SPiCE VC, a venture capital firm, is leveraging blockchain technology to remove the biggest problem for investors in VC funds – the 7-10 years illiquidity period. SPiCE is announcing today the launch of the first ICO for a VC fund that can accept funds from pre-qualified investors (per country regulations, and under Reg D Rule 506(c) in the US) and offers immediate liquidity in a market that was until now completely illiquid.
ICOs are already disrupting the way individual blockchain startups raise money, but what about the way VCs themselves raise capital? Today, investing in the most exciting (and risky) stage of startups, is blocked for most private investors, and even financial institutions could only dedicate a fraction of investments to VC funds because of the 7-10 years lockup. Digital tokenization has the ability to change the way VC funds raise, invest and distribute capital, making it more liquid, inclusive, and manageable.
SPiCE uses the ethereum blockchain to host their SPiCE token, which acts as a digital security, assuring that every investor, while holding the token, gets their share of the exits when they occur. The token can also be used as a tradable asset, making SPiCE both asset-backed, and liquid, and rightfully coining itself a Liquid VC. The SPiCE token ICO is scheduled for late November.
SPiCE will invest its funds in a gap the company identified in the tech ecosystem: Over the last few years, it has become easier for new startups to raise seed money from hundreds of angels and incubators. The challenges arise when arriving to the series A rounds, which have grown in size, and so have the milestones that startups must achieve to secure them. SPiCE VC will focus on companies in that gap, either pre-series-A or pre-ICO, because once a company crosses the chasm, it achieves the fastest growth in valuation, which SPiCE investors may benefit from via its liquidity.
SPiCE offers benefits to both the financial and blockchain industries:
From the world of the blockchain it brings:
- Immediate liquidity
- Inclusivity, opening venture capital to pre-qualified investors
- Investments in blockchain equity rounds, and ICOs
From the world of the venture capital it brings:
- Robust investment process and due diligence by a team of experienced entrepreneurs
- Diversification outside crypto, into equity investments across the hottest tech sectors
- Backing tokens by assets, shielding them from market volatility
“While equity crowdsourcing brought startup investments to the public,” said Carlos Domingo, Co-Founder and Managing Partner of SPICE, “we are hoping that SPiCE with its liquidity and inclusivity, will bring more people to investing in a venture capital fund, taking the portfolio approach, and avoiding the inherent risk of investing into a single startup or ICO.”
“We are excited about Spice’s decision to utilize the Bancor protocol to add liquidity to its security token,” said Eyal Hertzog, Co-founder of Bancor and SPiCE adviser, “The extreme efficiency that blockchain and smart contracts technologies enable, resulted in a volume of ICO crowdfunding for blockchain companies that has surpassed traditional early stage VC investment, and now with SPiCE VC, this revolution is coming for the funding of VCs themselves.”