Zoe Adamovicz is the CEO and co-founder at Neufund. She is an experienced entrepreneur and occasional angel investor.
Zoe is passionate about building technology businesses that are impactful, positive and at the same time profitable and powerful. Prior to Neufund, she founded Xyo, a company that re-imagines how people discover apps, Priori Data (app store intelligence), and Concise Software which provides software development and engineering services.
RS: Neufund has been described as a “stock exchange without the operator in the back”. What kind of similarities and dissimilarities has Neufund to a traditional stock exchange?
ZA: On one hand, Neufund provides companies with a technical ecosystem that allows them to tokenize their equity, and on the other hand it serves as a primary market for securities offerings, making it easy for companies to conduct a quasi-IPO on Blockchain. The latter may remind investors of the typical role of a stock exchange. However, secondary trading of such tokenized securities is happening outside of the Neufund platform. Equity which is tokenized through our protocol is ERC20 compliant, meaning that on a technical level it is possible to trade the tokens on any crypto exchange.
RS: What is the advantage of conducting a quasi-IPO on Blockchain over going public on a typical stock exchange?
ZA: Conducting an STO is much more accessible to companies than going public on a traditional stock exchange. You can conduct a public offering on Blockchain at almost no cost and at any stage of growth. It is interesting to observe, which gap in the existing fundraising market STOs will fill. We think it is a natural fit for a pre-IPO stage, when a company is too big for a typical VC round, and too small to file for an IPO.
Going public on Blockchain carries different benefits both pre- and post-offering. Companies no longer need to involve multiple middleman on the various stages of their offering, their cap table is updated in real time and investor can now manage their assets with greater flexibility. Also worth noting is the programmability of tokenized assets, which means that issuers can include utility functions in the asset itself such as automated dividend distribution. At the same time, making a public offering on Blockchain includes all typical advantages of going public, as well as the ability to conduct secondary offerings easily.
RS: What types of investors do you think will be attracted to Neufund’s ecosystem?
ZA: During our recent and also first Security Token Offering we have attracted a very diverse group of investors, which includes prominent venture capital firms like Atlantic Labs or Freigeist Capital, as well as angel investors, many of whom had no previous experience in this area. We find this especially interesting with the ongoing debate in mind on how Blockchain will impact the venture capital world. To us, conducting the offering on Blockchain isn’t contrary to typical investment rounds but rather enhances them, bringing much needed liquidity which so far only existed in capital markets.
But that’s not all, we also receive wide interest from many crypto and retail investors. The former see Neufund as a safe way to invest their crypto capital, while the latter appreciate the ease with which they can make their investments and manage assets at a later stage.
RS: Why is Neufund a good platform for investors to make their investments?
ZA: Neufund serves as a market with different offerings, coming from different companies and we encourage all of the investors to review each opportunity independently. However, all equity tokens offered through Neufund have similar advantages over paper-based assets that are known from traditional markets.
First, token holders will potentially have, once regulated, access to a global pool of investors across multiple secondary exchanges which potentially increases liquidity. Second, they are programmable assets which makes it possible to embed utility functions such as automated dividend distribution or voting mechanisms. Third, one real world asset can be represented by many tokens which lowers barriers to entry for retail investors.
What makes Neufund stand out from the crowd of primary issuance platforms, many of which were created over the last months, are our unique token economics – for every investment conducted through our platform investors are becoming economical co-owners of the Neufund platform itself, and thus can claim shares in the revenue that we generate. We often compare it to investing through NASDAQ in Facebook, but on top of equity in Facebook investors get a piece of NASDAQ itself.
RS: What types of companies are best suited to launch with Neufund?
ZA: We have a lot of companies in our pipeline and many more businesses which showed their interest in fundraising with us. Eleven of those were already publicly announced in 2018. They are at different stages of growth (seed, series A, B, D) and with different products (Banking, IoT, Mobility). What is important is that they don’t have to be necessarily connected with Blockchain.
RS: Why should companies launch on Neufund versus other competing platforms?
ZA: First, Neufund stands with the crowd, as we aim to make the offerings accessible to people from across the globe with different financial status, with a minimum ticket as small as a couple of hundred euros. This makes it possible to address the offering to a global community of investors. Secondly, we provide the companies with full technical and legal support over the course of the preparations for their Security Token Offerings, for instance, we are providing them even with a prospectus template, if needed.
