Bancor Meets SPiCE VC: Bringing Liquidity to Security Tokens

We believe all paper-based security certificates will eventually be replaced by digital securities on the Blockchain.

Ami Ben-David
Nov 12, 2017 · 7 min read
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(Photo credit: Dael Shalev)

Enter SPiCE VC

SPiCE is digitizing the securities of its venture capital fund, which will invest in technology companies (to learn about the fund’s investment thesis, visit www.spicevc.com ). The fund was founded by a team of entrepreneurs including Carlos Domingo, former CTO of Telefonica and a VC investor, Tal Elyashiv, former CIO at Bank of America and founder/angel investor of multiple startups, and Ami Ben David, serial entrepreneur, founder of EverythingMe and a product innovator.

Because the analog structure of VC funds is severely limiting the resources available to tech innovation outside Silicon Valley and the closed networks of the influentials.

Yes, VCs are funding the biggest success stories and the coolest unicorns, but to invest in a VC fund, you have to be able to afford to say goodbye to millions of dollars, for 7–12 years. You won’t see a cent until the exits arrive, if they do.

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Security token potential in the Venture Capital space.

How blockchains helps — tokenizing securities

SPiCE uses the concept of security tokenization to solve the illiquidity problem in a very simple and elegant way.

  • The tokens entitle holders to their pro-rata portion of 100% of net exit money. (So the fund returns money very much like a traditional VC fund)
  • These tokens are also tradable.

Why Blockchain?

We’ve been asked many times why blockchain is needed to achieve this goal, instead of traditional software platforms?

  • The simplicity and minimal costs of issuing tokens. Public stock exchanges provide a similar function in a centralized way, but they are prohibitively expensive and complicated. In comparison, security tokens will be simpler and less expensive even when compared to the current paper based model.
  • The ability to trade fractions of ownership, instantly with anyone in the world in seconds, 24x7, as opposed to the manual lawyer alternative which is extremely complicated, expensive and slow.
  • A ready-made global, transparent marketplace.
  • Smart contracts, enabling the parties to embed sophisticated business logic into each token.

More Liquidity = More Inclusivity

With blockchain tokens and increased liquidity, more people can finally participate. That’s also where regulators come in, to make sure that the public is shielded from abuse. SPiCE is working under existing regulations in each country, and therefore can market and sell its digital security-tokens only according to those regulations. For example, in the US SPiCE is working under Reg D, 506c.

Security Tokens Meet Bancor

With the digitization of securities, new models of liquidity are suddenly made available that were not imaginable in the paper-based world. One of these liquidity options is the solution offered by the Bancor Protocol, which uses a smart contract’s ability to own another token in order to network tokens (and prices) to eachother.

We strongly believe bringing liquidity to securities is one of Bancor’s top killer use cases, with applications potentially far beyond utility tokens in scope and market size.

Unlike cryptocurrencies where there are only a few leading currencies (Bitcoin, Ether… though certainly many more are expected in the future), when securities start to become tokenized, every fund and every company may want to have its own security tokens. There will be a very long tail of securities, and not all of them will have buyers and sellers at the same time.

Example Use Case

In reality, how does liquidity help VC fund investors be in a better position than non-liquid, traditional VC fund investors?

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We believe making all stocks and other securities digital, will do to the business world what streaming music has done to vinyl records — it will allow securities to flow much more freely and efficiently, and will revolutionize the concepts of ownership.

SPiCE is a new Liquid VC fund using tokens to disrupt the venture capital space.

SPiCE was founded by a team of entrepreneurs including Carlos Domingo, former CTO of Telefonica and a VC investor, Tal Elyashiv, former CIO at Bank of America and founder/angel investor of multiple startups, and Ami Ben David, seriel entrepreneur, founder of EverythingMe and a product innovator. Advisors include Eyal Herzog, Product Architect at Bancor, Loic Le Meur, founder of Le Web, and Brendan Eich, inventor of Javascript, and founder of Brave (BAT).

To learn more about SPiCE, go to www.spicevc.com

Or join us Telegram: https://t.me/spicevc

To learn more about Bancor, head to https://www.bancor.network/

SpiceVC

Disrupting the world of venture capital with the Blockchain

Thanks to Galia Benartzi

Ami Ben-David

Written by

Founder and CEO of Ownera.io, the Digital Securities Institutional network. Formerly co-founder of SPiCE-VC, Securitize, EverythingMe, Ki-Bi, AladdinSoft.

SpiceVC

SpiceVC

Disrupting the world of venture capital with the Blockchain

Ami Ben-David

Written by

Founder and CEO of Ownera.io, the Digital Securities Institutional network. Formerly co-founder of SPiCE-VC, Securitize, EverythingMe, Ki-Bi, AladdinSoft.

SpiceVC

SpiceVC

Disrupting the world of venture capital with the Blockchain

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