An investment memorandum published yesterday provides new details about an effort from venture capital firm Blockchain Capital to use digital tokens as a funding vehicle.
The document outlines the company’s plans for its recently announced Digital Liquid Venture Fund offering, an investment vehicle set up with the aim of raising $10m as part of a $50m fund that would provide capital to startups.
The ‘initial coin offering’ (or ICO) will raise funds via a sale of ethereum-based ‘BCAP Tokens’ with a face value equal to $1 and capped at a maximum of 10 million tokens. Annual fees are set at 2.5% for management and 25% for performance.
A token buyback provision will also enable Blockchain Capital to purchase open-market tokens in the event that their market value falls below their net asset value.
The offering is set to begin on 10th April, with the firm utilizing the TokenHub platform developed by Argon Group, which will also act as the offering’s underwriter. Legal advisory services will be provided by London-based Allen & Overy LLP.
The funds raised from the ICO will be split 50/50 between new ventures and a reserve account used for follow-up investments. Assuming a successful ICO, the fund will invest in 10–20 companies or token-based projects, contributing $500,000 per deal.
Further, the offering utilizes a filing exemption that allows up to 99 accredited US investors (individuals who meet stringent net worth requirements defined by the SEC) the opportunity the participate, without requiring the fund’s entity to file activity with the regulator.
Guidelines for non-US investors are less stringent as there is no net-worth threshold required.
Pot of coins image via Shutterstock
Correction: This article has been corrected to include the offering start date of 10th April 2017.