Neufund is an ecosystem of smart contracts operating on the Ethereum blockchain. Neufund is a community-owned fundraising platform. It acts as a bridge between the investment world and the blockchain space. By first quarter of 2018, companies will be able to raise equity on the Neufund platform.
Startups and established companies alike can legally issue a new type of asset Neufund calls tokenized equity. Such crypto tokens reflect the value of the business operating in the real, off-chain, world and at the same time are as liquid as a currency.
They achieve this by formally linking traditional contracts with Ethereum smart contracts through mutual reference and code correspondence. Blockchain and smart contracts allow Neufund to accelerate the investment process, lower investment barriers, align interests of inventors and investors, and eliminate transaction intermediaries.
Berlin-based Neufund said it has raised 10 million euros ($11.6 million) from private investors for its fund-raising platform, the first ever that will allow companies to issue a token or digital currency that will represent equity. They had previously raised about 2 million euro in January 2017.
The original idea for Neufund was to build a decentralised VC fund on the blockchain. Since then, we have refined our own understanding of the token economy, and expanded all components to work in a way that the system sustained itself.
Neufund is designed to be a true token economy. Neufund Platform’s value grows when the number and the volume of investments grows, so its economy must be designed to stimulate investment and reward transacting participants. Thus the value of the platform is reflected by a protocol token called Neumark, which participants earn by committing capital. This essentially means that the community economically owns the ecosystem, and it incentivises investors to bootstrap the platform and grow it with further investments.
Once these shares are created, anyone can invest into the company issuing them and verify the company’s claims by checking smart contracts and transaction data on the public ledger. The result is a primary market for real world, technologically enhanced equivalents to shares – “equity tokens” – that aim to be as liquid as cryptocurrency. By joining the platform and bringing their fiat currency on-chain, users gain access to this
market. In this way, Neufund also functions as a powerful mechanism for onboarding off-chain investors and companies to the crypto economy.
Companies can thus raise funds from investors in their existing network, as well as any cryptocurrency holder, or via the capital pool on the Neufund platform dedicated for funding. Once a company has successfully completed a campaign and issued their equity tokens, Neufund provides an easy-to-use user interface for interacting with shareholders. It is possible to hold votes for legally binding resolutions, issue updates and reports, open further fundraising rounds, enable secondary trading of equity tokens, and perform other functions necessary for responsible corporate governance.
In order for the described components to work and the system to sustain itself, Neufund is designed to be a true token economy. Its value is reflected by a protocol token called Neumark, which participants earn by committing capital to the platform. This essentially allows people to economically own the ecosystem, a powerful incentive for investors to bootstrap the platform and grow it with further investment. Neumarks are an attractive asset: they entitle their holders to revenues from platform fees for ETOs (Equity Token Offerings) taking place on Neufund, as well as economic benefit from a platform portfolio pool holding a small amount of every ETO ever conducted.
Some of the distinguishing features of the NEU token economy are:
* Funds stay in full control of their owners: investors can invest into the startups of their choice
* There is no minimum requirement on contributions
* If a contributor desires to remove his committed capital, he can do so after 18 months, with a 100% return
* Tokens entitle their holders to revenues from platform fees for ETOs taking place on the platform
* Tokens can be traded freely on crypto exchanges and easily transferred among users
Initial Capital Building Mechanism (ICBM) - Neufund Platform “ICO”
ICBM is a capital building event, consisting of Commitment Transactions. It is not a token pre-sale. All funds gathered during the ICBM still belong to Investors who make individual decisions which Equity Token Offering to fund at a later date.
Equity Tokens represent, and have legal ties to, equity (shares) in Companies. Each Company issues its own Equity Tokens during its own Equity Token Offering. Equity Tokens are acquired by Investors.
Investors get Neumarks as a reward for investing on the Platform. Neumark represents a share of the ecosystem. More specifically, it gives its holder a right to Platform fees and participation in the Platform portfolio. Neumarks can be transferred among users, but can circulate outside the user base of people registered on the Platform.
Investors get Neumarks as a reward for committing their funds to use on the platform during the ICBM, and by investing into Companies on the Platform once launched. The sooner the Investor commits funds, the higher the Neumark Reward received. The same applies to funds invested on the Platform, after the initial commitment phase is over.
SOURCES- Neufund, Reuters, cryptocoinupdates