The basic idea behind Neufund is to represent securities in an entity (e.g. shares in a startup) by tokens on the Ethereum network. Today there is no active secondary market for venture capital / startup equity. Such secondary market exists, however, for Blockchain projects, and has a great positive impact on the innovation financing ecosystem, both for founders and for the investors. It is, however, limited to Blockchain-based startups, and to investors who already own significant amount of cryptocurrencies.
Neufund aims to extend this to non-Blockchain startups and non-crypto investors, through representing equity/shares as Blockchain tokens — even for non-Blockchain projects. To make this work practically, we have established a legal-technical structure that attaches self-enforcing smart contract to such tokens, and also provides for a legal position that is enforceable off-chain, in regular legal proceedings.
As a first use case, to demonstrate the tokenisation process and its features, and to test technical and legal implications in real life, we have set up our own Neufund’s employee incentive program (EIP) on the EthereumBlockchain. This program is currently implemented for Neufund employees, but is open sourced to any other startup to use, regardless of its place of incorporation and the market where it operates.
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