FAQ

GENERAL
What is Neufund?

Neufund is a platform for primary offering of securities (Vermögensanlagen), as legally binding smart contracts on the Ethereum Blockchain - “Equity Tokens”. Such “Equity tokens” are technologically enhanced quasi-shares that are as easy to purchase and trade as cryptocurrencies, yet give the investors and issuers legal protection similar to classical forms of VC investing. Neufund is focusing on mid- to late-stage visionary companies, ideally not-Blockchain, and 7-9 digit EUR rounds. The platform accepts investments in EUR and ETH, and no knowledge of Blockchain is required from the investor to participate. In particular, crypto-HNWI (crypto-whales) get the opportunity to deploy their crypto capital off-chain.

What is an ETO?

ETO stands for Equity Token Offering. It is a novel way of fundraising, which allows any kind of company (blockchain-based or not) to issue Equity Tokens on Blockchain, in a public or private placement. Equity Tokens guarantee crucial equity-like rights for the investors and the issuers. Legally, Neufund’s Equity Tokens are securities structured as Vermögensanlagen (“Investment Assets”). The offering is subject to the German Banking Act (KWG) and the Investment Asset Act (VermAnlG). ETOs can be conducted by any incorporated entity worldwide, however at the moment the platform does not accept companies incorporated in the USA, due to regulatory uncertainty in America.

What is an Equity Token?

An Equity Token is a technologically enhanced quasi-share that is as easy to purchase and trade as cryptocurrencies, yet give the investors and issuers legal protection similar to classical forms of VC investing. Equity Tokens guarantee crucial equity-like rights for the investors and the issuers. Legally, Neufund’s Equity Tokens are securities structured as Vermögensanlagen (“Investment Assets”). The offering is subject to the German Banking Act (KWG) and the Investment Asset Act (VermAnlG). Equity Token Offerings can be conducted by any incorporated entity worldwide, however at the moment the platform does not accept companies incorporated in the USA, due to regulatory uncertainty in America.

How can a company apply for an ETO on the Neufund Platform?

We plan to launch the platform in Spring 2018. After the first ETOs are launched the platform will be open for registration to a broader public.

All in all these are the 6 steps of an ETO with us:

  1. Register your company on the Neufund Platform, following standard KYC procedures
  2. Specify the terms of your offer for investors, and the Platform will automatically turn them into smart contracts, and generate tradable Equity Tokens for you
  3. Raise funds in ETH and/or EUR, using the Neufund payment systems and wallets
  4. Close the financing round - sign the Investment Agreement and release Equity Tokens to investors, and get access to the funds
  5. Govern your organization - communicate with Token Holders, manage the cap table and voting procedures (shareholders resolutions, etc.) via the Neufund Platform dashboard
  6. Raise follow-on rounds easily, by issuing new Equity Token
Which companies can use the Neufund Platform?

The beauty of the Neufund Platform is that any kind of a company can conduct an ETO on the platform. From a blockchain-based project to an ice cream shop or in any financing stage: seed or E stage - anyone can participate. ETOs can be conducted by any incorporated entity worldwide, however at the moment the platform does not accept companies incorporated in the USA, due to regulatory uncertainty in America.

Is there already a first batch of companies conducting an ETO with Neufund?

Since the platform isn’t live yet, currently no company has performed an ETO with Neufund. However, we will launch our platform with a first batch of ETO handpicked by our team.

When can I do an ETO with Neufund?

The platform was launched in Spring. Go to https://platform.neufund.org/ to meet the first off-chain companies tokenizing their shares under German jurisdiction.

Who decides, which companies can do an ETO and what are the actual criteria?

There are only three requirements: 1) your company has to be incorporated in a country with a stable legal and corporate structure, 2) you cannot be US-based, since for now due to regulatory reasons we cannot support US-based companies, and 3) your company’s activities cannot be illegal or unlicensed. Other than that any kind of a company can register on the platform and offer tokenized equity to its investors. We as the platform operator conduct a standard legal check, but the business due diligence is done by the investors themselves.

