Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Zoe Adamovicz: Neufund and the Case for Selling Equity on the Blockchain

Episode Date: November 28, 2017

Neufund CEO Zoe Adamovicz joined us to discuss how Neufund is creating a platform to allow companies to sell tokens backed by actual company equity. Topics covered in this episode: Neufund’s thesis of the revolutionary implications of token equity The difference between ICOs and Equity Token Offerings (ETO) Why from a regulatory perspective ETOs are uncomplicated How Neufund’s token Neumarks serves to build a community How the Initial Capital Building Mechanism is bootstrapping the ecosystem The long-term vision of creating a global stock market Episode links: Neufund Neufund Whitepaper Neufund Light Paper Neufund | ICBM Commit Page German Financial Supervisory Authority (BaFin) on ICOs and cryptocurrencies This episode is hosted by Brian Fabian Crain and Meher Roy. Show notes and listening options: epicenter.tv/211

This is Epicenter Episode 210 with guest Zoe Adamovich. Hello and welcome to Epicenter, Showwich talks about the technologies, projects and startups driving decentralization and the global blockchain revolution. My name is Brian Fabian Crane. And I am Meher Roy. Today we are going to talk to Zoe Adamovich, who is the co-founder and CEO of Neufund. Neufund is a new way to fund ventures that uses the Ethereum blockchain and allow startups to access. this new kind of capital market essentially. Zoe, welcome to the show. Hi, welcome everybody.

Thanks guys for having me here. So before we start, tell us about your background and how you came to be interested in blockchains. Maybe I'll start with how I got interested in entrepreneurship because this is as important as blockchain. Well, I've always been an entrepreneur, technology entrepreneur, and maybe this is where one should start. you know, I stood very, very early with building startups somehow successfully, sometimes not successfully,

but, you know, like everyone in the entrepreneurship space, of course, I was, you know, often looking for funding. And this is a little bit where the story of NIFAN starts as well. You know, interested in blockchain. weren't we all interested in blockchain ever since we heard about it from the first time, right? You know, I guess the so-called blockchain enlightenment, so this feeling when you suddenly understand how it really works and you're thinking the centralized terms. I experienced, you know, I started experiencing it when the grace started picking up in 2008, of course,

because this is the first time that we all started thinking, you know, like what's wrong with these banks? and then, you know, the real thought of intermediaries and things like that and the trust and the concept of trustless trust started to, you know, be important for everyone. But, you know, and we had Bitcoin and Ether later and so on. So, you know, like as in, you know, I guess early adopters are simply adopting. So we started just getting and hold these coins. But the real interest as in, you know, as in as in the urge to start contributing into this, as an, you know, eagerness to co-create that system was for me actually when the, you know,

shortly after Ethereum ICO and with the first ICOs, right, when this concept started picking up. Because this combined with this, you know, with my kind of entrepreneurial career, you know, with this drive to build stuff, right, and find means to build this, to build whatever, to build whatever technologies in fact, because, you know, blockchain is just one of many, many really great technologies.

And then you kind of see that there is a way to fund technologies without the need to, you know, to approach this, you know, extremely fragmented and complicated market of venture capital. This is when I kind of properly thought, uh-huh, this is something that can really change the world, right? This is something where I can really see that one can do something and build something to lower the barriers of entry for, or everyone who wants to contribute, to create, to whatever, right? Because, you know, if you think of venture capital or any financial markets, the barrier to interest would really high, right? I mean, if you want to start the startup, you need to know the people,

you need to really put a lot of effort, and you need to be born in a certain country, ideally close to certain city like San Francisco, right, to even be able to start. Public markets, you can forget about it. the starting point is you need to have 650,000 euro. So this is when I started thinking, okay, there is something where we can democratize the access to building. Cool. Well, let's speak about Neufant much more in just a little bit.

I think you probably meant to say 2013 before, no, because somehow I probably understood you got interest in blockchain in 2008, which would be very impressive. No, no. I mean, with the 2008, with the failure of the banks, this is where I want. one started questioning the idea of the intervieweries, right? Yeah, yeah. And one started to think about the concept of trust, you know. This is, I guess, where we, I'm also a sociologist as background. You know, I kind of was, I'm a sociologist and a computer programmer, right?

In one. So, you know, so these are, so these concepts are very interesting for me. But, yeah, 2008 was when I was like, wow, what the fuck? I had money and now I don't disappear, you know? How is it possible? So, yeah. Maybe just briefly, so you said you started some companies before and, you know, some of success, some of not success. There's like one very interesting or maybe difficult experience you had in that time and sort of, you know, the biggest lesson you took away from that that informs how you go about things today.

You know, how it is with the companies. You do them for a few years and then you're done with it and then you want to forget. So maybe I'm going to talk about the one that was here before, Noifan. because this is the one that I still somehow remember. And actually, it also was kind of on my way to come up with the NIFant idea. So, you know, the startup that, you know, by the way, the same co-founder that I have right now, we did together before, was in the mobile space. It was a search engine.

