Fundraising right now is a sore topic for many startups, with questions arising about jittery investors and founders uncertain of how to coax the horse back to the stable.
Enter Neufund, the fundraising platform making blockchain-enabled fundraising a reality for every founder, no matter their background. Aiming to ‘democratise’ this kind of funding, and present it in a more easy-to-understand and human way, startups don’t need to be tech savvy to get involved.
Co-created by Zoe Adamovicz (a pioneering tech entrepreneur, and one of our Top 50 most influential women in the startup scene) and Marcin Rudolf, Neufund has been making waves in the news the past few years. And rightly so – for the way it simplifies blockchain-enabled funding for entrepreneurs from all walks of life has got us all talking.
If your interest is peaked, then keep reading our interview with co-founder Zoe to find out how startups can digitise their shares, why you don’t have to be a qualified investor to invest, why now more than even investors are looking for impact-driven startups, and her tips for startups on weathering the pandemic.
Thank you for joining us Zoe! We’re excited to learn from your experience at Neufund. Let’s start with your mission: to democratize access to capital for innovators and entrepreneurs. Could you expand?
Thank you for having me!
The classical investment process has limitations for both entrepreneurs and investors. I’m sure many startups may share lots of stories, about how hard it can be to find proper partners, and close the deal, especially now, in a crisis, when the demand for the capital grew significantly, and many companies are fighting for survival. Add costly legal support, time-consuming meetings, geography aspects – these are just a small part of the problem, which the entrepreneurs face. At the same time, a high financial barrier to entry creates an ecosystem that is available to a limited few.
We believe that anyone should have access to investing and fundraising, no matter where they live and what economic background or network of investors they have. Thanks to Neufund entrepreneurs can address venture capital, institutional and individual investors from across the globe and prepare their campaigns easily and quickly, in mostly automated ways. And you don’t have to be an accredited or qualified investor to enter the world of investments: fractional ownership enables us to represent one equity by a thousand tokens with a minimum investment ticket size as low as €10.
Two years ago, Neufund became the world’s first company to digitalize its equity and conduct a public offering. What’s special about the Force tokens?
In 2018 Neufund became the world’s first company to digitilize its equity. The FORCE (FTH) Token was the first fully compliant equity token issued under German jurisdiction and represents equity in Fifth Force GmbH.
This first campaign has received overwhelming support from entrepreneurs, VCs and angel investors. For the first time in history we made it possible to invest in an easy way for such a variety of investors. It was our first experience, but we’ve managed to show the market not just the platform’s possibilities, but how the traditional investing might be changed, and how the principles of decentralised economics work.
So, for a startup that is not inherently based on a blockchain model, how would they issue their shares on Neufund, as ‘equity tokens’?
An Equity Token Offering is a novel way of fundraising, which allows any kind of company (blockchain-based or not) to digitise its shares and make a public or private placement. And you don’t need to be tech savvy – we made the fundraising process more human, and easier to set up for everyone.
Simple and intuitive forms will help you configure the offering depending on your company’s needs and requirements: you may enable voting rights for investors, set the soft and hard cap, define the minimum ticket size, and decide on the duration and phases of the fundraising — and much more.
How can venture capital funds take part in Neufund? How can the platform connect startups with VCs that might not have previously found them?
Neufund offerings enable companies to address all kinds of investors at the same time, including VCs. Our first fundraising campaign (Fifth Force) has attracted a diverse group of investors, including venture capitals like Atlantic Labs, Freigeist Capital, as well as angel investors. Later the first retail offering on our platform (Greyp bikes), showcased a way for companies to raise capital outside of traditional startup hubs. Altogether the campaign collected €1.4 million in funding from over 1000 investors, from 34 countries around the world. It proved that blockchain makes the future of finance possible today, investing can and should be accessible for everyone and we are moving in the right direction.
Given the current pandemic, many are expecting funding opportunities for startups to slow down. How do you see this playing out on Neufund? And is Neufund doing anything differently now?
A majority of startups have been impacted by the economic downturn and the market’s slowdown, which makes the need for alternative forms of fundraising even more pressing.
But we should think bigger. This unexpected pause showed us the problems which can not be unseen: the healthcare system cannot provide necessary protective equipment; small and medium-sized businesses are on the fighting for survival. We may see the problem of rising poverty, inaccessibility of education, and unemployment. At the same time, we see how simple steps, like reduced traffic immediately brought us to the cleaner air and water in seas, animals, which appeared in unexpected places (dolphins are back to Venice, coyotes on the Golden Gate Bridge).
Due to these changes, market players are also looking wider on financing now: the importance of impact-driven projects, businesses, which follow sustainable business models and aim solving the world’s most pressing problems, grew significantly. Further development of the solutions that will let such companies fundraise and connect with progressive investors is our main priority today. The entrepreneurs are the key power that would help to rebuild the world, and we are here to help them.
Do you have any fundraising tips for founders during this difficult time?
It’s hard enough to raise money when the global economy is healthy, so it’s no wonder that this crisis is causing startups to become jittery. At the same time, we all understand that for investors, the crisis might be the best time. The rates and valuations are lower than ever before, meanwhile many funds have committed, but unspent capital.
Many investors are choosing companies to support and invest, based on their ability to survive in the new, difficult economic situation. It’s vital to keep the objectives at the forefront of thinking, and at the same time to be flexible and get ready to reinvent and rethink your business, even if it brings you to the tough decisions. The strength of the teams and their leaders comes to the forefront now.
You should also remember, though, that VCs, for example, are now under pressure from their LPs, revising their portfolio and future strategy. It might lead to unexpected results: lower valuation or even rejection. Don’t put all your eggs in one basket; try to attract several interested investors and angels, try new ways of fundraising.
And finally: think of the impact that your company creates. The market is still obsessed with unicorns, but we now know how the world might be if we find a way to have a less deadly daily effect on the environment. Many investors are looking for sustainable and impact-driven companies, which are not just highly-profitable right now but aim at solving the world’s most pressing problems in the long term period.
Even though Neufund is reducing barriers for all, it’s also quite a tech-y topic. Is there any way to give founders from minority groups or from an unpriviledged background a helping hand, so they can access the benefits of a platform like Neufund?
We’re driven by the idea to democratize access to funding and use every vehicle possible to achieve that. We’ve automated the largest amount of legal paperwork, our user-friendly interface makes it easy to set up the campaign, tokenize (digitize) shares of the company, and address all kinds of investors at the same time, no matter where you are.
Our customer care, of course, walks the applied companies through the fundraising process in detail. We won’t send you to the chatbot if you need help and would provide you with full technical support.