Whitepaper 2.0 released
- October 2017: Smart Contract Watch
- November 2017: ICBM
- May 2018: Platform pre-launch KYC
- June 2018: First ETOs announced
- July 2018: First partnerships with secondary markets
- November 2018: Platform 1.1. Live on the Mainnet
- November 2018: First Security Token Offering (STO)
The Equity Token Offering ETO took 14 days to execute the raise. Registration and settlement in legacy government frameworks add 2 months to their timeline.
The startup also raised €10M in private equity late 2017.
Pipeline
There are currently 10 advertised firms preparing to raise equity on the platform in the near future. Everything from seed stage, through Series D offerings. Countries of origin span Germany, India and Malta so far. Industries span energy, finance, consumer and technology. Germany based Brille24, is a 10 year old company and has shipped 2 million eye glasses. India based Emflux Motors, sells bikes that do 0 to 100 km/h in 3 seconds. The highly anticipated Malta based, Founders Bank, initiated as a strategic move by Binance is also on the platform.