It was also like a deep tech company. We're creating a search engine for digital items that don't have metadata. So how do you search stuff that does not have text, right? And this company was acquired by a public, by a NASDAQ listed company, American corporation. And, you know, for a while after that we had to stay in the company as typically after an exit, right, you need to be at the company and be one of those executives. So, you know, from one day to another, I became one of the executives of a NASDAQ listed company. And this is actually, you know, while we were there for a bit more than a company.

year, this company went through some rounds of financing on NASDAQ, right, as an issuing a share to get public money. And what was stunning for me is that within one year, when you're realistic on a stock exchange, you can do this a few times. And you more or less press a button and then, you know, people are signing up for these shares or not, right? And this is going really, really fast. And it is kind of relatively easy, you know.

but when you're a startup founder, especially early stage, right, when you have five people team, let's say, and you want to get a round of financing, then it's going to take you six months minimum from the idea to have money until when the money is in your bank, right? And in the six months, the whole team is doing nothing but fundraising, right? So forget building products, forget anything, you run around the world with your pitch deck, you know, analog almost, right?

and you need to just fundraise. The same investors, however, that invest in the super innovative companies expect from us the founders that we create hockey stick growths, let's say within one year of time. But six months of this one year, we're fundraising. And I thought, this doesn't make any sense, right?

Because it's easier for Mercedes, it's easier for a huge corporation to fundraise than it is for the companies that are supposed to be fast and agile, quickly develop. topic, right? So, and that is a, that is, you know, I was used to this, you know, VC process forever because this is the process I was doing and I always thought, aha, this is how the world works. But no, the world shouldn't work like that because this is kind of internally making sense. Actually, one thing that we also need to disclaim here, actually, we should have done this in

beginning is that so we're going to get to this in a little bit there's this thing this initial capital building mechanism in noi fund which is a little bit like an ICO but works quite differently too and both meher and i participated in that so we are not unbiased in this matter thank you guys for your contribution the world is grateful so yeah you mentioned the issue of funding right raising funds and Neufund kind of solving that problem. I remember you also mentioned at one point that initially you were looking at doing a tokenized VCF fund. How did you originally have that idea and then why did it evolve into this fundraising platform?

So we always wanted to build Neufant as in the centralized stock exchange. in a way, right? But the question was, the question was, you know, in order to build something like this, you need to kind of address two communities in the world, the blockchain community, right, on one hand, and on the other hand, this classical startup and venture capital community, right? Because if you want to, if you want to create a tool or an ecosystem or anyone, and in particular not that blockchain companies, but, you know, but the projects that are not blockchain related, it can be technology project, but it can be simply a coffee shop as well, right? Then you need to somehow open up the blockchain ecosystem to the rest of the world.

And, you know, and we're thinking how to do that. And the first idea that we've had was like, okay, why don't we first kind of create a little classical fund internally, you know, that consists of, you know, whatever classical VCs or angels and so on. And then kickstart, you know, this whole process with it, right? So we will first, you know, invest in the companies that would, you know, that would ETO on their platform from that fund, right, to kind of boost them to kickstart it. But then we thought that maybe we should do an ICBM. So the initial capital building mechanism or initial community building mechanism actually, which is a mechanism to attract all kinds of investors,

experienced investors, crypto community investors, VCs and so on, to this concept, right? So we ask people to reserve or contribute certain amount of capital into the platform this is the capital that we as founders there's the company we do not have access to we're not spending it on any operations but we also do not manage it into we do not deploy it into the companies

right this is what the investors themselves but this is like a signal of like okay I understood what the project does and in particular if someone is from the outside of the crypto community it forces someone to understand okay I understand how this project is going to work and my eyeballs are of the companies

that we're going to eat you on the platform, right? So yeah, so you mentioned this tokenized equity fund, right? So you guys didn't want to do that for some reason. And then, so can you just now on a very, very high level, like NOI Fund? Like what is the thesis of NOIF Fund? Noi Fund, um, noifant is like a decentralized NASDAQ. Okay.

Noi Fund is, first of all, it is like NASDAQ or like any other stock exchange because you need to imagine a world in which any company can IPO, right? And the difference then between, you know, the kind of difference, very simple difference for companies that, you know, that they're doing an IPO on NASDAQ and it will do with us is that because of the infrastructure of blockchain, we're massively lowering the barriers to entry, simply the cost barriers, right? In order to do an IPO today, you need to have tremendous amounts of money.

So you need to be a huge company. You also need to go through a bunch of, you know, intermediaries like banks or brokers or... And imagine you could do this without it, right? Imagine also that you could, you know, do an equity offering and, you know, write a prospectus and it's not going to cost you $200,000 just to have that side of.

And... So anyone can do that, right? The other, so the utility that we have for, you know, for companies is that we have this equity token. You can go and you can say, you know what, I am not a blockchain company. So I'm not a token model. I'm just whatever, a shoe producer, or I am a drone producer, or I am ledger, the hard wallet that we have. So I'm not a token model, not naturally. So how do I do an ETO or an ICO?

well, you just take your share of a company and you put it on blockchain in form of a token and then people sign up to this share by buying it. So this is like an IPO. On the other hand, what we opened also for investors is that we imagine that people who do not necessarily have ether or Bitcoin would be able to invest in this company

simply with euros, right? And we kind of put euros for them on chain as well. So that's one, you know. But the other thing, the other thing that is, you know, for us, kind of the most important part as the crypto community people is that this is supposed to be a decentralized exchange. And what does it mean? You know, NASDAQ is owned by a company, right? There is a company that is operating this exchange. And this company is making revenues.

