Investing in businesses has become commonplace, but the ways individuals can get involved hadn’t evolved much — that is until crowdfunding solutions like Kickstarter and blockchain technologies came along.
While the former can be best described as project funding, blockchain technology truly delivers new financing and investment opportunities.
But there are still opportunities to innovate in the space, especially when it comes to helping regular people invest in a business.
Neufund — a company that uses blockchain technology to give investors new ways to fund ventures — has today announced the first companies to tokenize equity through its Equity Token Offering (ETO).
What’s an ETO, you ask?
Neufund has created a legal and technical infrastructure that serves as a primary market for companies from blockchain and non-blockchain spaces. Through this structure, Neufund offers tokens guaranteeing equity rights, which the company has coined “equity tokens.”
“We have focused on creating a user-friendly and accessible platform for both the companies and the investors,” Neufund CEO and cofounder Zoe Adamovicz told me. “In comparison to other primary offerings markets, we’re the natural evolution, combining world-class user experience and strong back-end technical and legal framework. Thanks to Neufund, you no longer have to be a developer with advanced programming skills to invest or fundraise over blockchain.”
With traditional investments, VC companies are able to invest in conventional equity instruments. But Neufund’s equity tokens give those with limited capital access to fractional ownership. One share has the potential to be represented by one million equity tokens and can be held by anyone from an individual to a major VC firm.
“Anyone can become an investor with Neufund, both big VC companies with access to multimillion capital and students with modest savings,” Adamovicz said. “All they need to do is to register on the Neufund platform, go through a simple verification process, and that is all — their account is set and ready for the investments. What’s exciting about our platform is that both the student and big investment company can invest in the same companies on the same conditions and within the same investment rounds.”
Neufund’s regulation-compliant framework operates under the admittedly strict bounds of German law and jurisdiction and uses Ethereum (ETH) and the euro (EUR) to allow users to purchase equity tokens. An ETO, therefore, is intended to be a legal and secure alternative to the ICO.
Investors have already pledged millions for future investments on Neufund, and the community currently consists of more than 1,000 investors from both traditional and cryptocurrency markets. These investors include Frank Thelen (Freigeist), Christophe Maire (Atlantic Labs), Alexander Lange (prior to joining Index Ventures), and Max Kordek (Lisk).
The first companies that will tokenize their equity through Neufund’s infrastructure include businesses representing the internet of things (IoT), fintech, banking, biotech, and the automotive industry. For example, AI-powered eyewear brand Brille24 and Swedish electric car startup Uniti are both using ETOs to offer fractional investment.
Also using equity tokens are omnichannel re-commerce platform mySWOOOP, startup incubator for IoT and blockchain ventures Next Big Thing, electric superbike company Emflux Motors, and blockchain-powered financial services provider BlockState.
So what’s next for Neufund?
“For now, we’re focusing fully on the first offerings that will be conducted on the platform,” Adamovicz said. “We’re also involved in a number of ecosystem building projects, such as our advisory to Maltese and German governments on creating distributed ledger technology (DLT) frameworks. I have just recently joined the Innovation Board advising to the Minister of Digitalization in Germany. I believe that only by creating stable and strong foundations can we build products that will positively disrupt industries, including the way we fundraise and invest. We are also working on a number of smaller projects that will help the community, such as a knowledge hub for security tokens and a mapping tool for DLT regulations around the world.”