Four parties jointly publish the ‘MOU template for future token issuance in conjunction with J-KISS’
Skyland Ventures (Head Office: Shibuya-ku, Tokyo; Partner/CEO: Max Kinoshita; hereafter “SV”) has developed the MOU template for future token issuance in conjunction with J-KISS, which mainly targets startups established as domestic corporations for token investment in the Web3 era, with Infinity Ventures Crypto (IVC), Headline Asia, and Masakazu Masujima (Mori Hamada and Matsumoto Law Firm).
◆What is the MOU template for future token issuance in conjunction with J-KISS?
The MOU (memorandum of understanding) template for future token issuance in conjunction with J-KISS will be used by domestic startups planning to issue tokens in order to obtain funding from VCs in Japan. J-KISS is the Japanese version of the ‘Keep It Simple Security’, published by a Japanese VC firm Coral Capital, and it is the most commonly used template for seed investment in Japan. Anyone is allowed to use this investment agreement.
When an entrepreneur intends to launch a Web3 project with fundraising through J-KISS, by signing a simplified memorandum of understanding with the investor, the entrepreneur will be able to promise the investors a certain percentage of the tokens at the time of token issuance, thereby allowing startups to raise funds quickly and focus on their Web3 projects. By using the MOU template for future token issuance in conjunction with J-KISS, Web3 startups can save legal expenses while raising funds. This time, Version 1.0 of this MOU template will be released.
◆ Investment Contracts used worldwide for investments in Web3 startups
There are three main international templates for startup investment agreements in Web3:
(1) SAFE (Simple Agreement for Future Equity) created by Y Combinator
(2) SAFT (Simple Agreement for Future Token) created by The SAFT Project
(3) SAFE + Token Warrant*
Although it is currently not accessible for Japanese companies to issue tokens due to the tax and accounting regulations, future improvements in the handling of tokens are currently under discussion. Therefore, we are releasing the MOU template for future token issuance in conjunction with J-KISS as a template to facilitate the process for Japanese Web3 startups who aim to publicly launch their network as well as their investors.
◆The MOU template for future token issuance in conjunction with J-KISS, and J-SAFT Project
MOU template for future token issuance in conjunction with J-KISS Ver1.0 https://docs.google.com/document/d/1okTJebHI8sXNadLx64_pJN4tyKxqlKoS/edit
The open-source version 1.0 released on April 28, 2022, is intended to be further improved by incorporating feedback from startups and VCs who are knowledgeable or have actual experiences in token investments.
In addition, starting with the release of this version, we aim to create and publish the Japanese version of SAFT (J-SAFT) that will enable investment in the tokens themselves.
If you are interested in token investments, please contact the co-publishers of this template or contact us through info@skyland.vc.
◆The Background of this publication
As of April 2022, there are only a handful of Japanese startups in Web3 that have received VC funding. However, on a global scale, as shown in the chart below, in Q4 2021, there were more than 500 VC-backed startups that in total raised $10B in funding. Today, Japan is significantly lagging behind the rest of the world, and to produce world-class crypto/blockchain startups from Japan, there is an urgent need to develop a way for startups to raise funds through token issuance. Hence, this project was launched to solve these issues and support crypto/blockchain startups in Japan.
◆Comments from VCs and lawyers who co-developed the MOU template for future token issuance in conjunction with J-KISS
We have made token investments in about 150 crypto startups over the past year, but the obstacles for Japanese companies to raise funds using tokens are high, and as a result, investments in Japanese startups from our crypto fund is less than 10%.
In order to break out of this situation, we are working together with our portfolio companies, talking with authorities, helping Japanese teams issue tokens overseas, and making various other efforts to raise the level of the Web 3.0 ecosystem in Japan. As a part of this effort, we have participated in the joint release of the MOU template for future token issuance in conjunction with J-KISS. We hope that this will be an opportunity to increase the number of token-based fundraising and token issuance in Japan.
Headline Asia/Infinity Ventures Crypto (IVC)
Akio Tanaka, Partner / Masayasu Hayashi, Senior Associate
Skyland Ventures has been actively executing investments in the Web3.0 (Crypto, NFT, Blockchain) field from late 2021 to early 2022. In discussions with numerous startups, we have noticed that template documents such as SAFE and SAFT, which are commonly used worldwide, are not used in Japan, and thus we have created the MOU template for future token issuance in conjunction with J-KISS. Furthermore, looking at the activities of overseas startups in 2021–2022, there is no doubt about the growth potential of Japanese web3.0 startups. We would like to actively invest through the document in order to produce world-class startups from Japan.
Max Kinoshita, General Partner & CEO of Skyland Ventures
SAFT is known internationally as a means of fundraising using tokens, however, Japanese VCs (Investment Limited Liability Partnership) are most likely not able to invest in Japanese startups directly. We have been asked to participate in a project to develop a method for Japanese web3 startups to raise funds by promising future token issuance. As the first step, we have created a simple memorandum of understanding (MOU) which allows startups to promise the investors a certain percentage of the tokens at the time of token issuance. By linking this to J-KISS, seed-stage Web3 startups will be able to raise the funds needed to develop their networks. I believe that the ideal Web3 company is one that can raise funds through the tokens themselves without having to offer equity of the company so I will continue to support this project to develop J-SAFT.
Masakazu Masushima, Partner at Mori Hamada and Matsumoto Law Firm
◆About Skyland Ventures
Skyland Ventures (SV) is a venture capital (VC) fund focusing on seed startup investments. With a mission of “The Seed Maker. & Unlearning.”, we make equity and token investments that provide seed money to startups that will have a significant impact on the technology industry. To date, we have invested in over 120 startups, mainly in Japan. From 2022 onwards, the company is focusing on investing in Web3 (Crypto, NFT, Blockchain) startups.
URL: http://skyland.vc
Get in touch with us by emailing; info@skyland.vc