And most of these revenues are a huge part of these revenues are coming from, for the company. from fees that companies pay for, you know, registering the ownership transfer and, you know, brokerage fees and things like that. All of this blockchain is actually doing, right, for us. Because if I am selling you my Bitcoin, right, then the ledger is taking care of the registration. So these fees are down. And thanks to this, what we can do also is that we created this token model on top. So every investor in Neufant becomes an owner of this ecosystem simply by

acquiring by investing the company is acquiring Neumarks. Yeah, so like I think the simplest way of describing Neufant is yeah, as you said it, that's the perfect. It's like a decentralized NASDAQ or decentralized stock market. Yeah, exactly. And like when I read the Neufant paper, I had exactly this idea. oh, this is a decentralized stock market that allows companies to sell equity. And at some level, because I come from India,

I get the value proposition of this thing very, very like, in a way that I think many people in the West might not. So it's like in a place like US, capital markets work really well. You can issue bonds, you can issue shares. And for many intents and purposes, they do work. But when we go to an emerging market, capital markets are not that efficient. Especially capital markets don't want to fund risky ideas, really risky game-changing ideas.

That's the domain of venture capital. Yeah. Yeah. And even when you go to emerging markets, venture capital is highly underdeveloped. Like venture capital is underdeveloped. Like venture capital is underdeveloped. And venture capital itself is conservative. And like when I see Neufurn, I'm like, okay, can we marry the risk-taking pioneering spirit of like crypto ether holders or cryptocurrency holders that are willing to take a lot of risk with actually companies that need access to capital.

And these are mostly like to me, these are definitely there in the emerging markets. Yeah. So it's like, Noifund is the place where these two things can match. So, you know, first of all, you know, can we marry? Let's let me answer this question first. I think we definitely can marry these two because while you are right that certain, you know, venture capital firms have become very conservative. And indeed, the business model of venture capital is such that it only funds certain type of ideas.

And this is the so-called unicorn, right? It doesn't. There is a lot of, you know, ventures spirit among venture capitalists still. And I guess this is well proven by the list of investors that we have announced, right? We have like an amazing community of both VCs, business angels from the classical world, also for private equity firms and investment bankers. And we also have, you know, Oscar, we need movie producers. So it's like a, so I guess the, you know, there is a lot of venture spirit among different people. But it is now changed in what the venture capital as institutional investors have, you know, have kind of locked up themselves with, right?

Because they have their business case and they can only fund stuff that fits this business case, right? And that caters to the needs of their LPs. But, you know, there's so many use cases, right? Emerging markets, you're completely right. So because what we are actually doing is we're doing it very easy for any company to issue shares and for any investor to buy them. This can work really well in both emerging markets where these capital markets are not operating that well. But it also is a use case for very well operating capital markets. I'll give you an example.

I am sometimes a business angel and I like funding nice ideas. but if there is a company doing a B round or a C round and let's even imagine it's a company that is struggling right and I really like the company and I want to give them my 100,000 euro nobody wants my 100,000 euro because if you're in a B or C phase then there is a board and there's again some kind of structure and there's a ticket size and there's syndicate building and all of that right so you see companies fail just because they didn't

find someone who would give them a 10 million euro ticket. Fair enough. But if they could an offering, you know, with like smaller tickets, then maybe they will get these 10 million euros, you know, from a lot of people. But these mechanisms don't exist. There's just no way, you know. So before we go further, let's define what an equity token offering is on Neufan. You know, you simply say, let's imagine that you are, that you know nothing about smart contracts and things like this even right so you you go to some kind of interface a new fund

interface and then you say you know what i plan to sell uh you know 5% or 10% or 50% of my company's equity because i need funding and i'm issuing a certain amount of shares you configure an agreement between you and the shareholders you press a button and the system spits out a smart contract a token that contains these uh terms right you offered. And then people are buying this using cryptocurrencies or like or euro. That's it. From the utility level, there's nothing more. Of course, it's extremely complicated to set this up, but the utility is just that. Yeah. I mean, what I like a lot about this as well is, you know, with ICOs that have become this huge thing and lots of money has been raised. And so there's

all these projects and all these companies, they're like, oh, this is great, right? Now, I can have access to this, like, wide range of people and sell my, you know, sell my products, sell my vision, sell this company, raise lots of money, build this community, right? And, and of course, that's true. But the problem is that very often, or I think this kind of model of having a token and a business built around this token, it works well. in some cases, but it doesn't make any sense in many cases, and perhaps a majority of cases that we are seeing today doing ICOs. So I think it's like people are basically trying to kind of shoehorn this thing into the ICO to kind of write this wave.

And that's, I mean, I have many, got many such, you know, requests of like people, no clue and I want to do an ICU too now. And, yeah. And, yeah. And it just doesn't. it doesn't make a lot of sense, right? There's this legal issues, which, you know, maybe can be solved, but there's lots of problems with it. And that's just the nice thing about having this kind of equity token offering because equity is a much more general thing, right? Equity makes sense for almost any company.

