Last week ihodl.com met with Agnieszka Sarnecka, Neufund VP Ventures, on the sidelines of the 2018 Delta Summit in Malta. She talked about her firm, a German startup bridging blockchain and off-chain world, and its fundraising method tailored for the age of tokenized economy.
Hi Agnieszka! Please give us a little introduction about your company. What does Neufund offer to companies and investors?
Neufund is a set of protocols for tokenized securities. And our first product is tokenizing private equity. So we allow companies to document their shares and offer them as equity in so called equity token offerings (ETO) and security token offering (STO) on our platform.
On the other end we offer investors to get verified on our platform and then invest in any of those token offerings and therefore become co-owner of the platform themselves.
Your service is available to both retail and accredited investors. Please tell us more about the latter: how much interest have you received from that side?
Our platform attracts all kinds of investors. We have VC funds and private firms. We have institutional investors and we also accredited investors (in Germany they are called qualified investors). And retail investors as well.
At the moment we have approximately 2000 people verified on the platform and these are all types of investors really. That’s what you want to provide. You want to provide a diversity of investors and you want to make sure that anyone can invest.
And those companies can fundraise for both VC firms and their family members in one offering.
In a previous interview, you stated that classifying all token as securities endangers the market. What’s the real danger in your opinion?
I believe that tokens have different functions. And they are used for different things. Many make sense, many don’t. If you want to tokenize your business model, surely a utility token can be useful.
The only thing you should not be doing with utility tokens is fundraising. In this case a security token makes sense. But I don’t think that every token should be classified as security token, because this literally kills the business.
A recent report showed that 64 of the top 100 cryptos have no working product. How does your company protect investors in that regard?
Our platform is not for ICOs that raise millions in 2 minutes. We are really selling asset-backed tokens. They are bought by investors, not by traders. So it is a completely different approach. It is something between a VC round, an IPO and an ICO.
Of course you are using the very same technology that is used by ICOs too. But the people involved are different. And I would say that the type of fundraising is a little bit more mature than selling utility tokens to millions of investors that don’t get any right, they don’t get anything after buying these tokens, right? While buying equity tokens, they have actually shareholders’ rights and they can enforce them legally. And this is what makes it valuable.
Talking about working products, I am choosing the companies that are going to end up in our portfolio and I make sure that all companies are solid existing companies. We do legal checks on them, KYC of sorts. We do not promote any project that doesn’t at least have a demo.
We check that the projects have a dedicated team and a good track record. Some of them are bigger established companies, that have revenues already, with a proven track record. Other are very young startups, but they have very motivated teams and they are legally completely fine.
I will drop some names: Binance, BitBay, Founders Bank, MSX… They are part of this ecosystem that is being pushed by Malta. What role does Neufund play in this puzzle?
We have been in Malta since the beginning of this year and Malta has been very welcoming to us. And yes, we are partnering up with companies that are moving here to Malta. We are also often here and engage with the regulation itself.
However, we will stay under German regulation at the moment, so we will do all our public offerings under German law.
Our full company is based in Germany, we have our headquarters in Berlin, and we do all our platform operations, our public offerings, there.
Here in Malta we are involved with the Founders Bank, which is one of the portfolio companies. Founders Bank will counduct an ETO with Neufund and that’s where our connection comes from. Also we have partnerships with BitBay and Binance, so that’s why we are often here to meet them. And we are talking to Malta Stock Exchange for listing security tokens.