- Focused, Initial Coin Offering (“ICO”) exposure through strategic, seed/pre-ICO early stage investments into high-quality blockchain and blockchain-like projects
- We believe ICOs are the highest-returning, most-asymmetric investment opportunity currently in the digital asset space
- Leverages Digital Asset Capital Management’s industry connectivity — access to key projects, across all regions, in the initial financing rounds, is a key return differentiator in the ICO market
- Digital Asset Capital Management has extensive blockchain technical but also unrivalled capital markets experience — our team has experience raising over $80bn in primary capital across multiple asset classes so understands due diligence and what ICO transaction structuring and marketing will succeed
- The Fund is seeded with two high-quality pre-ICO investments to assist it achieve liquidity in CY2018/early-2019 and the potential to redeploy capital
- Ability for investors to co-invest alongside the Fund in select opportunities
Digital Asset Capital Management (“DACM”) has launched the DAF ICO Fund, a fund 100% focussed on investing in high-quality ICOs and complimenting Digital Asset Fund’s market positioning.
Our focus is on finding, working with and financing early-stage, high-quality blockchain and blockchain-like projects. The Fund is structured to provide global institutional and family office investors with unique exposure to emerging and potentially high-returning projects.
DACM believes the investment opportunities within the ICO market are compelling, namely:
- Ability to take strategic investments in pre-ICO rounds of high-quality projects;
- Leverage DACM’s global industry connectivity and financing/markets experience to help partner with quality ICO leadership teams;
- Whilst there has been some “inflation” recently, select ICO valuations are generally materially below listed peers allowing for a significant re-rating if the ICO is successfully executed and subsequently achieves liquidity; and
- Often relatively short timelines to liquidity reducing potential risks/increasing potential for fund-wide year-on-year returns
The ability to source quality investments remains high as the pace of innovation continues and volume of capital raised remains strong — there has been over $9.5bn in ICO capital raised over the last six months as ICO’s rapidly become a new “venture” market:
The fund will follow a four stage strategy to investing in ICOs and realising returns:
- Identify Opportunities: leverage global connectivity to identify attractive ICO pre-sale opportunities with appropriate legal protections and discounts commensurate with the early-stage of investment;
- Leverage Expertise: work with the ICO’s leadership team to help with industry connectivity, ICO structuring and distribution to maximise ICO success;
- Assess post-ICO Trading: monitor post-listing trading against assessed view of value and monetise when appropriate, but, don't hurry;
- Monetise to fiat: Monetise ICO investments to cash and hold until new opportunities for deployment are found — in-line with investor preferences the Fund will minimise “passive” ether/bitcoin exposure
There are no fixed timeframes on the monetisation of assets and the Fund is open-ended so has the flexibility to retain ICO investments until it believes appropriate value has been achieved against the initial investment case.
To allow the Fund to accelerate its investment cycle it is seeded with two, high-quality pre-ICO investments that we would expect to achieve liquidity in late-2018 or early 2019. We expect to make a number of further investments over the next three months and make a selection of these opportunities available to the Fund’s initial investors on a co-investment basis.
What We Look For
In our experience the key driver of ICO returns is the experience and passion of the project’s leadership team. Whilst quality tech and the ability to build it and focus on a tangible use case goes without saying, the ability of a team to deliver it, on time, and manage the complex stakeholder relationships post-ICO is often underestimated.
To enhance the value the Fund is adding to investors’ portfolios it will focus on early-stage rounds in smaller projects. Whilst these projects are harder to find and often take more work to diligence, we believe the return from these projects will exceed the returns available from larger, $75m+ financing rounds. With this in mind we have capped the Fund at $20m which we believe can realistically be deployed in high-quality ICOs with these characteristics over a sensible time-frame.
Our team at DACM is well placed to participate in this market. We have a highly successful history of investing personally and through the business in marquee ICOs and believe our global connectivity, and ability to apply core valuation methodology to identify compelling opportunities sets us apart. Our team also has experience managing funding rounds for over $80bn across multiple asset classes so understands how to conduct traditional due diligence, assess and obtain appropriate capital raising terms and protections and what projects will be well received by the broader investor community.
We look forward to bringing DAF ICO Fund to market and partnering with exciting projects to deliver the Fund's objectives.
Digital Asset Capital Management (“DACM”) and DAF ICO Fund (“DAF ICO”) are not providing any general advice or personal advice regarding any potential investment in any financial products. DACM and DAF ICO, their directors, related parties, representatives and employees do not accept any liability for results of any actions taken or not taken on the basis of information above, or for any negligent misstatements, errors or omissions of any of its contents and no legal or other commitments or obligations shall arise by reason of the provision of this information.