It's like a universal token, right? It's like an abstraction above token of this, right? It represents any business, not just some project. Exactly, yeah. And, of course, you also have the rights and obligations. of equity with it, which again, in some cases, if you create this revolutionary decentralized protocol, maybe doesn't make sense.

I mean, you really want to have a token and really want to do something like an ICO, but in many, many cases, I think something like an equity token offering makes much more sense. And so then you can basically maybe still have access to a very wide community. You can kind of publicly sell this project, also have this community building,

aspect, also have the aspect of liquidity, potentially, you know, very quickly, but without having kind of the negatives of the things that will fit with ICOs. So that's one of the things that I found very, you know, kind of appealing about, or find very appealing about the vision and the product of NIFRON. Yeah. No, you're completely right. I mean, this is a, this is, this is exactly what we're trying to achieve here. And, you know, a share. per se is not a bad concept, right? It's like one of the greatest inventions of humanity, I think, and it's actually not so old.

And, you know, we're kind of trying to innovate it even further because, you know, of course, smart contracts are also giving us, you know, a lot more tools to kind of innovate on the concept of share. You know, you can combine, you know, equity tokens with utility tokens, right? You can give certain type rights to your shareholders that maybe you couldn't, you wouldn't be able to give so easily or at least execute upon so easily with regular shares, you know, that you can create all this governance models and so on. So this is, this is, this is certainly amazing.

And you're right, I agree with you that today everybody wants to an ICO. And I also receive calls from people who are asking me, hey, can you do a token model on top of my, whatever bar, right? Which is, just doesn't make sense. It's a bit like when Web 2.0 when every company was turning the customers into the community. Remember those times? You were a Vodafone customer

and suddenly they would be creating a community of customers for Vodafone, right? And then it was all gone. So I think we perceive the same of the tokens today. Nonetheless, you know, as much as there's a lot of, you know, the ICOs have gained a bit of a bad reputation as well because there were these, you know, huge rounds and sometimes scammy models.

It's kind of normal that we're, wherever there is money, there's also scammers. It's not only the domain of blockchain. It's like this everywhere. But, you know, the sheer process of, you know, raising capital this way, the ICO process. And, you know, backed by blockchain where everything is so cheap because blockchain takes care of so many things, like payments, like transfer of rights and so on. It's great, right? It's great.

We should just clean it up and make it better. So even though the blockchain gives a lot out of the box, what are sort of the hard challenges in building Neufan? We need to work with changing all the mindset. I think that the technical part is of course a challenge. But there's many, many complicated complex projects. And Neufant is just one of them. But what is challenging sometimes is I still need to run around the world and fight with the perception of blockchain as or Bitcoin or cryptocurrencies in general as the money for drug dealers and stuff, right?

I still need to fight with the perception that we are trying to build something illegal here, you know? So, you know, I'm posting something about Neufant and people just out of the blow ask me, oh, is it another pyramid scheme? I'm like, read your white paper. I mean, there's nothing about pyramid, right? But, you know, this perception is there. And, you know, even people who are willing to participate, you know, they have this reserve. right the reservation they you know they want to figure out where this is legit and there's a lot of

explaining behind that so i think this is the main main focus um and the other is you know the world is actually not completely ready for blockchain it right we see this on the regulatory level uh there is a lot of movement and it's uh and it's great to see that you know of countries are adapting to it but this is this is a task that this you know that it's not my task it's the task of the whole community and the whole world to adapt to this new, well, phenomenon. Lockchain is a fact. We need to deal with this right now. So that's another challenge to be able to be agile within this ever-changing landscape.

Just sort of two more things I wanted to kind of bring up regarding these interesting maybe intersections, because you brought it up briefly as well, right, between equity tokens and ICOs. So one of the things, if you look at equity, how equity is being raised by startup, you have this kind of fixed structure and your seat round and series A rounds. It's all kind of done in a very kind of standardized way. And of course, if you look today at ICOs, we have seen an explosion of different models with like auctions and Dutch auction, reverse ductal auctions and like cap sales and uncapped sales

and then all kinds of stuff. And I don't know if this is going to be feasible or not. fund, but at least technically it seems like it should be quite trivial, to allow kind of plethora of different funding and pricing and sales model and structures as well. Are you planning to build that or will it be possible for people to basically implement their own sales mechanisms on top of non-y fund, kind of without restriction? Of course. I mean, you know, what we actually are, if you, you know, go into deeper than the sheer utility level, then we are a universal fundraising protocol.

So, you know, our kind of specialty is this equity token and the fact that there is an agreement and the terms of an agreement that there's somehow typical or standard for VC rounds. So, you know, there's vesting and drag alongs and tag alongs and liquidation preferences and so on. So we provide the tool set to configure this kind of agreement and spit it out as a token, okay, as an offering. But, you know, we support also, we can support also

you know, any kind of tokens, utility tokens, stuff tokens, combine tokens, and things like that. And through this, of course, you can also combine any kind of, really any kind of offering. I mean, as long as it is not illegal, and this is the only part that we actually take care of, that it must be, you know, something legal. You can do, you know, you can, by the way,

on the public markets, you can do this to some extent as well, right? You can have a cup or not, you know. So any kind of models are possible, just that it will be always for equity. Great. So let's speak about this initial capital building mechanism because this is also one of the things that Mejah and I talked that we really liked. It's just because the game theory is very clever. So can you explain? What is this ICBM?