RS: Last summer you partnered with MSX (an innovation division of the Malta Stock Exchange), how will this benefit Neufund? And you also announced a partnership with industry leader Binance last summer, could you tell us more about the Binance partnership and what it entails?
ZA: Both partnerships aim to bring much needed liquidity and create a complete environment for the issuance and, at a later stage, secondary trading of the security tokens issued through Neufund’s set of protocols.
RS: What is the biggest challenge that Neufund faces with the launch of your first security token and how do you plan to overcome that?
ZA: We have faced most of the challenges at the pre-offering stage. It included making sure our legal architecture is compliant and technical solutions secure. Now, that the tokens are about to be released, which will happen after the signing period, we focus on building the governance system and the UX around it.
RS: Neufund did an ICO in 2017 and raised approximately $15M. What will happen to the utility tokens when Neufund launches the new equity token?
ZA: During our ICBM (Initial Capital Building Mechanism) we have managed to secure an equivalent of €12.5m. It is important to note, that Neufund had no access to those funds. The committed ETH and EUR got locked on a smart contract and investors will be able to invest them into coming offerings placed through Neufund. In exchange for their early commitment investors have been rewarded with NEU tokens, that represent economical co-ownership in the platform. With those, investors can claim their share in the revenue Neufund makes.
RS: You’re based out of Berlin which has a great blockchain community. Has this community helped foster the development of Neufund?
ZA: Yes, absolutely. Neufund is surrounded with an amazing community here in Berlin which offers access and the support from top minds in Blockchain development. Germany is at an interesting intersection between traditional VC, innovative spirit of startups and a regulatory gateway to the EU.
RS: Is there anything else you would like to tell the readers about Neufund?
ZA: Blockchain is one of the greatest opportunities we’ve been presented with in modern history. Decentralization is ultimately about equalizing opportunities, so a young entrepreneur from the third world receives the same access as a wealthy investor. Building solutions that perpetuate the mistakes of existing markets solely for the purpose of increasing revenues is not enough. We, as a Blockchain community, can and should do better.
Luc Falempin, CEO of Tokeny – Interview Series
Luc Falempin is the CEO of TOKENY Solutions a Luxembourg based software vendor building an end-to-end platform to issue, manage and transfer tokenized securities in a compliant way.
Antoine: Can you tell us about the Tokeny issuance platform and how it differs from competitors?
Luc: At Tokeny we are the European leader in terms of tokenization platforms. We provide our customers with the modular end-to-end platform they need to digitise their assets. For single issuers we can automate complex and cumbersome processes that are involved in the distribution of traditional securities. For multi-issuers, such as investment banks, asset managers or marketplaces, we deliver our solutions via a white-label platform and a set of APIs.
We are currently the only live platform in the market that has the technology to digitise the issuance, the compliant security transfer and the post-issuance servicing. Our compliance system is also unique, as we are the only company worldwide with an onchain validator to enforce the necessary rules and regulations that govern financial securities.
Antoine: How did you personally become involved?
Luc: I have over 10 years of experience in entrepreneurship and software development. I worked with some of the largest e-commerce marketplaces in Europe and eventually, I sold my stake in 2017. At this time everybody was talking about decentralized marketplaces, and because of my education I understand how securities work and I saw the purpose of applying blockchain to financial markets. This was when Tokeny was born, and we’ve been building the technology ever since.
Antoine: Where’s Tokeny headquartered? What made you choose this jurisdiction?
Luc: We are headquartered in Luxembourg but we also have operations in London, Paris and Barcelona. We chose to be headquartered in Luxembourg as globally it’s second in terms of money under management, with the US sitting first. In March, €4300 billion was invested into Luxembourgish funds, so of course this is a very interesting place for a company like ours. It is also one of the leading financial centers in Europe, and we are very close to the other leading cities like London, Paris and Frankfurt.
Antoine: You initially tokenized ICOs and then pivoted to offering STOs, what made you decide to pivot?
Luc: The initial vision for Tokeny was to tokenize securities. However, in 2017 the market wasn’t ready for this. So, we saw an opportunity with ICOs, and it was the perfect MVP. There was a high market demand, ERC20 tokens are simple and the compliance was straight forward too. But now it is the time to start tokenizing financial securities and for over a year we have been developing our product to do exactly this, so our technology is ready.
Antoine: How many customers do you currently have? How many new customers are you on-boarding each month?
Luc: We have more than 30 customers and currently select 2 or 3 customers per month. We are now starting to work with multi-issuers such as investment banks, marketplaces and asset managers. Technically we have the capacity to tokenize thousands of assets per month but for each project the issuer needs some guidance on the partners selection as the ecosystem is still being built.
Antoine: Which verticals are the most popular on your platform?
Luc: Equity attracts a lot of interest, but shareholder agreements can become quite complex and given the infancy of the market it isn’t the easiest asset to tokenize. However, most companies should start tokenizing debt as this is a much simpler process to issue and the benefits are immediate. Real estate is very interesting too as this is a typically illiquid asset class. By representing this asset on the blockchain, ownership can be settled in seconds, rather than the need of selling the underlying asset. The case is similar with other types of closed-end funds.
Antoine: What’s the process for a company that is interested in your tokenization services? Are there minimum requirements that they need to meet?
Luc: Yes, of course. We receive many enquiries each month but we only select the best projects and those that are asset backed. We have a due diligence process and the projects need to be led by an experienced team, KYC & AML checks on all the beneficial owners need to be processed and we require the legal documentation to setup the platform.
Antoine: Tokeny recently launched InvestorID. Can you describe with this product is?
Luc: InvestorID is a not for profit and open ecosystem allowing investors to generate their on-chain identity to access and trade compliant tokenized securities. It provides them with the platform they need to create their identity, control their personal data and enable issuers to act in full compliance. It is a single entity linking the proof of identity, so the KYC and AML segment, with the wallet of that entity. In a way, you can see it as a KYC aggregator. Under European law it is unlawful to whitelist wallets and so we came up with this method to represent investors on the blockchain and fill this missing piece of the puzzle.
Antoine: Tokeny also recently joined the non-profit Global Digital Finance Registry. What are the advantages of being a member of this registry?
Luc: The aim of this organisation is to standardise terminology across the digital assets sector. If there is no standardisation across the industry, how will mainstream adoption be achieved? They bring community members, of which includes market participants, regulators and policy makers, to contribute to the set of standards with the goal of achieving uniformity and global adoption. Educating the market is a core objective for us, and joining the GDF was something that completely aligned with this value.
Antoine: Where do you see the digital securities market in five years?
Luc: In five years time I see interoperable assets having opened a lot of opportunities and benefits. The technology will be in place to reduce the successive layers of reconciliation that are currently present in custody chains, the benefits in collateralization will be realised and the impact in terms of transferability will be present. All in all, I think there will be a much greater awareness of blockchain and its impact on financial markets. If you look at the sentiment this time last year, the attitude has changed significantly. In five years it is of course hard to predict, and easy to be over optimistic, but I think there will be wider recognition of blockchain’s impact because there will be working examples across capital markets. We can also imagine some projects like Libra bringing a lot of awareness if people start managing some of their money and assets on this blockchain.
Antoine: Is there anything else that you would like to share about Tokeny?
Luc: Tokeny Solutions is a toolbox for investment marketplaces and we provide the layer of technology needed for these players to benefit from working with blockchain. Benefits such as automation, efficiency, increase in the speed of transfer times and so on, can be achieved by these companies without building the complex technology that’s required. These markets are also lacking from digitisation, and we provide them with the tools to enable and benefit from digitizing their services. Although we are working with a number of them, there is still a huge need for digital distributors of tokenized securities.
To Learn more visit Tokeny.
Ed Tuohy, CEO of MERJ Exchange Limited – Interview Series
Edmond Tuohy is the CEO of MERJ Exchange. MERJ Exchange is an innovative end to end, multi-market global financial exchange for equities, debt and derivatives.
MERJ is soon to launch its Digital Assets and Security Token markets along with the opportunity to invest in MERJ Exchange.
Antoine: MERJ Exchange is a securities exchange that currently offers an Equities, a Derivatives, and a Debt Market. What’s the inspiration with expanding to digital securities?
ED: We strongly believe in the potential of digitization to transform the capital markets. Quite simply we think it is the future. There are 3 headline reasons why we are moving in this direction:
1) This technology can streamline everything we do in the securities markets, from issuance, to shareholder registers, compliance, distributions, voting etc. The opportunity to streamline big chunks of this workstream is very attractive and would benefit everyone involved.
