If you have a smart business idea, you have to convince investors of your vision. In the beginning, it is often family and friends. You could be even seeking financial help from a lending club or traditional banks. Later, ideally, business angels and investors come in who provide venture capital. A time-consuming process.
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Now, there’s what is called crypto lending as explained by Cointelegraph. It works much like a regular loan but within the limitations of cryptocurrencies. This service connects willing lenders to seeking borrowers using online platforms. Lenders lend their Altcoins, Ether, or Bitcoins to borrowers under agreed terms and regulations.
The entrepreneur Zoe Adamovicz can imagine it all easier, faster, and cheaper. With her start-up “Neufund”, the Polish-born artist, together with her partner Marcin Rudolf, wants to create a platform on which investors can participate in start-ups using the Ethereum cryptocurrency. It is an experiment that no one can say at the moment whether it will succeed and what risks are involved for the investor. Bafin’s financial supervision is in the process of dealing with this business model.
The company is financed through venture capital. It recently mobilized $ 12 million from investors for the platform. The financiers include, for example, the investor Frank Thelen, who is known to a wider audience as a jury member of the start-up show “Höhle der Löwe”. Neufund has dubbed this process the “Initial Capital Building Mechanism” (ICBM). Supporters, therefore, commit funds that they can later invest on the platform in companies.
Adamovicz and Marcin are experienced entrepreneurs. In 2014, they sold their self-founded Xyo app search engine to an American, listed company. It is important for the manager to differentiate herself from so-called initial coin offerings (ICO). “New discovery does not make an ICO,” she clarifies. “No euro is used by the ICBM for the company. We don’t manage this money either. ”
She doesn’t want “newfound” to be lumped together with companies that use intransparent ICOs to collect money by issuing tokens. Much can be hidden behind tokens: some companies promise to share in possible future profits, others only declare the collected money as a “donation”. “At the moment, investors who finance companies using cryptocurrencies cannot be sure whether the tokens issued will actually be used for the purposes for which they were announced,” Adamowicz describes the dilemma. This is exactly what is supposed to work differently on the “Neufund” platform.
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There, companies can finance themselves with so-called equity token offerings (ETOs). Adamowicz wants to ensure that the investor who participates in a company on the Neufund platform also benefits from possible profits or sales proceeds. At the same time, investors have to bear possible losses. “With an ETO, the investor acquires rights to the company, which he can also assert, if necessary,” she emphasizes. This is a big difference to tokens, which are awarded in the context of an ICO.