So intercontinental ballistic missile, some people say initial. Initial capital building mechanism, some people say, and we also often say, I like to say initial community building mechanism. And why? Because it's not about creating a capital pool because the whole crypto community is the capital pool. And actually also with our interface to the euro, everyone who has money is a capital pool, right? but what we are trying to build around Nauiphant is a community of people who are both who are all early adopters, technical technology investors or developers

who understand tech products because that's what we start with. We can also, of course, at some point, ETO a factory or a bar, but at the moment we're focusing on the technology projects. The way it works is the first, following. We are in a way, although we are built on Ethereum blockchain, we are in a way a separate blockchain in the sense that on an abstract level, right? Because the way, for example,

Bitcoin works, as we all know, is that there is miners or many other blockchains, but it's focused on Bitcoin for a second. There's miners who are contributing the so-called useful work to the ecosystem. This is the mining, right? And if we're contributing to this useful work, they're once in a while, based on an algorithm, getting a reward. So once in a while, they're mining themselves a Bitcoin, right? And there is a limited supply of those, but the whole ecosystem is, you know, it needs these minors to be sustained. And we're thinking, okay, what is the useful work, right, in a fundraising ecosystem? And this is, of course, the act of investment, right?

So the way NoiFand works is that if you are investing in some kind of ETO that happens on the platform, so you buy a share in a company, you're contributing the useful work to this ecosystem. And for that, you get a reward. And this reward is the token of the ecosystem itself, which is Neumark. So every investor, whoever invests in the company on the platform is becoming a co-owner, of the ecosystem, of the fundraising ecosystem. Noemark is giving you two things. You know, our business model is that, you know,

whenever there is a successful ICO or ETO actually, then the company pays a percentage into the ecosystem of the success fee. And this is going to the Neumark holders, right? So if you have a Neumark, then, you know, wherever successful ETO, you will see some actual ether or euro in your wallet. The Noymark gives you this fee into components. One is the ether or the euros, so the cash component, but also the other component is a little bit of the tokens of the company

that has done as successful ICO, right? So with this, the whole ecosystem kind of distributes, you know, the success, you know, its success all the time to the holders of the Noymark and builds like a portfolio as well of tokens that also belongs to the ecosystem. Whenever someone invests on the company, becomes part, becomes co-owner of this portfolio, and also gains the right to the proceeds from any successes that are on this platform. This is how the platform works. Now, right now, we are doing the ICBM, which is like a special offer,

the initial community building mechanism. And we are telling everyone, listen, if you reserve some capital on the platform, that you will later, that you later intend to commit or invest into the ETOs on that platform, then already today you're going to get some Neumarks. You're going to already to then become the co-owner of that ecosystem. So today you reserve some capital and you get the Neumarks. In the future, we'll have to invest some capital to get the Neumarks. But the idea is to start already today, you know, initiate this distributed, the centralized exchange this way.

Yeah, so basically, right, the logic here, if you just sort of want to walk through it, is okay. So we could today say, right, so me and Mayer both did this, right, say, okay, we're going to basically put some ether into this platform, right? Now, this ether is still ether, but it's sort of locked in this, you know, a iPhone smart contract. And it's still held sort of by us, right? And then in addition, one gets some of these noy marks. Now, let's say in the future there's some great projects. One can basically invest that and get equity in those projects. Let's say noemark or noi fund, maybe there's no projects that we like.

Then there's the option of basically destroying those noemarks and withdrawing the money and paying kind of a 10% fine. or if it happens before 18 months or after 18 months withdrawing the money and no fine so it's sort of if one has ether the logic at least for my brother is that if one has ether it's almost like it's like an

option on the success of Noi Mark that's right of Noi Fund so that's very clever right because on the one hand one gives people this kind of like option to put money in and then of course that builds already kind of a pool of capital that can then be invested in projects and I imagine

that will also be very beneficial for, you know, if companies are interested in doing this, so they see already there are people on there who are sort of now waiting for something to do with their money, right, because it's sort of allocated for the platform. Yeah, exactly. And, yes, and, you know, also in this ICBM, you know, we are, you know, we have representatives of many funds, we have representatives of PE firms, you know, and many professional investors as well so that of course

any project that's going to ETO is going to get attention of this crowd immediately as well right so that's an additional value yeah cool so in some sense as an owner of Neumarks that

single Neumarck that I own is a is sort of a claim on the future fees generated by the platform and also the future tokens in various startups that are going to be part of part of the community pool yes yes and this is also the difference between you know uh let's say nasdaq and us right because here every investor who has a noymark and indirectly through this own Noemark participates in the success of all companies that will ever ICO on this platform, right?

In NASDAQ, if you buy a share, you just have one share, but you do not participate in the whole portfolio that NASDAQ has. Here you participate in the whole thing. And the thinking behind it was like, okay, whoever contributes work to the ecosystem should be rewarded, you know, should participate in the overall success of this ecosystem. Yeah. So what is the kind of governance of not?