2) We can dramatically reduce frictions for people who may not have participated in the capital markets in the past. By frictions I mean you won’t need a computer, or a stock broking account, or even a bank account. Many emerging markets have been empowered by the “mobile first” revolution. We want to build an access point to the capital markets that integrates seamlessly with that ecosystem.
3) We are perfectly set up for it. We operate a Regulated Market with integrated post trade infrastructure, which is quite unusual If you look at other Regulated Markets around the world, they are tied into a central clearing / central depositary model. This means lots of disparate organisations are going to have to agree on exactly how to process digital assets. We have the infrastructure and regulatory approval to bring both institutional and retail investors into the world of digital assets in a way that is compliant from end to end.
Antoine: What does the name MERJ symbolize?
Ed: I’m glad you asked that. I love the name MERJ. As much as we strongly believe in tokenization, we also strongly believe in the principles of securities laws, investor protections and regulation. MERJ is a reference to the idea of combining the best of the old world and the new. The best of traditional market protections with all the potential benefits of this digital technology. It is also a reference to the idea of merging all the layers of the settlement and custody chain. Instead of multiple reconciliations taking a few days we can look forward to one almost instantaneous transaction.
Antoine: MERJ Exchange Limited is currently the only licensed securities exchange in the Republic of Seychelles. What made you choose this domicile versus other popular offshore jurisdictions?
Ed: We are a Regulated Market – in that we provide the same function in the Seychelles as the LSE in the UK and the NYSE in the US. It’s not so much that we chose the Seychelles, more that the Seychelles needed a stock exchange and we were the right people to do it. This story began post GFC, when the IMF and the World Bank sat down with the Seychelles government and encouraged them to develop the financial services sector here. Part of that was to establish a stock exchange. We put ourselves forward to do it and have been working hand in hand with regulators here since 2011 to build an international exchange. Our listings now account for more than 20% of the national GDP, which is a key metric in evaluating the maturity of an economy. The FSA Seychelles is now an associate member of IOSCO and MERJ is an affiliate member of the World Federation of Exchanges. These are not trivial achievements and are very important when it comes to institutional investment mandates, so we are able to open this market up to widest possible pool of global capital.
Antoine: How many securities are currently listed on the exchange?
Ed: 29 equity and 2 debt. We have issuers from 5 continents and investors from 7.
It takes time to build the kind of infrastructure and regulatory standing we have here – and there are no shortcuts. We now have a great foundation for a very exciting phase of growth.
Antoine: Most of the companies listed on the MERJ exchange are African, which makes complete sense since Seychelles is often portrayed as the Cayman Islands of the African continent. Most investors in Europe will be familiar with Seychelles, but the same cannot probably be said for North American and Asian investors. Do you believe that you will need to educate STOs on the benefits of being listed on an exchange in this jurisdiction?
Ed: We adhere to the standards of IOSCO and the WFE, international investors don’t mind whether we are in London or Seychelles. We already have issuers from North America, Asia, Australia, Europe and Africa. We are going to be providing something that isn’t available elsewhere and Issuers will go where the liquidity is.
Having said that the Seychelles is actually a great story of international cooperation. There are so many reasons why Seychelles is a good jurisdiction and any STO issuer that is serious will do their research and quickly realise that. In the last 10 years the Government and regulators have worked with international agencies like the OECD and FATF to bring the Seychelles up to the highest international standards. The OECD now ranks it with the UK, Japan, Germany, USA and Australia. Since the IMF and World Bank stepped in the country has gone from a B- rating to BB. That really underlines the trajectory of the economy. Our view is that the STO market is likely to be quite borderless, but issuers are not going to want to go to a jurisdiction that doesn’t meet these high international standards, because it will attract greater scrutiny from other regulators. In the securities markets there is no regulatory arbitrage, people want clarity and simplicity, not added hassle. The Seychelles offers that in abundance, as well as an advantageous tax regime, many double tax agreements, a thriving corporate services sector, competitive pricing. If all of that isn’t enough for you it’s not the worst place to have to visit for business.
Antoine: What will be the onboarding and listing requirements for new STOs?
