Last year, Finance Magnates sat down with Neufund Co-Founder Zoe Adamovicz to talk about the company’s recent partnership with Binance and the Malta Stock Exchange, the decision to base the company in Berlin, and how the company as working to provide more companies with access to capital and investors with greater access to new assets.
Recently, we’ve gotten a chance to catch up with Adamowicz and with Neufund. The company recently completed its first token sale and has been working with regulators across Europe.
Adamowicz co-founded Neufund with her business partner, Marcin Rudolf, in 2016. “From the beginning, our idea was to build an assets tokenization and issuance platform,” she said.
What is Neufund?
“We allow any company, Blockchain-related or not, to give its equity a representation on-chain in the form of security tokens, and to conduct regulated offerings that can address the general public and not just an accredited few.
Adamowicz added that there are a number of benefits to this, including fractional ownership, wherein “one share can be represented by many tokens.” This makes it possible for small investors to put money into a company more easily, and also facilitates programmability “with which company can automate, e.g., dividend distribution or shareholders resolutions.”
Furthermore, Neufund’s tokenization platform transforms investments into interoperable tokens “which make it possible on a technical level to put these tokens on any Blockchain-based secondary market.” In other words, a token representing a share in a company can be bought and sold across various token-trading platforms.
“I see Neufund and what we do, as a technological evolution for financial markets worldwide,” Adamowicz said. “Blockchain is a powerful technology, far more reliable than existing systems that consist of multiple middlemen. Why would you keep intermediaries such as registrar, stock transfer agents, custodians, brokers, central securities depositories, etc., etc., if their functions can be effectively replaced with immutable and transparent Blockchain?”
”Building Solutions that Perpetuate Mistakes of Existing Financial Markets…Is Not Enough”
Since we last spoke with Adamowicz, the company has taken its first big step on the journey toward full functionality as a tokenization platform. Rather than the “move fast and break things” approach to business that is often the modus-operandi in the tech world, Neufund seems to be moving slowly and deliberately.
“I’ve said it many times, but I’m happy to say that again – building solutions that perpetuate mistakes of existing financial markets, where only prominent investors have access to the most lucrative offers, is simply not enough,” she said.
“Late last year we have conducted the world’s first public offering of equity on Blockchain (FTH token) and successfully raised roughly €3.4m from a diverse community of investors,” Zoe said.
We’re proud to say that we’ve just successfully finalized the first ETO on Neufund. Thanks to everyone who participated. After this first test round we’re looking forward to the next ETOs in 2019! #ETO #STO #fundraising #blockchain pic.twitter.com/4VagysVy1X
— Neufund (@neufundorg) December 16, 2018
“It was a general test drive for our set of protocols and technical architecture, and I’m happy to say that the outcomes have far exceeded our expectations. In less than a month we will distribute pro rata over €100k of the proceeds generated by Neufund.”
Adamowicz emphasized that “the main test of the offering was to conduct a test drive, not the fundraising. We have almost tripled our soft cap, and having in mind that we did not pursue active fundraising campaign we consider it as a very positive reaction from the market.”
”We Perceive Diversity Among Investors as a Very Good Sign”
Who participated in the token sale? “Neufund’s offering has attracted a very diverse group investors, ranging from our existing venture capital investors, like Freigeist and Atlantic Labs, to private individuals not strictly connected with equity markets or Blockchain,” Adamowicz explained.
“Among them, we secured the support of Udo Schloemer, Factory Berlin founder and CEO, Chris Zippel, award-winning music producer and composer and Dario Suter, movie producer, DCM founder and managing director.”
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Zoe said that the somewhat atypical group of investors was one of the company’s “most interesting observations” about the sale.
“We perceive diversity among participating investors as a very good sign. On the one hand, securing support from venture capital investors means that most likely more and more investors of such kind will become interested in Blockchain-powered investment opportunities,” she said.
“On the other hand, interest from private individuals, many of whom we didn’t know prior to the offering, backs our firm belief that when we make investing easier and more accessible, more capital will flow into the space of private equity.”
Regulatory Concerns Caused Neufund to Raise Ticket Size from €500 to €100k
While Neufund is working toward making investing more accessible, this first token sale had a rather high ticket size. “In our first equity token offering we have set the minimum ticket size at €100k. However we work towards making it as low as €500.”
However, Zoe explained that this was due to regulatory issues rather than the company’s own wishes. “As explained extensively in our blog post we have decided to raise the minimum ticket size from the originally planned €500 due to an unexpected request from the German Financial Supervisory Authority (BaFin).”
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— Neufund (@neufundorg) December 27, 2018
She went on to say that at the end of the day, timing took precedence: “We didn’t want to wait any longer with launching our product, which had been ready for some time.”
However, “in the meantime, we remain in close contact with BaFin, and we’re looking forward to lowering that barrier of entry soon.” When Finance Magnates last spoke with Adamowicz, she said that in terms of crypto regulation, Germany is doing “a lot of great stuff.” However, the country is “just a lot more careful and very reasonable” than countries like Switzerland and Malta.
Neufund may also be working to change the policies that caused the company to raise its ticket size–in addition to the token sale, the company has also been working as an advising force to a number of regulators: “we continued to offer our knowledge and counsel on DLT regulation to multiple governments, which resulted in meaningful progress, e.g., in Germany.”
“Before we code the law, we need to make sure that it does not perpetuate problems and weak points of existing systems and also recognizes opportunities offered by innovation and technological progress” writes @zoeadamovicz in column for @crowdfundinside https://t.co/pt8WHGgLXq
— Neufund (@neufundorg) January 28, 2019
Steady the Course
Until the opportunity to lower the ticket size presents itself, Neufund is steadily checking off items on its to-do list.
“Just as planned we have conducted the first equity token offering, launched our platform with state-of-art AML / KYC processes and laid the groundwork for an entire ecosystem of tokenized securities. This also includes our partnerships with Binance, Blocktrade, MSX of Malta Stock Exchange and Ledger,” Adamowicz explained.
“We’re just getting started!”