What is the general timeframe for an ETO?

You can design your own ETO the way you want. This depends on the investor type you are addressing. But in our experience a typical ETO process from setup to end of the public offering durates 3-4 moths. The actual fundraising duration can vary but we think a 1-week private (pre-ETO) and 1-month public placement (ETO) is natural.

How do we intend to raise awareness for the different projects to fund via Neufund?

At its core, Neufund is a legal-tech and a reg-tech platform. It provides an ecosystem of smart contracts, legal structure and technical framework to ensure an easy and compliant Blockchain based fundraising. An ETO is a hybrid investment model combining advantages of an IPO, an ICO, and a VC round. Thus, we recommend to conduct a campaign or a roadshow to inform the investors about the offering. Additionally. The ETO will be listed on the Neufund Platform, which means it will be offered to 1000+ investors, including VC, PE, BA, crypto-HNWI, and retail. However it is the company’s responsibility to raise awareness for their ETO. We do not provide marketing services. You will be able to work with our partners on that.

Is an own marketing budget required by the companies doing an ETO via Neufund?

Companies planning to raise funds in an ETO need to allocate its own budget to do the marketing and pr outreach.

To whom can the public offering of the Equity Token be directed to? Can I approach retail customers with my investment proposition, or only institutional investors (funds).

In Europe once you have filed a prospectus you can address all investors also retail investors. In the US this would require a costly and challenging process with the SEC.

Do I need any confirmation that my investor is an accredited investor? Or is this only the case with US-investors?

It is not required with regard to Europe. In the US you would still have to file with the SEC.

What information about our company are we required to provide/publish and to whom (e.g. Business Plan, Management Presentation etc.)?

Since Equity Tokens are securities (Vermögensanlage) you will be required to file an Investment Prospectus. You will be asked to provide the information that usually is already included in a pitch deck for investors or a whitepaper. It is your decision how much you want to include but the more detailed you are the better from the perspective of investors.

GENERAL

What is Neufund?

Neufund is a platform for primary offering of securities (Vermögensanlagen), as legally binding smart contracts on the Ethereum Blockchain - “Equity Tokens”. Such “Equity tokens” are technologically enhanced quasi-shares that are as easy to purchase and trade as cryptocurrencies, yet give the investors and issuers legal protection similar to classical forms of VC investing. Neufund is focusing on mid- to late-stage visionary companies, ideally not-Blockchain, and 7-9 digit EUR rounds. The platform accepts investments in EUR and ETH, and no knowledge of Blockchain is required from the investor to participate. In particular, crypto-HNWI (crypto-whales) get the opportunity to deploy their crypto capital off-chain.

What is an ETO?

ETO stands for Equity Token Offering. It is a novel way of fundraising, which allows any kind of company (blockchain-based or not) to issue Equity Tokens on Blockchain, in a public or private placement. Equity Tokens guarantee crucial equity-like rights for the investors and the issuers. Legally, Neufund’s Equity Tokens are securities structured as Vermögensanlagen (“Investment Assets”). The offering is subject to the German Banking Act (KWG) and the Investment Asset Act (VermAnlG). ETOs can be conducted by any incorporated entity worldwide, however at the moment the platform does not accept companies incorporated in the USA, due to regulatory uncertainty in America.

What is an Equity Token?

An Equity Token is a technologically enhanced quasi-share that is as easy to purchase and trade as cryptocurrencies, yet give the investors and issuers legal protection similar to classical forms of VC investing. Equity Tokens guarantee crucial equity-like rights for the investors and the issuers. Legally, Neufund’s Equity Tokens are securities structured as Vermögensanlagen (“Investment Assets”). The offering is subject to the German Banking Act (KWG) and the Investment Asset Act (VermAnlG). Equity Token Offerings can be conducted by any incorporated entity worldwide, however at the moment the platform does not accept companies incorporated in the USA, due to regulatory uncertainty in America.

How can a company apply for an ETO on the Neufund Platform?

We plan to launch the platform in Spring 2018. After the first ETOs are launched the platform will be open for registration to a broader public.

All in all these are the 6 steps of an ETO with us:

  1. Register your company on the Neufund Platform, following standard KYC procedures
  2. Specify the terms of your offer for investors, and the Platform will automatically turn them into smart contracts, and generate tradable Equity Tokens for you
  3. Raise funds in ETH and/or EUR, using the Neufund payment systems and wallets
  4. Close the financing round - sign the Investment Agreement and release Equity Tokens to investors, and get access to the funds
  5. Govern your organization - communicate with Token Holders, manage the cap table and voting procedures (shareholders resolutions, etc.) via the Neufund Platform dashboard
  6. Raise follow-on rounds easily, by issuing new Equity Token
Which companies can use the Neufund Platform?

The beauty of the Neufund Platform is that any kind of a company can conduct an ETO on the platform. From a blockchain-based project to an ice cream shop or in any financing stage: seed or E stage - anyone can participate. ETOs can be conducted by any incorporated entity worldwide, however at the moment the platform does not accept companies incorporated in the USA, due to regulatory uncertainty in America.

Is there already a first batch of companies conducting an ETO with Neufund?

Since the platform isn’t live yet, currently no company has performed an ETO with Neufund. However, we will launch our platform with a first batch of ETO handpicked by our team.

When can I do an ETO with Neufund?

The platform was launched in Spring. Go to https://platform.neufund.org/ to meet the first off-chain companies tokenizing their shares under German jurisdiction.

Who decides, which companies can do an ETO and what are the actual criteria?

There are only three requirements: 1) your company has to be incorporated in a country with a stable legal and corporate structure, 2) you cannot be US-based, since for now due to regulatory reasons we cannot support US-based companies, and 3) your company’s activities cannot be illegal or unlicensed. Other than that any kind of a company can register on the platform and offer tokenized equity to its investors. We as the platform operator conduct a standard legal check, but the business due diligence is done by the investors themselves.

What is the general timeframe for an ETO?

You can design your own ETO the way you want. This depends on the investor type you are addressing. But in our experience a typical ETO process from setup to end of the public offering durates 3-4 moths. The actual fundraising duration can vary but we think a 1-week private (pre-ETO) and 1-month public placement (ETO) is natural.

How do we intend to raise awareness for the different projects to fund via Neufund?

At its core, Neufund is a legal-tech and a reg-tech platform. It provides an ecosystem of smart contracts, legal structure and technical framework to ensure an easy and compliant Blockchain based fundraising. An ETO is a hybrid investment model combining advantages of an IPO, an ICO, and a VC round. Thus, we recommend to conduct a campaign or a roadshow to inform the investors about the offering. Additionally. The ETO will be listed on the Neufund Platform, which means it will be offered to 1000+ investors, including VC, PE, BA, crypto-HNWI, and retail. However it is the company’s responsibility to raise awareness for their ETO. We do not provide marketing services. You will be able to work with our partners on that.

Is an own marketing budget required by the companies doing an ETO via Neufund?

Companies planning to raise funds in an ETO need to allocate its own budget to do the marketing and pr outreach.

To whom can the public offering of the Equity Token be directed to? Can I approach retail customers with my investment proposition, or only institutional investors (funds).

In Europe once you have filed a prospectus you can address all investors also retail investors. In the US this would require a costly and challenging process with the SEC.

Do I need any confirmation that my investor is an accredited investor? Or is this only the case with US-investors?

It is not required with regard to Europe. In the US you would still have to file with the SEC.

What information about our company are we required to provide/publish and to whom (e.g. Business Plan, Management Presentation etc.)?

Since Equity Tokens are securities (Vermögensanlage) you will be required to file an Investment Prospectus. You will be asked to provide the information that usually is already included in a pitch deck for investors or a whitepaper. It is your decision how much you want to include but the more detailed you are the better from the perspective of investors.

FUNDRAISING
Does a company have to work with Blockchain to use the Neufund Platform?