Noimax like. So, for example, is the supply of Noimax fixed? Yeah. Yes. Tell us about like, you know, the supply of Noimax and like the governance of Noimak. So there is a limited supply, limited to the equivalent of 1.5 billion euro invested. So the thinking behind that limitation was, you know, how much capital do we think we need to incentivize? with this Noymark reward to, you know, to get this going, right?

How much money is competitive to start with, you know, like to, you know, to make, to start, you know, hoping for this to become the, you know, the fundraising ecosystem of the world, right? And, you know, if you, with every euro invested on the platform, the Noymex become more expensive. So for the first euro, you get more Narmex than you get for the second. and so on and so forth. So there's also this company called Fifth Force KMBAH that has a role to play in Noi Fund. So tell us about Fifth Force and its relationship to Noi Fund and then to Neumarchs.

Yeah, so we're trying to bridge the world of the classical and the world of blockchain, you know, so we need to operate, of within the infrastructures and ecosystem that exists today. And so, yes, we had to fund a company. It's a limited company that is, you know, where there are people, they're developing the software, you know, and there is an office and salaries and so on.

And we think of this as a, you know, like as an initiator, as an initiator of this ecosystem, right? As a company that had to be there to kickstarted and create it. And a fifth force is like an operator. And the fifth force lives, you know, is dependent on the success of the whole ecosystem in the sense that, you know, with every euro invested on the platform and every noymark issued, the fifth first gets another noymark, right? So we hold some of the newmarks, some of the newmarks that are created.

Now, the idea for the company for ourselves is that we would like to at some point decentralized this whole thing go together. So we're not thinking about some kind of classical exit as a startup. But what we would like to do is the moment there is enough movement and enough revenue and fees to make this independent from any external sources of capital. You would like to actually ETO fifth force on this platform itself, right? and decentralized the whole thing completely. And then, of course, we will introduce some governance models

that would be completely decentralized as well. That's the vision, right, whether we're able to achieve it. Yeah, I mean, I have to say that is, there were sort of two aspects here that I felt like, you know, were sort of problematic or potentially problematic. So one is what you put now, right, is that essentially a fifth force gets, you know, for every Noymark issued to an investor,

a fit force also gets a noemark. So since this is sort of, you know, the claims and all the future of this ecosystem, you know, half of those basically go into one company. So that, you know, it doesn't feel very decentralized. And then there's also just a question of simply, you know, to what extent is there like a debate? dependency on that and you know maybe when does that dependency go away at some point right because of course if you look at something like Ethereum

Sure. I mean there was also a dependency on the Ethereum foundation but you know even once the network is launched I think Ethereum would have survived the foundation probably and So it wasn't that long my question is like how long is that dependency going to be here? Is there any way of you know Actually getting rid of it maybe because of this bridge to the existing legal word? It's harder to do that. No, I mean, of course. So we want to get rid of it, right? But one has to start somewhere, you know, and it is, and, you know, in today's world, it would be impossible to start a business without incorporating, you know, that's how the world works. Unfortunately at the moment, so, you know, so the on-chain-only organization has tremendous, you know, regulatory problems. I don't think

would be ever able to pull this off. But, so, you know, so as I said, the idea, is that eventually all Noymarks will be in the circulation, right? Because we're going to ETO the whole company. You're going to ETO the gay and BHA. We're going to be completely public and community owned. And then, you know, the community is going to govern all normarks that are in the circulation. So, you know, while this, you know, well, yeah, some people say, okay, but you hold half of the noemarks.

Well, yes, this is true. But, you know, on the other hand, you know, we are taking, we're not an ICO, we're not asking community to give us any money, right? We never spent a penny of the community on any of these operations, you know? So we needed to find some kind of way to finance these operations without asking the community for the nation. And at the same time, we wanted to balance it in a way that we would be dependent on the platform success, you know?

So we are fully incentivized to grow an infant ecosystem because we are dependent. on the success of it because we are going to operate from the fees, from the success fees of these ETOs, right? Yeah, I agree with that. I mean, I think that is nice in that, you know, there really is kind of an alignment of incentives in that, you know, there's not like money going up front to the company, but the only money earned as companies actually issue equity through the platform. So I agree on that aspect. I think that there is. a nice alignment. But what about, for example, key parameters of the platform? Like, there's now there's three and two percent fees that are being charged to companies. Can you guys change

that at kind of at will or is there some kind of governance mechanism there? Yeah. So there is a provision that we would, that we would be, that we can change that. We always need to ask the Neummark holders what they think. And, and, you know, that was important to have, this kind of provision because we need to look a little bit at the market as well, right? So, you know, there might be, I don't know, a competitor that is going to offer a better deal or something, right? Or we might need to optimize something or even maybe increase or decrease the fees. So this kind of mechanism is to be there. Yeah. Okay, but then there is a mechanism as well. I guess building also governance into it so that

noelmark holders would actually vote on. They would, yeah, they would influence the decision. Yeah. So, you know, we need to, here wants to be you know, of course, very careful because, of course, there's also like a speculation aspect and so on. And, you know, this is such a sensitive decision, you know, like if you take this decision wrongly, for example, there's a competitor that, you know, takes only 1%, let's say. And let's say, you know, your shareholders, I don't know, start to behave strategically and they say, or even this competitor's purchasing, you know, from the, you know, a lot of remarks, right? Then you may, you can very easily end up in a situation where the company is simply off the market

it because it's unable to make a competitive decision, right? So right now the way it works is that, you know, we're taking this decision. Fifth First is taking this decision, but it's influenced by the community. So we're going to ask the community, of course, because this is also influencing them. So what kind of cost would this process entail for a company? On our platform, it's just a success fee. Okay, but what about, I mean, if we now, okay, so we have to create this perspective, You know, probably have, I don't know, get some lawyers.