Ed: Our onboarding procedure follows the same KYC/ AML process as for clients wishing to trade any listed securities. As for the listing requirements, the chosen token standard has to be to be compatible with our regulations but otherwise they are exactly the same as for our traditional securities. We have 3 equity boards, a main board, an SME board and a venture board. An STO would have to choose which board was most appropriate and then meet the listing requirements. We work on a sponsor advisor model, so STO’s will work with one of our global network of sponsors to prepare them for listing. The sponsor undertakes responsibility for due diligence and making all the relevant disclosures. This is the same process that an issuer would go through to list on AIM in the UK or the Toronto venture exchange in Canada. We think it’s a great model and will work well for STO issuers.
Antoine: You recently announced that you will be launching your own security token, which will then be traded on your own exchange. What’s the expected date of this STO launch? Also do we know the hardcap yet?
Ed: First we have to list our equity by introduction on the exchange. This is imminent, and when done it will be the first equity to be listed on a national stock exchange in tokenized form. It’s really quite a major watershed point for the digital asset community. The subsequent STO will be a public offering of ~15% of that tokenized stock. We don’t want to launch the STO into peak summer so we will probably wait a couple of months now. The funds are for growth capital, largely to bring more people on board. We are very confident of our pipeline and we need additional people in operational and compliance roles to service the demand.
Antoine: What benefits will investors receive from this investment?
Ed: The benefit is a stake in an exchange which we think is one of a kind. We have the flexibility to trade, clear, settle and register securities ourselves, or plug into any other global infrastructure if it makes better sense. This in itself is unusual, and a deliberate piece of Seychelles law, which was designed to be outward looking. Consider our regulatory status, licenses, permissions, the structure of our business, the combination of regulated exchange/clearing/depositary entities, the clarity provided by our regulator and the fact Seychelles is a well respected jurisdiction with a modern financial services industry. When you look at all these factors in combination, you realise it is a very compelling, and entirely unique proposition. We have an opportunity here to build a truly world class piece of infrastructure for the next generation of capital markets. Our competitors around the world are the likes of LSE and NYSE and they are not in a position to move so quickly and decisively. There are big fish and there are little fish, but we like to think we are a fast fish! Our investors will own an equity stake in a very exciting company that is spearheading the next generation of financial markets infrastructure.
Antoine: When do you expect your first security token offering to go live?
Ed: We have a number of issuers that are keen to push the button as soon as possible. I am quietly confident that we will have done a handful before the end of the year and a couple of dozen within the next twelve months.
Antoine: Is there anything else that you would like to share about MERJ Exchange?
Ed: We have a tremendous team based in the Seychelles, Cape Town, Johannesburg and London. We are looking for experienced market professionals to join us and help deliver on our vision. If anyone would like to work in the Seychelles or Cape Town, or represent us in another region then drop us a CV at email@example.com.
Antoine: Thank you for the great interview. Anyone who wishes to learn more should visit Merj Exchange.
Mikko Ohtamaa, CTO at TokenMarket – Interview Series
Mikko is the cofounder and CTO of TokenMarket Ltd, one of the leading token sale and blockchain crowdfunding platform at Gibraltar. Mikko has advised dozens of blockchain startups. He is also the former co-founder and CTO of LocalBitcoins, a peer-to-peer cryptocurrency exchange. Mikko holds MSc. in industrial engineering and management from University of Oulu. Mikko actively engages in open source communities and speaks in conferences. He is a cofounder of Pycon Finland, a Python programming conference. Mikko is also a member of Plone Foundation, the oldest of open source non-profit foundations.
AT: You’ve been in the crypto space since 2011. Could you share with us how you first became involved with cryptocurrency and blockchain?
Mikko: Back in my mobile software development days, I was asked to develop the first and original Bitcoin mobile wallet back in 2011 compensated by $10,000 worth of Bitcoin. I rejected it as I thought fiat would suffice at that point in my life. In hindsight, taking this offer might have been the last project I needed to do. Later I got involved in building out LocalBitcoins and from there I moved to establish TokenMarket.
AT: You’re listed as one of the original co-Founders of TokenMarket. What inspired you to launch this marketplace?
Mikko: The original goal of TokenMarket was to tokenise company shares. However, back in 2016, it was way too early for that. The term “token” had just been invented, many referred to tokens as ‘coloured coins’ looking at new digital assets as bitcoin with different ‘flavours’ and ‘colours representing different token attributes and purposes’.
We saw the ICO boom coming a little bit earlier than others in late 2016 when FirstBlood, Gnosis and other Ethereum based ICOs started to roll out. The catalyst was that the Ethereum technology had matured to the point that it was realistic to launch custom tokens with it. And oh boy, a lot of tokens were launched.
TokenMarket had the first tokenisation platform in the world and suddenly there was a spike in customer demand.
AT: When inspired TokenMarket to pivot from ICOs to STOs?
Mikko: I would not use a word pivot here. Security tokens are a natural continuum for unregulated token offerings. It is always better for investors themselves to get something with stronger investor rights. Securities offerings give investors rights which utility tokens never legally could, such as receiving dividends, yields and voting rights in the company you purchase a security from. For the investors, receiving passive income with security tokens becomes so much easier rather than moving toward a largely unstable and volatile utility token dragged up and down by bitcoin price.
Since 2016, it took some time for the global audience to learn about the benefits of tokenisation, including financial regulators. Now we are seeing interest from regulators worldwide on how to apply DLT and blockchain technology to regulated securities markets.
AT: TokenMarket recently announced a partnership with Loopring which is a protocol for decentralised token exchanges. Could you tell us more about this and what we should expect from this partnership?
Mikko: Loopring is one of the industry leading projects developing layer two scalability for decentralised exchanges and we will use Loopring’s technology to scale our own DEX.
As you might know, at the moment, decentralised exchanges have scalability issues and cannot match the volumes of exchange giants such as your Bitmexe’s and Binance’s. But from other aspects, decentralised exchanges are more secure and fair. Bitcoin exchanges get hacked every two weeks. Some exchanges are accused to trade with insider information and against their own users. Regulators like the decentralised aspects, as they guarantee that all the investors and traders can access the post trade data in equal manner, there cannot be irregularities with accounting and trading with something that is merely fabricated.
The good news is that the security tokens will have low liquidity, like Bitcoin back in 2012, when they start to roll out for trading. But for the future exchange technology, we want to build it better and more bulletproof what both traditional trading and crypto trading has today. We see the academic research and theory that allows us to get there, now it is just engineering over the next few years to fulfill this promise.
AT: Can you tell us what the listing requirements are for companies who wish to crowdfund via the TokenMarket platform?
Mikko: There are many crowdfunding platforms out there which operate on a ‘cater for all’ thesis, TokenMarket operates on an industry specific focus. We mainly look for global growth companies in sectors such as fintech, gaming and software services as this is what our investor audience has looked for in the last two years.
We mainly look for companies which are close to, or already have, some substantial revenue generated with a key commercial focus on B2C businesses.
AT:TokenMarket is current raising their own STO. Are you happy so far with the progress of this raise?
Mikko: This is a pilot raise under the UK’s regulator, FCA, sandbox. We need to demonstrate them that tokenised equity crowdfunding works: payments goes in, people get their tokens and are properly registered in Companies House as shareholders.
We do not expect huge intake of money for our pilot project due to the UK’s FCA’s Sandbox test limitations. Awaiting regulatory approval we will be able to raise up to €8M from self-accredited investors for all our STOs with no private funding cap restrictions.
AT: Are there any STOs that are launching on TokenMarket that have you personally excited?
Mikko: Yes there are! But at the risk of publicly endorsing or soliciting a securities investment go check out our pipeline of projects here.
AT: Where do you see the marketplace in 10 years?
Mikko: The change and transformation is not just about the technology or blockchain. There is an ongoing process of how new investors, millennials behave. There is an ongoing process to dial down the regulation for SME listings since the last financial bubble, especially in Europe. Then there is a change in globalisation as the future powerhouse economies of the world may come from countries like Brazil, Indonesia and Nigeria.
The future investing is going to be more “marketplace driven” and less about relationships and network centric models. We are going to replace Silicon Valley and their venture capital networks with a website like Amazon did for retail commerce. Ironic, is it?
AT: Is there anything else that you would like to share about TokenMarket?
Mikko: If you are a high tech company looking for funding, contact us. If you are a fund, a family office or similar looking for alternative investments, contact us. We do not care which part of the world you come from. We want to create an equal playing field for opportunities and investors all around the world.