No, blockchain is just the underlying technology allowing the Neufund Platform to perform its service. Neufund provides the interface for all key functions (such as tokenizing equity, legal framework, raising funds and interactions with token holders). You do not have to understand the Blockchain technology to enjoy its benefits with Neufund.

How is the company value underlying an ETO determined and by whom?

You decide what your company valuation is.

Are there funding limits - both, bottom line and/or upper limit?

No there are not, you can set the limits yourself.

Who decides how much funds can be raised by a company?

The company itself decides on all the commercial terms of the deal. How much they want to raise, what is the valuation of the company, how much equity should be tokenized, what are the rights of the token holders and how long the ETO should last.

How is the equity value of one token determined?

This is calculated just like in usual funding rounds based on the valuation of the company.

How is the amount of tokens to issue set?

We will provide a suggested amount of tokens to represent one share based on market standards and an algorithm. This will be changable on the case-by-case basis.

Can a company on the Neufund Platform raise only part of a given cap, or more than originally specified?

Just like in classical fundraising round, you raise an exact amount. The startup, likely in negotiation with initial investors, determines the offering terms. When all shares are sold, the deal is closed, and equity tokens and funds are transferred. This is similar to equity crowdfunding where you can fundraise more than the required amount. The valuation is determined as part of the offering and it can be less than the maximum amount. Changing the offering terms as you go along is hard, both a) changing valuation and b) issuing more shares will somehow hurt, or at least change, the deal your previous investors already agreed to. We at least initially will not have a bidding system. A company will offer a certain amount of tokens at a certain price. Once they are sold, they are sold. It is, however, possible and probably even required to have a minimum amount, so, if a certain amount of tokens isn’t sold the whole tokenization process is aborted.

Do companies get NEU?

No, companies don’t get NEU unless they buy them on the secondary market and become co-owners of the ecosystem.

Is there any fee for conducting an ETO on the Neufund Platform?

There is no upfront fee. However, you will be paying a success fee once you close your ETO successfully. You will pay it in two tranches: 3% in cash from the amount you raised in the ETO and 2% in equity tokens of your company that you have issued. The proceeds from these fees are distributed to all NEU holders proportionately, not only to the platform operator.

Can I do an ICO with an utility token on Neufund Platform?

Currently, we are concentrating on launching ETOs and equity tokens. Later on, we will also allow the creation of utility tokens and other protocol tokens. The platform is token-type agnostic.

What happens with my tokens if Neufund goes out of business?

Neufund’s structure ensures legally binding Equity Tokens. That means your rights as issuer or as an investor are protected also off-chain with the Investment Agreement and Token Holders Agreement that you actually sign. Since this legal structure is mirrored in the Blockchain smart contracts, your rights are actually protected twice - the off-chain law is a backup for Blockchain failure. If for whatever reason Neufund ceases existence, you can always refer yourself to the Blockchain or to the signed agreements.

FUNDRAISING

Does a company have to work with Blockchain to use the Neufund Platform?

No, blockchain is just the underlying technology allowing the Neufund Platform to perform its service. Neufund provides the interface for all key functions (such as tokenizing equity, legal framework, raising funds and interactions with token holders). You do not have to understand the Blockchain technology to enjoy its benefits with Neufund.

How is the company value underlying an ETO determined and by whom?

You decide what your company valuation is.

Are there funding limits - both, bottom line and/or upper limit?

No there are not, you can set the limits yourself.

Who decides how much funds can be raised by a company?

The company itself decides on all the commercial terms of the deal. How much they want to raise, what is the valuation of the company, how much equity should be tokenized, what are the rights of the token holders and how long the ETO should last.

How is the equity value of one token determined?

This is calculated just like in usual funding rounds based on the valuation of the company.

How is the amount of tokens to issue set?

We will provide a suggested amount of tokens to represent one share based on market standards and an algorithm. This will be changable on the case-by-case basis.

Can a company on the Neufund Platform raise only part of a given cap, or more than originally specified?