You don't pay anything for that. But what about time in terms of time? How much time do you think it would take somebody? To create a prospectus. Depends on the complexity of the project, right? To describe your business, but if you know everything, then it costs you as much time as doing a startup pitch deck or writing a white paper, something like that.

It's really good. Okay, so that, so it literally is that easy to do an IPO in Germany. like you have a prospectus, that's it? I mean, let's say now they're selling the X-EU. Well, you know, IPO in Germany may be more difficult because, you know, certain Dax, for example, has its own requirements that are, you know, are exceeding the regulatory requirements, right?

So if you want to go to Dax, then it's a whole different story. But if you want to, you know, comply with the laws, with just the laws, then we would, of course, as I said, we would handhold you. So depending on what round you want to raise, how much money and so on, we would kind of guide you through this process of configuring the proper offer and the proper prospectus. But yeah, I mean, this is, that's it.

And so this is in Germany, right? Now, you guys are excluding US investors at this point. Yeah, just because the situation in the US is very unclear, right? So we actually, we don't have to in a way to do. this, but we feel safer to do this way at the moment. So. Okay. And what about US companies?

Could like a US company do this through the platform and just sell equity to non-US citizens, residents? Well, yes, but we initially won't do US companies. We won't do the US incorporated companies for now. That's because the US law is just really so much different than anything else. The US security's law is different. and also is structured in a way that it is encompassing the whole kind of influences the whole world, right? So, you know, to reduce our own complexity, you want to step away from this for now.

And we also think that, you know, that there is enough market out there and there is enough companies that could use that first. So we're going to do this in a later, Faisal. Okay, cool. But so still, like, so we have the US is out, right, both from companies and at least for the time being. But then any other company in the world, I mean, maybe you exclude some kind of sanctioned countries. So let's say any other country, any other investor can use this without. Yeah. So the investors need to go through the KYC, was they, not, you know, not in the ICBM process, but for the ETO, yes, they need to go through a KYC.

of course, I mean, you don't want to have any money that you don't know the source of to acquire legal shares in companies, right? That should not be possible on ethical level and any other level. So, but yeah, in principle, yes, this is working for all jurisdictions that we have researched so far. So this means, you know, more or less Western world style jurisdictions. So the concept of share must be there. It shouldn't be some strange religious law. It shouldn't be some, you know, a sanctioned country and so on. It needs to have a concept of a share that you can actually change into a token in the level.

You know, for a number of cases, when you configure your agreement, we're going to have like a, you know, like a tool to configure it simply. But if you want to have a more complicated smart contract, a more complicated token, maybe, you know, combined with utility documents, some coding might be required, right, to do like a proper smart contract or additional smart contract to that. Okay. And so how does this process look like from the perspective of people like, angel investors who invested in a company before they did an ETO? So let's imagine like there's a company in Italy. It had a set of 10 angel investors. And now this Italian company does an ETO. and the tokens that are etiota liquid, but the original shares are not. So whether the token in the ETO is liquid or not

is the choice of the entrepreneur, right? So this is very important to say because they were very used to secondary markets and exchanges in our crypto world, but the entrepreneurs and companies, sometimes they don't want to be publicly traded because this is a whole new set of things that you need to take care of, right?

Or they may just, you know what? want to be publicly traded in a few weeks or something or months from now and so on. So we are not forcing this. You know, with an equity token, you can be liquid, but you can also, and this can also be in your smart contract, you can just block the trade. Okay, this is up to the entrepreneur. It is offered, it's transparent, and then the investors, of course, decide whether they want to invest in a token that is not tradable.

So that's, this is how it works. It's the choice of the entrepreneur themselves. So in this whole regulatory piece, is everything clear as day or are there aspects that you yourself are uncertain about today? You know, we didn't want to build any, you know, like workarounds with like strange offshore jurisdictions and things like this because this is, you know, this is difficult to handle. And also I think that the regulatory space around tokens is so fluid that, you know, if you go to some offshore jurisdiction, or somewhere suddenly the law may change, right? It is not changing all the time. So we didn't want to risk anything like this.

