Following a record year for Initial Coin Offerings (ICOs) in 2017, two UK-based entrepreneurs have launched a new blockchain-powered platform aimed at opening up Venture Capital opportunities to a broad community of investors.
The brainchild of Baroness Michelle Mone and private equity industry Veteran Doug Barrowman, the Equi platform enables investors to back fast-growth companies through the purchase of tokens linked to the ethereum virtual currency. As with other virtual currencies, the tokens are tradeable. Thus, if an investee company does well, there is a potential for the token to rise in value, providing the investor with an opportunity to take profits by selling the units on.
The platform is launching at a time when the ICO concept is attracting an ever increasing pot of investment money. According to a report published in January – The State of the Token Market – by VC fund, Fabric Ventures and cryptocurrency data provider, TokenData, startups around the world raised a total of $5.6bn in 2017. Over the same period, investors who participated in successful ICOs, saw the value of the tokens they purchased rise by an average multiple of 12.8. The startups whose ICOs succeeded raised an average of $12.7m.
The Equi platform, which will be launched in March 2018 with a sale of discounted tokens and will hand-pick investment-worthy businesses and make recommendations to the community of investors.
Although the goal of the platform is to open up VC investment to larger communities, the platform is not for retail investors. Given the regulatory limbo that blockchain-driven projects currently occupy, access is unsurprisingly limited to those who qualify as “sophisticated investors.”
Equi says companies who raise money through the platform will benefit from the hands-on involvement of an experienced team of venture capital professionals. Co-founder Doug Barrowman says one attraction for companies will be the ability to raise capital without being beholden to one or two (or a concentrated group) of demanding investors.