Just like in classical fundraising round, you raise an exact amount. The startup, likely in negotiation with initial investors, determines the offering terms. When all shares are sold, the deal is closed, and equity tokens and funds are transferred. This is similar to equity crowdfunding where you can fundraise more than the required amount. The valuation is determined as part of the offering and it can be less than the maximum amount. Changing the offering terms as you go along is hard, both a) changing valuation and b) issuing more shares will somehow hurt, or at least change, the deal your previous investors already agreed to. We at least initially will not have a bidding system. A company will offer a certain amount of tokens at a certain price. Once they are sold, they are sold. It is, however, possible and probably even required to have a minimum amount, so, if a certain amount of tokens isn’t sold the whole tokenization process is aborted.

Do companies get NEU?

No, companies don’t get NEU unless they buy them on the secondary market and become co-owners of the ecosystem.

Is there any fee for conducting an ETO on the Neufund Platform?

There is no upfront fee. However, you will be paying a success fee once you close your ETO successfully. You will pay it in two tranches: 3% in cash from the amount you raised in the ETO and 2% in equity tokens of your company that you have issued. The proceeds from these fees are distributed to all NEU holders proportionately, not only to the platform operator.

Can I do an ICO with an utility token on Neufund Platform?

Currently, we are concentrating on launching ETOs and equity tokens. Later on, we will also allow the creation of utility tokens and other protocol tokens. The platform is token-type agnostic.

What happens with my tokens if Neufund goes out of business?

Neufund’s structure ensures legally binding Equity Tokens. That means your rights as issuer or as an investor are protected also off-chain with the Investment Agreement and Token Holders Agreement that you actually sign. Since this legal structure is mirrored in the Blockchain smart contracts, your rights are actually protected twice - the off-chain law is a backup for Blockchain failure. If for whatever reason Neufund ceases existence, you can always refer yourself to the Blockchain or to the signed agreements.

TECHNICAL
How are the equity tokens created and how long does it take?

This is done automatically by the smart contract we are providing for you.

Do you provide the technical infrastructure to create the tokens?

Yes, we do.

Can the code of the smart contracts be reviewed?

Yes, of course, all smart contracts created by Neufund are open sourced and viewable on GitHub under https://github.com/neufund.

Where are the tokens stored once being issued? Do you provide a special wallet or can they also be stored in common ETH wallets like myetherwallet etc.?

Equity tokens are standard ERC20 tokens and can be stored in any kind of crypto wallet that supports ERC20 tokens. However, Neufund provides an incorporated light wallet on the Platform.

Why did we choose to run the Neufund Platform on the Ethereum Blockchain?

Ethereum is the most advanced public blockchain which excels through its high programmability. It facilitates the involvement of smart contracts, which offer self-enforceable mechanisms enshrined in code. This allows accommodating the construction of complex applications, so-called Decentralised Applications (DApps). Ethereum has thus proved to be a highly valuable and sustainable project to which we contribute gladly. Neufund itself is technologically neutral, so in theory, it could move to another blockchain platform if necessary.

TECHNICAL

How are the equity tokens created and how long does it take?

This is done automatically by the smart contract we are providing for you.

Do you provide the technical infrastructure to create the tokens?

Yes, we do.

Can the code of the smart contracts be reviewed?

Yes, of course, all smart contracts created by Neufund are open sourced and viewable on GitHub under https://github.com/neufund.

Where are the tokens stored once being issued? Do you provide a special wallet or can they also be stored in common ETH wallets like myetherwallet etc.?

Equity tokens are standard ERC20 tokens and can be stored in any kind of crypto wallet that supports ERC20 tokens. However, Neufund provides an incorporated light wallet on the Platform.

Why did we choose to run the Neufund Platform on the Ethereum Blockchain?

Ethereum is the most advanced public blockchain which excels through its high programmability. It facilitates the involvement of smart contracts, which offer self-enforceable mechanisms enshrined in code. This allows accommodating the construction of complex applications, so-called Decentralised Applications (DApps). Ethereum has thus proved to be a highly valuable and sustainable project to which we contribute gladly. Neufund itself is technologically neutral, so in theory, it could move to another blockchain platform if necessary.