Then you have a shareholder's agreement with them as a founder. If you want to buy some Bitcoin on Krak, and then you go through a very lengthy KYC procedure. And this is true for most exchanges because we're all obliged and regulated to do it this way. And also, you know, in particular after the July SEC announcement, right, from the U.S. supervisory, financial supervisory. there is an interpretation or I could think that suddenly all the exchanges in America

that were trading or are still trading utility tokens, they unknowingly were actually trading securities. The result is that, you know, I guess on American exchanges, I have seen almost no new coins since July, right? because they are not licensed to trade securities so they do not accept any new coins to list and I know for a fact that many of them are trying to obtain these licenses right now

so you know what is going to change very soon is that we're going to see a lot of exchanges that are going to be able to trade securities that's simply where this market is going. So in theory if and when equity tokens start working on blockchains this is an enormous opportunity for cryptocurrency exchanges, right? Because they started as cryptocurrency exchanges.

Now they are handling shares. And ultimately, who knows, like, if this technology succeeds on a massive scale in 20 years, not just Neufund, but everything else that comes, then this could be the global stock market of the world. Yeah, that's right. This is the global, you know, this is the global stock market. of the world. And I know for fact, I'm actually not sure if I can disclose it, but, you know, let me just say it that, you know, I know for a fact that the major exchanges are looking at that

and getting licenses as we speak. Okay. So I know that for a fact, we're looking at many of those because, of course, for us, it was essential to find, like, secondary markets for those equity tokens. Yes, for sure. And how beautiful is that? But of course, if you're, if you're an exchange, if you're a cryptocurrency exchange to day, yes, you have this huge opportunity in front of you that you might be able to very seamlessly offer, like not seamlessly, but offer securities and those securities could grow and grow and grow, those list of securities. But on the other side, you have this decentralized exchange technology threat that maybe

all of these tokens on blockchains may not need exchanges at all. Yeah, I mean, this is something that, you know, for me, to be honest, is difficult to wrap my head around because you know that the today the way it works is that the centralizing exchanges kind of escaped the regulation uh or some regulation and um because they they kind of are more like facilitators of peer to peer transactions right um and this is regulated completely differently don't grill me on that because i do not know the details of it and i guess many lawyers would you know which uh would have difficulty to understand how to how to do that but but what you know as common sense what is a bit difficult for me to imagine is that

is that is that you know that not only the regulator but you know the law as a set of rules that we as humanity want to operate within would allow an existence of some kind of gray market for real securities

just because it technically works different so I think some kind of regulation should be there as well because otherwise you know this could you know if there is equity tokens or actually securities registered real security is real money, connected to the real world, right? And they can be traded or operated with it

some market where any kind of money, including black money or terrorists, money could be potentially allowed. I don't think that this is something we should. I don't think this is going to hold, right? Oh, it will be super messy in the beginning. Yeah, but I don't know, you know, I somehow... I actually believe that we're going to solve it because all of this is moving faster than what.

things, you know. So what's the timeline for Neufond? What can you tell us about kind of the biggest events and dates that are, you know, coming up or? Yeah, Christmas. This is going to be the time for holiday that we're all looking forward to. And then, you know, the late Q1, we're going to do our first ETOs already. And before that, you're going to, of course, see some, you know, launch on the platform. You're going to be able to look at the product because Neufant platform actually is almost ready. I mean, there's still some stuff to do, but we're almost ready to do ETOs. And we're heading for a late Q1 for that.

Yeah, and I guess maybe you should add also that right now there's still this initial capital building mechanism going on. It's still going on. Yes, it's still going on. It's going on for a month. And yes, this month you're also going to see some cool announcements because there is really, really, really cool people joining in. Yeah, and it's going to be going until mid-December. And after that, we are getting ready for the first DTOs already. So Q1 for CTOs. Now, are there some interesting features that you guys are planning?

What's the feature set that you guys are launching with in Q1? Well, you will be able as a, so first of all, the first companies that we're going to ETO with, we're going to, you know, we're kind of going to list an almost incubated environment. You could say, so it's not like we're going to open the platform and anyone can ETO because this, you know, has a huge potential for explosion. So the first ETO is going to be just a few first ones, like companies that agreed to test it with us, the brave guys. And the feature set is, yes, you can configure your token or equity token.

You can launch it as a proposed investors to buy it. Investors can purchase it with ether or with euro. They can manage this investment. So there's like a dashboard and you see how many ETOs you have, how much euro or ether you have to spend on the platform and how many tokens of what companies do you have. also how many know it, what's your ownership of the ecosystem? And then after that, there's also for the founder, there's like a cap table manager, you could say.

So, you know, you will have many shareholders, so you will as an entrepreneur, so you will want to, for example, the shareholders resolution, I don't know, I don't know, whatever. You want to exit the company, for example, right? You need the concept of your shareholders. So there's going to be also smart contract governed, cup table manager, right, where you will be able to do those.

And this is like the very first initial feature set for us. Cool, that's exciting. Well, Zoe, thanks so much for coming on. It's a pleasure to talk with you and about this very exciting project. Thank you. Thank you, thank you guys for having you. Yeah, so we're of course going to link to some of the resources to have a comprehensive white paper and a shorter, more digestible light paper.

Yes, as well. And yeah, so if you want to check that out, they can do that. And yeah, thanks so much to our listener for once again tuning in. We're going to be back next week. In the meantime, if you want to support the show, you can do so by leaving a review for us. Or you can also make it a donation if you'd like to. So yeah, thanks so much. We look forward to seeing you again next week.