With the volatility of Bitcoin and growing scepticism about initial coin offerings, this might seem like a tough time to be launching yet another ICO. But for a company with proven business figures at its head and a semi-securitised token on offer, there may be ample reasons for optimism.
That is the hope of EQUI at least which is aiming at nothing short of disruption of the world of venture capital. If it succeeds, it could even unleash a wave of small investor activity not seen since the heady days of 1980’s privatisations and “Tell Sid” willingness to put cash into stocks.
EQUI is using blockchain to issue cryptocurrency tokens based on Ethereum. These are bought by individuals who can hold, trade or invest them into the pre-vetted tech businesses listed on the platform. It is this underpinning by real-world ventures - both established firms scaling or launching new divisions and start-ups - which differentiates the business from the multitude of blockchain-driven ICOs whose tokens are only of value in a monoline environment.
“This will allow people to buy and invest in a way that has traditionally been the preserve of VC investors,” explained EQUI co-founder Doug Barrowman (pictured left - photo by Dan Kennedy) in an interview with DataIQ. “Instead of tech companies raising money from institutions and high net worth individuals (HNWIs), they can go to our web site, investors can look at what they are building and buy tokens to invest.”
Several other strategies adopted by Barrowman and co-founder Baronness Michelle Mone are also notable. “We give 70% of the profit we realise back to people holding tokens who have invested them. If they hold the token, but don’t invest, they get 5%. Also, if they choose not to invest, they can just trade the currency knowing its value is underpinned by those investments,” he said.
Barrowman brings 40 years’ experience of investing, VC and private equity into the business as well as being an entrepreneur in his own right. Together with Mone, the pair have already launched the first luxury property development based in Dubai which is priced in Bitcoin .
“I have visited a lot of high-tech companies and the real issue they have is finance,” said Baronness Mone (pictured - photo by Dan Kennedy). “With EQUI, they can get access to our investors and also our board of advisors who are themselves successful enterpreneurs. That is a real benefit to any business. If I’d had that at the start, I would have been jumping for joy.”
Mone’s own start-up was backed by the Prince’s Trust, but her advisor was a former accountant with no experience in running a business. Many start-ups and early stage firms lack an understanding of the essentials of building a company, even if they are able to attract funding.
To ensure capital flows are not an issue, the pair have already tapped into their network, but have also put a highly-attractive deal on the table. When the ICO opens to institutions and HNWIs on 1st March, every £100,000 they put in will attract a 25% premium in tokens. EQUI opens to small investors on 8th March when the minimum stake is just £100.
“Because this is an evolving industry and only just scaling up, we’ve taken extra legal advice, so people have to agree to be classed as sophisticated investors,” said Barrowman. Using collatoral management scheme exemptions, the EQUI token will not be subject to FCA regulation, “but we’ve stayed on the safe ground.”
For many start-ups who go through the VC and PE route for investment, the 12- to 18-month timescale this can take may be too long and lead to them missing their market opportunity. Equally, standalone ICOs may be losing their appeal or look too risky . By raising funds via this platform, they could short-cut the process, have more confidence in the funding stream and, potentially, be part of a new widening of shareholding.