Investing? In Uber, in Airbnb, in the big guns and the up-and-coming pistols of tech?
That’s the arena in which those with the deepest pockets play, say some who stay on the sidelines. Venture capital is for the firms and the individuals with the wherewithal to commit hundreds of millions of dollars.
Those investors are the ones who can afford to wait years before they get their money – hopefully with a lot of return on investment. Conversely, there is always risk in those same investments, in terms of loss of capital.
Elsewhere, the promise and the premise of blockchain and cryptocurrencies is one where just about any unit of value becomes uniform and accessible to anyone across the globe.
To that end, Andra Capital said late last month that it would launch a fund geared toward technology investments. The wrinkle is that the company is offering the investments across what may be considered a unique vehicle: a digital coin.
Enter, then, the Silicon Valley Coin, in tandem with blockchain technology, eyeing what Andra Capital executives say will be a levelling of the playing field for investors on a truly global stage.
Andra has said that it has $500 million in commitments in place for the fund.
When PYMNTS interviewed managing partners Dr. Hermann Liu and Haydar Haba, the pair noted that the venture capital realm is one that takes on risk and rewards that have heretofore been out of reach for investors, marked in part by illiquidity.
In this case, the coin can be traded much like other securities and is backed by investments in growing tech firms. In addition, said Haba, the firm (and the coin) are to be compliant with regulatory requirements in each of the countries in which it is traded (for example, the SEC in the U.S.). Governing it all are KYC and AML mandates that dictate the vetting of investors.
The offering is slated for summer of 2018.
Haba told PYMNTS the tokens that will be made available will take into account each country’s rules and regulations. “Here in the U.S., we are only opening it to qualified [investors], which are people in the range of a minimum of $5 million in assets,” he said.
The target firms are companies that are entering their growth mode, said Haba and Liu. These firms have products on the market and are using their capital to grow into unicorns, Haba said.
Amid Andra’s other investing criteria: The target companies must have a valuation that sports a minimum of half a billion dollars in (implied) market cap, and double-digit growth every quarter for the last few years. These companies are backed by Tier 1 venture capitalists, and they are leaders of their sectors, either domestically or globally. Andra intends to start investments in the targeted firms’ B rounds and follow these companies to the F round.
Liu noted that the fund’s coin is tradable on blockchain with relatively more liquidity, and they can even trade fractions. Asked by PYMNTS how the value of the coin would be determined, management said it would be dollar-for-dollar indexed against a portfolio of these high-growth technology companies. The net asset value (NAV) is reported on a quarterly basis. Other factors that will impact pricing include scarcity value of the coin and the fact that it will be traded globally, with a nod toward each country’s rules and regulations.
For transparency and compliance, they said, the company has enlisted Deloitte as auditor and DLA Piper as legal counsel. “Each token is equivalent to a securitized ownership stake in our fund,” said Liu, who added that this is no ICO, but is instead being treated as a sale of securities.
“What we hope to provide here is unprecedented access to late-stage, high-growth, pre-IPO technology companies in Silicon Valley,” said Haba.