NEUFUND is a platform for primary offerings 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 to 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, cryptoHNWI (crypto-whales) get the opportunity to deploy their crypto capital off-chain.
EQUITY TOKEN OFFERING (ETO) is a novel way of fundraising, which allows any kind of company (blockchain-based or not) to issue equity tokens on the 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.
TERM SHEET Neufund Platform provides a term sheet template, containing standard provisions for VC market today. Configure the commercial terms of your ETO e.g.: company valuation; ticket size; voting rights; transferability; information rights; etc.
PROSPECTUS Neufund Platform provides an appropriate prospectus template, including legal disclaimers and helps filing it with Financial Supervisory Authority (BaFin). For rounds up to 2.5M EUR and tickets up to 10k EUR you need to file a 3-page long Pamphlet (Infoblatt). For rounds larger than 2.5M EUR you need to file an Investment Prospectus (Verkaufsprospekt) additionally to the Pamphlet. Writing and filing the Prospectus using Neufund Platform does not require more work than a VC pitch deck or a business plan. In principle, but depending on the final terms, you can offer Equity Tokens both to accredited and retail investors, in public and private placements.
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. Based on the conditions you configured in the term sheet the Platform generates the Investment Agreement. This agreement is a paper contract between fundraising company and the Neumini*.
Additionally, the Platform generates the Token Holder Agreement, which is an on-chain PDF contract between the Neumini and the Token Holders, that is investors in your Equity Tokens. The Investment Agreement transfers the shares to the Neumini, and the Token Holders Agreement states that the shares are represented by Equity Tokens, owned by the Token Holders. Both agreements are linked (cryptographically hashed) to the smart contract executing your ETO on-chain.
*Neumini is a bankruptcy remote SPV, set up to bridge the worlds of on-chain tokens and off-chain equity. Neumini represents Token Holders as a single entry in the cap table. It is contractually bound to execute the will of the Token Holders expressed in the smart contracts, and performs a purely bureaucratic function.
Neufund structure ensures legally binding Equity Tokens. That means your rights as issuer or as 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 - 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.
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 your investors about your offering. Additionally. your 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.
Except for the initial prospectus, the law does not impose any reporting rights after the ETO. It is up to you what information rights you will give your Token Holders. We recommend, however, as much transparency as possible, in the Blockchain Community spirit.
Equity Tokens are securities, and can be traded only by properly licensed entities, eg stock- and crypto-exchanges (licensed), brokers, banks etc. Over the past year two trends have emerged in the industry which open for you the door for secondary trading:
1) Due to the awakening regulator, crypto-exchanges are getting licensed for securities trading.
2) Progressive banks, financial institutions, as well as progressive stock-exchanges are applying Blockchain technology to enable tokenizing of securities as part of their offering. Neufund is working with a number of partners around the world to develop such trading ecosystem, and we will guide you through the process.
After a successful ETO Neufund Platform deducts a success fee and distributes it to the NEU token holders: