#211 Zoe Adamovicz: Neufund and the Case for Selling Equity on the Blockchain

Transcript

[Music] hello and welcome to episode show which talks about the technologies projects and startups driving decentralization and a global watching revolution my name is Brian Fabian crane and I'm a Harrow today we're gonna talk to Zoe adamovich who is the co-founder and CEO of knife on Noah fund is a new way to fund ventures that uses the ethereum blockchain and allow startups to access new kind of capital market essentially

Zoe welcome to the show hi everybody thanks guys for having me here so before we start tell us about your background and how you came to be interested in lock chains maybe I started with how I got interested in entrepreneurship because this is important that's my chain well I've always been an entrepreneur technology entrepreneur and maybe this is where one should start and you know I started very very early with building startups somehow successfully sometimes not successfully but you know like like like everyone in the Entrepreneurship space of course I was

you know often looking for funding and this is a little bit theory of knife and starts as well you know interested in blockchain weren't we all interested in blockchain ever since we heard about it for the first time right you know I guess there are the so-called Lockton enlightenment so this feeling when you suddenly understand how it really works and you think in decentralized terms I experienced you know it started experiencing it when I when you know when when the gray started picking up in 2008 of course because this is because the first time that we all started thinking you know like what's wrong with these banks and then you know the real sort of intermediaries and things I and

the trust and the concept of trust is trust started to you know be important for everyone but and you know and we had Bitcoin in an ether later and so on so you know like as an you know I guess early adopters are simply adopting so we started just getting and and hold these coins but the real interest as in you know as an as an as in the orange district contributing into this as as you know eagerness to to co-create that system was for me actually when you know shortly after he theorem ICO and with the first i ce o--'s craze right when this concept started picking up because

this combined with this you know with my mind of entrepreneurial career you know with this drive to build stuff right and find means to build this to build whatever to put whatever technologies in fact because if a blockchain is just one of many many really great technologies and then you kind of see that there is a way to fund technologies without the need to you know to approach this you know extremely fragmented complicated market of venture capital this is this is what i when i kind of properly thought how this is something that can really change the world right this is something where I can really see that one can do something about something to lower the barriers of entry for everyone who wants to

contribute to create to whatever right because you know if you think of venture capital or any financial markets the barrier to entry is really really high right I mean if you wanna start a start-up you need to know the people you need to you need to really put a lot of effort and you need to be born in a certain country ideally close to certain city like San Francisco right to even be able to start public markets you can forget about it do you know the starting point is you need to have six hundred fifty thousand euro so this is when I started thinking okay there's something here we can democratize the access to building no cool well let's let's speak about no fund much more in in just

a little bit I think you probably meant to say 2013 for no because somehow I thought I understood you are interesting 14 2008 which would be very impressive I mean 2008 the failure of the banks this is where one started questioning the idea of the interview yes right yeah and one started to think about the concept of trust you know this is I guess where we are mostly sociologists this background you know it kind of was I'm a sociologist and a computer programmer right in one so you know so these are so these concepts are very interesting for me by Jung 2008 was one was like wow what the I had money and now I don't disappear it may be just beautifully so you said you

started some companies before and you know some movie success some of that success there's like one very interesting or maybe difficult experience you had in that time and sort of you know the biggest lesson you took away from that informs how you go about things today you know how it is with the companies you do them for a few years so maybe I'm gonna talk about the one that was here before because this is the one that they still somehow remember and actually it also it also was the whole my way to to come up with an infant idea so you know the the startup that you know by the way the same co-founder that

they have right now we did together before was it the mobile space it was a search engine was also like a deep tech company were creating a search engine for for for digital items that don't have metadata so you went how do you search stuff that does not have text right and this company was acquired by a public by nasdaq listed company american corporation and you know for a while after that we had to we had to stay in the company asset typically after an exit right you need to be at the company and be one of these executives so you know from one day to another i became one of the executives of an aspect was discovered me and this is actually you know why we were

there for a bit more than here this company went through some you know rounds of financing on NASDAQ right as an issue if you share to get public money and what was stunning for me is that within one year when your allistic on a stock exchange it's a few times and you're more or less press the button and you know people are signing up for these shares or not right and this is going really really fast and it is kind of relatively easy you know but when you are a start-up founder especially early stage right when you have five Kapoor team let's say and you want to get a round of financing then it's gonna take you six months minimum from the idea to have money until when the money is in

your bank right and in the six months the whole team is doing nothing but fundraising right so forget moving products we did anything you run around the world with your pitch deck you know analog almost right and you need to just fundraise the same investors however you know that investing the super innovative companies expects from us the founders that we create focused across let's say within one year of time but six months of this one year we're fundraising and I thought this doesn't make any sense right because it's easier for me to see this it's easier for a huge corporation to fundraise than it is for the companies that are supposed to be fast and agile

quickly develop right so and that desire that this that I you know I was used to this you know VC process forever because this is the process I was then doing and I go whistle aha this is how the world works but no the world shouldn't work like that because this is kind of internally making obsess actually one thing that we also need to disclaim here actually we should have done this in the beginning is that so no we were gonna get to this and a little bit as this thing this initial capital building mechanism no fun which is little we like in IC o---- but works quite differently to and and both mayor and I participated not so we are not

unbiased in this matter the world is grateful so yeah you mentioned the issue of funding like raising funds and and Noah fund kind of solving a problem I remember you also mentioned at one point that initially you were looking at doing a tokenized VC fund like how did you envision I have that idea and then why did it evolve into this fundraising platform so we always wanted to build Noah fund as in you know the centralized stock exchange in a way right but the

question was the question was you know in order to build something like this you need to kind of address to communities in the world the blockchain community right on one hand and on the other hand this classical startup the venture capital community right because if you wanna if you wanna create a tool or an ecosystem or anyone and in particular note that watching companies but you know but the projects that that are not work-related it can be technology project but can be a coffee shop as well right then you need to somehow open up the election ecosystem to the rest of the world and you know when we're thinking how to do that and the first idea that we've had was like okay why don't we first kind of create a little classical fund internally you

know that consists of you know whatever classical VCS or angels and so on and and then kick start you know this whole process whippet right so we will first you to invest the companies that would you know that would eat you on a platform from that front right to kind of boost to kick-start it but then we thought that maybe we should do an ICBM so the initial capital building mechanism or initial community building mechanism actually which is a mechanism to to attract all kinds of investors experienced investors kept the community investors VCS and so on to to this concept right so we asked people to reserve or contribute certain amount

of capital into the platform this is the capital that we that we as founders there's a company we do not have access to we're not spending and your precious but we also do not manage it in two we do not deploy it into the companies right this is what the investors of themselves but this is like a signal of like okay I understood what the project does and in particular if someone is you know from the outside of the crypto community you know it forces someone to understand okay I understand how this project is going to work at my eyeballs are on the companies that are gonna eat so yeah so you mentioned is tokenize actually fun right so you guys didn't want to do that some reason in 10 so can you just now on a very very high level

like noise fund like what is the thesis of noise fund no I find Noah fund is like a decentralized Nasdaq okay no front is first of all first of all it is like Nasdaq or like any other stock exchange because you need to imagine a world in which any company can I peel right and the difference then between you know the kind of difference very simple difference for companies that you know they can IPO does that kinda to do with us is that because of the of the infrastructure of blockchain were massively lowering the barriers so entry

simply the cost barriers right in order to do an IPO today you have tremendous amounts of money so you need to be a huge company you also need to go through a month bunch of you know intermediaries like banks or brokers or and and imagine you could do this without that right imagine also that you could you know do an equity offering and you know write the prospectus and it's not going to cost you two hundred thousand dollars just to have it signed off and so anyone can do that right the other so the utility that we have for you know for companies is that we have this equity token you could go and you can say you know what I am NOT a blockchain company some other token although just

whatever shoe producer or I am a drone producer or I am Ledger the hard wallet that we have some know that Okamoto but naturally so so how do I do an eto or an IC oh well just take your share of a company and you put in induction from a bit open and then people sign up to the share by buying it so this is like an idea on the other hand would be opened also for investors is that uh you know we imagine people who do not necessarily have either or Bitcoin would be able to invest in this company simply but with euros right and we kind of put your us for damage chain as well so that's one you know but the other

thing the other thing that this you know for us kind of the most important part is the crypto community people is that this is supposed to be a decentralized exchange and what does it mean you know Nasdaq is owned by a company right there is a company that is operating this exchange and this company is making revenues and most of this revenues are huge part of these revenues are coming from from from fees that companies pay for you know registering the transfer ownership transfer and you know brokerage fees and things like that all of this blockchain is actually

doing right for us because if I am selling you my Bitcoin right then the ledger is taking care of the registration so these fees are down and thanks to this what we can do also is that are we created this token model on top so every investor no fund becomes an owner of the surco system simply by acquiring by investing the company is acquiring no marks right yeah so like I think the simplest way of describing know if one is as you said it does the perfect it's like a decentralized Nasdaq or decentralized stock market yeah and like when I read the NOI when people

I had I had exactly this idea oh this is a decentralized stock market that allows companies to sell equity and at some level because I because I come from India I get the value proposition of this thing very quick very like you know in a way that I think many people in the West might not so it's like in a place like US capital markets work really well you can issue bonds you can issue shares and for many instances intents and purposes they do work but when we go to an emerging market capital markets are not that efficient did

especially capital markets don't want to fund risky ideas really risky game-changing ideas yeah and even even when you go to emerging markets venture capital is highly on underdeveloped like venture capital is underdeveloped and venture capital itself is conservative and like when I see Noah and I'm like okay can we marry the risk-taking pioneering spirit of like crypto ether holders or our cryptocurrency holders that are willing to take a lot of risk with actually companies that need access to capital and these are mostly like to me these

are definitely there in the in the emerging markets yeah so it's like Noah fund is the place where like these two things can yeah so you know first of all you know can me marry let's let me answer this question first I think we definitely can marry these two because while you are right that's certain you know venture capital firms has become very conservative and you need the business model of venture capital is such that it only funds certain type of ideas and this is the so-called unicorn it doesn't the there is a lot of you know venture spirit that my friend and I guess this is well proven by the list of investors

that they have announced right we have like an amazing community of both disease business angels from the classical world also from private equity firms and investment bankers and you also have crypto community and we also have you know oscar-winning movie producers so it's like so I guess the the you know there is a lot of venture spirit among different people but it is not change in what the venture capital as institutional investors have have you know have kind of locked up themselves with right because they have their business case and they can only fund stuff that fits best in this case right and that caters to the needs of their their L piece but you know there's so many cases use cases right emerging markets you're completely right so because what we are

actually doing is we're doing it very easy for any company to issue shares and for any investor to buy them this is can work really well in you know in both emerging markets where these were these were you know we're discuss that markets are not operating that well but it also is a use case for you know for very well operating capital markets I'll give you an example you know I am sometimes a business angel and I like fun NIC nice ideas but you know there if there is a company doing be round or ass around and that even imagines a company that is struggling right and I really like the company that I wanna give that my hundred thousand euro nobody wants my hundred thousand euro because if you're in a B or C phase then then you it and

there is a board and there's again some kind of structure and there is a ticket size and there's syndicate building and all of that right so you see companies fail just because they didn't find someone who would give them a ten million euro ticket fair enough but if they couldn't offering you know with like smaller tickets that maybe they look at this you know from a lot of people but these mechanisms don't exist there's just no way you know so before we go further let's let's define what an equity token offering is on my phone you know you simply say let's imagine that you are that you know nothing about smart contracts and things like this even right so you you go to

some kind of interface boy font interface and then you say you know what I plan to sell you know 5% to 10% or 50% of my company's equity because I need funding and I'm measuring a certain amount of shares you configure an agreement between you and the shareholders you press the button and the system spits out a smart contract a token that contains these terms right that you offer it and then people are buying this using crypto currencies or or like or or Europe that's it from the Ute leather there's nothing more of course it's extremely complicated to set this up but uh but the utility is just

that's yeah I mean what I like a lot about this as well as you know we've ideas that have become this huge thing and lots of money has been raised and so there's all these projects and all these companies like oh this is great right now I can have access to just like wide range of people and and sell my you know sell my products of my visions of this company where is lots of money built this community right and and of course that's true but the problem is that very often or I think is this kind of model of having a token and the business build around this

token it works well in some cases but it doesn't make any sense and made in many cases and perhaps a majority of cases that we are seeing today doing icos right so I think it's like people basically trying to kind of shoehorn this thing into the ico to kind of ride this wave and that's that every now I many got many such you know requests of like people no no clue and god I want to do it I co to none and yeah and and it just doesn't it doesn't make a lot of sense by this legal issues which you know maybe can be solved but this was a lot lots of problems with it and that's just the nice thing about

having this kind of equity token offering because equity is a much more general thing but equity makes sense for almost any company it's like a universal token it's not like an abstraction about above token motors right it represents any business not just some products yeah exactly yeah and of course you also have to then the rights and obligations of an equity with it which again in some cases if you create this revolutionary decentralized protocol maybe doesn't make sense right there you really want to have a token and really want to do something like an IC o---- but in many many cases I think something like an equity token offering makes much more sense and so then you can basically maybe still have access to a very wide community you can kind of publicly sell

this project also built half this community a building aspect also after aspect of liquidity potentially you know very quickly but without having kind of the negatives or the things that won't fit with I SEOs so that's one of the things that I found very you know kind of appealing about or find very appealing about the vision and the product of no fun yeah no you're completely right I mean this is a this is this is exactly what we're trying to achieve here and you know a share per se is not a bad concept right it's like one of the greatest inventions of humanity I think and it's actually not so old and and you know we're kind of trying to

to innovate that even further because you know of course some of the contracts are also giving us you know a lot more tools to to kind of innovate on the concept of share you know you can combine you know equity tokens of utility tokens right you can give certain type rights to your shareholders that maybe you couldn't you wouldn't be able to give so easily or execute upon so easily with regular shares you know that you can you can create all this governance models and so on so this is this is um this is certainly amazing and and you're right I agree with you that that's our today everybody was certain I see oh and I also received calls from people who are asking me hey can you do a you know a token model on top of my

whatever bar right which is just doesn't make sense it's a bit like went web 2.0 when every company was turning the customers into the community remember those times what's your Vodafone customer and suddenly they would be creating a community of customers for Vodafone right and then it was all gone so I think we perceive the same of the tokens today nonetheless you know as much as there's a lot of you know the ICS have gained a bit of a bad reputation as well because they were in this you know huge rounds and sometimes kinda motors it's kind of normal that wherever there is money there is also scammers it's not only the domain of blockchain it's like this everywhere but you know the the

sheer process of you know raising capital this way the ICO process and you know that backed by blockchain where everything is so cheap because blockchain takes care of so many things like payments like transfer of Rights and so on um it's great right it's great we should just get up and make it better so even though the blockchain gives a lot out of the box what are sort of the hard challenges in building no phone we need to work with changing all the mindset you know I think that you know the technical part is of course a challenge but you know there's many many complicated complex projects and you

know France is just one of that but you know what is what is challenging sometimes is you know I still need to run around the world and fight with the perception of blockchain us you know or Bitcoin or crypto currencies in general as as the money for drug dealers and stuff right I still need to fight with the perception that we are trying to build something you do here you know so you know I'm hosting something about Noah funds and people just out of the blue asked me oh is it another pyramid scheme I'm like with your white paper I mean there's nothing about pyramids right but you know this perception is there and and you know you know even people who are willing to participate you know they have this reserve right the reservation they they're you know they want to figure out whether this is

legit and there's a lot of explaining behind that side this is the main main focus and the other is you know the world is actually not completely ready for blockchain it's right we see this on the regulatory level there is a lot of maintenance and it's great to see that you know a lot of countries are adapting to it but this is this is a task but this you know that it's not my task it's the task of the whole community and the whole world to adapt to this new well phenomenon blockchain is a fact we need to deal with this right now so that's another another challenge to be able to be this ever-changing landscape just just sort of to two more things I wanted to kind of bring up regarding

he's interesting maybe intersections because you brought it up briefly as well right between equity tokens and icos so one of the things if you look at equity how actually it's being raised by start-up you have this kind of fixed rupture at your seed round and series a rounds it's all kind of done in a very kind of standardized way and of course if you look today at at ICS we have seen an explosion of different models with like auctions and - often reversed up to auctions and like cap sales and on cap sales and then all kinds of stuff and and I don't know if this is gonna be feasible no fund but at least technically it seems like it should be

quite trivial to allow kind of plethora of different funding and pricing and sales model and structures as well are you planning to build that or will it be possible for people to basically implement their own sales mechanisms on top of no fun kind of without restriction of course I mean you know what we actually are if you deeper than this share utility level then we are a universal fundraising protocol so you know the are kind of specialty is this equity token and the fact that there is an agreement and the terms of an agreement that there's some how typical or standard for VC rounds you know there's vesting and Dragons and

Tagalongs liquidation preferences and so on so we provide the tools to configure this kind of agreement and spit it out as a toke okay as an offering but but you know we support also we can support also you know any kind of token city digitalgov tokens combined tokens and things like that and through this of course you can also combine any kind of really any kind of a Frank I mean us as long as it's not illegal and this is not a part that we actually take care of that it must be you know something legal you can do you know you can by the way on the on the public markets you can do this to some extent as well right you can you can have a cup or note you know

so any kind of motors are possible just that it will be always for it great so let's speak about this initial capital building mechanisms because this is also one of the things that me and I talked that we really liked it's just because it's a game the game theory is very clever so can you explain well what is this ICBM so interconnected ballast intercontinental ballistic missiles some people say initial capital building mechanism some people say and we also often say I like to say initial community building mechanism and why because it's not about creating a

capital pool because you know the whole crypto community is the capital pool and actually also with our interface to the euro everyone who has money is a capital pool right but but what we are trying to build around - is a community of people who are both who are all early adopters technical in technology investors or developers who understand tech products because that's what we start with you know we can also of course at some point ut-oh a factory or a bar but at the moment we're focusing on the technology projects the way it works is the following we are in a way although we are building

a serial blockchain we are in a way a separate block chain in the sense that on an abstract level right because the way for example Bitcoin works as we all know is that there is miners or many other block chains but this focus on beacon for a second there's miners who are contributing the useful work to the to the ecosystem or at foreign country this is the mining right and for contributing to skews for work there once in a while there's an algorithm getting a reward so once in a whi their mining themselves the Bitcoin right and there is a limited supply of those pacino but the whole ecosystem is you know it means these miners sustained and we're thinking okay what is what is the

useful work right in a in a fundraising echo system and this is of course the act of investment right so so the way no I found works is that if if you know if you are investing in some kind of video that happens platform so you buy a share in a company right you are contributing the useful work to the psycho system and for that you get the reward and this reward is the token of the ecosystem itself which is Noah Marc okay so every investor who ever invested the company in the on the platform biscuit is becoming a co-owner of the ecosystem of the fundraising ecosystem know America's

giving you two things you know our business model is that I you know whenever there is a successful ICO or eto actually then the company pays a percentage into the ecosystem of the success fee and this and this is going to deny mark holders right so if you have an oil bug then you know where every successful video you will see some actual ether or you're out in your wallet the the dough mark gives you this fee in two components one is the ether or the euros or the cash component but also the other component is a little bit of the focus of the company that has done a successful SEO right so with this the whole ecosystem kind of distributes you know the success you know its

success all the time to the holders of that of the die mark and builds like a portfolio as well of of tokens that also belongs to the ecosystem every whenever someone invests on the company becomes part becomes colder of this portfolio and also kind of gains the right to the proceeds from any successes internal stuff right this is how the platform works now right now we are doing the ICBM which is like a special offer the initial community building mechanism and we are telling everyone listen if you reserve some capital on the platform the queue will later that you later intend to commit or invest into the ETS on the platform then

already today you're gonna get some new marks you can already to then become the co-owner of the ecosystem right so today you reserved some capital and you get the new marks in the future we will have to invest some capital to get the network's but the idea is to start already to you know initiate is distributed the centralized exchanged as well yes so basically right that the logic here if you just sort of want to walk through it is okay so we could today say right so me me who booked it I say okay we're gonna basically put some ether into this platform right now this ether is still easier but it's sort of will be unlocked in this you know no fun smart

contract and it's still held sort of by us right and then in addition one gets some of these new marks now let's say in the future there's some great projects one can basically invest that and get equity in in those projects let's say no mark or no fund maybe there's no projects that we like then there's the option of basically destroying those no marks and withdrawing the money and paying kind of a 10% fine or if it happens before eighteen months or after 18 months withdrawing the money and no fine so it sort of if one has either the logic at least from my brother's everyone has

Easter it's almost like it's like an option on the success of knowing mark that's right of no fund yeah so that's very clever right because on the one hand want these people this kind of odd option to put money in and then of course that builds already kind of a pool of capital that can then be invested in projects now I imagine that will also be very beneficial for you know if companies are interested in doing so today see already there there are people on there who sort of now waiting for something to do with their money right because it's sort of allocated for the platform yeah exactly and yes and you know also in this ICBM you know we are you know we have

representatives of many funds we have representatives of PE firms you know and many professional investors as well so that of course you know any project that's gonna eto is going to get attention of this crowd immediately as well right so that's an additional value yeah cool so so in some sense as an owner of nine marks that that single knowing mark that I own is exactly is sort of a claim on the future fees generated by the platform and also the future tokens in various startups that are going to be part of

part of part of the community pool yes yes and this is also the difference between you know it's a gnostic and us right because here every investor who has a new mark and indirectly for this all new mark participates in the success of all companies that will ever ICO on this platform right enough like if you buy a sure you just have one share but you do not participate in the whole portfolio that occurs here you participate in the whole thing so and the thinking behind it was like okay whoever contributes work to the ecosystem should be rewarded you know should participate in the overall success on the side

yeah so what is the kind of governance of no marks like so for example is the supply of no IMAX fixed again still tell us about like you know the supply of no marks and like the governance of no mark there is a 1.5 billion invested so the thinking behind that limitation was you know how much capital do we think we need to incentivize with this new mark reward to you know to get this going right how much money is competitive to start with you know like

just to you know to to make it to start you know hoping for this to become the you know the fundraising ecosystem of the world right and you know if you would ever euro invested on the platform IMAX become more and more expensive so for the first hero you'll get more in our bags than you get for the second and so and so on and so forth yeah so there's also this company called fifth force Gambia that has a role to play in not in a knife in - so tell us tell us about like fifth force and its relationship with noise fund and then to now marks yeah so uh you know we're

bridges we're trying to bridge the world of the classical block chain you know so we need to operate kind of with the infrastructures and the ecosystem that exists today and so yes we had to find from the company it's a limited company that is you know there are people there developing the software you know and there is an office and salaries and so on and we think of this as they are you know like as an initiator as an initiator of the psycho system right us as a company that had to be there to kick started and create and booth first is like an operator and the the fifth force our lives

you know is or is dependent on the success of the whole ecosystem in the sense that you know if with every euro invested from the platform and every night mark you should v first heads gets another knowing mark right so we hold some of the new marks some of the dynamics that are created now the idea for the company for ourselves is that ah you know we would like to at some point to centralize this whole thing go together so it not thinking about some kind of classical exit as a startup but what we would like to do is a the moment there is enough movement and then ending of revenue and fees to you know to make this independent from any external sources of

capital you would like to actually heat your fifth force on this platform itself right and the central is the Coliseum completely and then of course we will introduce some you know some some governance models it would be completely decentralized as well that's the vision right whether we're able to achieve it yeah I mean that I have to say that is there were sort of two aspects here that I felt you know were sort of problematic or potentially problematic so one is what you put put now right is that essentially a fifth force gets you know for every knowing mark issued to an investor the field force also gets no mark so since this is sort of you know

the claims and all the future of this ecosystem you know half of those basically go into one company so that you know it sound like it doesn't feel very decentralized and then and then there's also just a question of simply you know to to what extent is there like a dependency on that and you know maybe when does that dependency go away at some point right because of course if you look at something I eat here iam sure I mean there was also dependency on the human foundation but you know even once the network is launched I think human would've survived without the foundation probably and so it wasn't that long my question is like how long is that dependency gonna be

here is there any way about you know actually getting rid of it maybe because of this bridge to existing believe your word it's harder to do that no I mean of course I mean so we will not get rid of it right but we one has to start somewhere you know and it is and you know in today's world it would be impossible to start a business without incorporating you know that's how the world works unfortunately at the moment so you know so that so the own chain only organization has tremendous you know regulatory problems I don't think would be ever able to to pull this off but so you know so as I said the idea is that you know eventually all new marks will be in the circulation right because

we're gonna eat you the whole company you're gonna eat you all the gay in Baja we're gonna be completely public and community owned and then you know the commedia is gonna cover in all nine facts that are in the circulation so you know while while this you know when yeah some people say okay but you hold half of the numerix well yes this is true but you know on the other hand you know we are taking but we're not a nice you're not asking community to give us any money right we never spent a penny of the committee on any of these operations you know so we are we needed to find some kind of way to finance these operations without asking the community for the nation and at the same

time we wanted to balance it in a way that we would be dependent on the platform success you know so we are fully incentivized to go in front echo system because we are dependent on the success of it because we are going to operate from the from the fees from the successes of the GTOs right yeah I agree with that I mean I think that is that is nice in that you know there really is kind of an alignment of incentives in that you know there's not like money going upfront to the company but the only money earned as companies actually issue equity so I agree on that aspect I think that there is a nice alignment

right but what about for example key parameters platform like there is nowadays 3 and 2 percent fees that are being charged to companies can you guys change that at kind of at will or is there some kind of governance mechanism there yeah so there is a provision that we would that we would be that we can change that we always need to ask more holders what they think and and you know that was important to have this kind of provision because we need to look a little bit at the market as well right so you know us there might be I don't know the competitor that is gonna offer a better deal or something right or we might need to optimize something or even maybe increase or decrease the fees so

this kind of mechanisms to be there ok but then so then there is a mechanism as well you guys building also governance into it so that knowing mark holders would actually vote on they would yeah they would influence the decision yeah so you know we need to here wants to be you know of course very careful because of course there's also like a speculation aspect and so on and industry this is such a sensitive decision you know like if you take this decision wrongly for example there's a competitor that you know takes only 1% let's say and let's say you know your shareholders I don't know start to behave strategically and they say or even this competitors purchasing you know from the one you know a lot of X Y then you make you can very easily end up in situations

where the company simply off the market because it's unable to make a competitive decision right so right now the way it works is that you know we're taking this decision fifth versus taking this decision but it's influenced by the community so we're going to ask the community of course because this is also entrancing down yeah so what kind of cost would this process entail for a company on our platform it's just a success fee okay but what about I mean if you now okay so so we have to create this prospectus you know probably half I don't know but what about time in terms of time how much time do you think it would take

somebody to create the perspectives depends on the complexity of the project right in to describe your business but it's all if you know everything that it's cost you as much time as on doing a start-up pitch deck or writing a white paper something like that it's really ok so dad so it literally is that easy to do night here in Germany like you have a perspective that's it I mean let's say now there no no I mean well you know IPO in Germany might be more difficult because you know certain docks for example has its own requirements that are you know are exceeding the regulatory requirements right so if you want to go to docks then it's a whole different story but if you wanna you know comply with

with the laws who have just the laws then we would we would of course as I said we would handhold you so you know depending on what round you wanna race how much money and so on we would kind of guide you through this process of configuring the proper offering the proper perspectives but yeah I mean this is that's it and and so this is in Germany right now you guys are excluding US investors at this point yeah just because the situation in the USSR is very unclear right so we actually we don't have to in a way to do this but we should save her to do this this way at the moment so okay and what about US companies could lucky US

company do this through the platform and just sell equity to non-us citizens and residents well yes but we initially won't do US companies we want the u.s. incorporated companies for now that's because the US law is just really so much different than anything else the u.s. securities law it's different and also it's structured in a way that it is you know encompassing the whole we kind of influences the whole world right so you know to reduce our own complexity you wanna stay away from this for now and we also think that you know that there is enough market out there there is enough enough companies that could

use that first so we're gonna do this in a later phrase oh okay cool but what's the still like so we have the u.s. is outright open companies and at least for the time being but then any other company in the world I mean maybe used to some kind of sanctioned countries whether I say yes any other country any other investor can use this without yeah so the investors need to go through the KYC was they not not you know not in the icbn process but for the eto yes they need to go through kyc of course I mean you don't want to have any money that you don't know the source of to acquire legal shares in companies right that should not be possible on ethical level

and any other level so but here in principle yes this is this is working for all jurisdictions that we have researched so far so this means you know mall as Western world style jurisdiction so the concept of share must be there it shouldn't be some strange religious law it shouldn't be some you know a some short country and so on the needs to needs to have a concept of a share that you can actually change in Bella you know for a number of cases when you configure your agreement we're gonna have like a you know like our like a tool to configure it simply but if you want to have a more complicated smart contracts a more complicated talk and maybe you know combined with utility dope and so on

some coding might be required right to to do like a proper smart contract or additional smart contractor that okay and and so how does this process look like from the perspective of people like angel investors who invested in a company before they did an eto so let's let's imagine like there's a company in Italy it had a set of tenant angel investors and now this Italian company does an eto and the the tokens that are ET owed are liquid but the original shares are not so what are they the token dto is liquid or not is the choice of the entrepreneur right so this is

very important to say because they were very used secondary markets and exchanges or crypto world but uh but you know but the entrepreneurs companies sometimes they don't want to be publicly traded because this is you know a whole new set of things that you need to take care of right or the main damages you know what we want to be publicly traded in a few weeks or something or months from now and so on so so we are not forcing this you know even with an equity token you can be liquid but you can also and this can also be in your smart contract you can just block the trade okay this is after an intrapreneur let this offer it's transparent and then the investors of course decide they didn't want to invest in a talker that is not tradable so that's the this is

this is how it works is the choice of the entrepreneur themselves so in this whole regulatory piece is everything clear as day or are there aspects that you yourself are uncertain about today you know we didn't want to build an you know like work around like strange offshore jurisdictions and things like this because this is you know this is difficult to handle and also I think the regulatory space around tokens is so fluid that you know if you go to some offshore jurisdiction or somewhere suddenly the law might change right it is not changing all the time so we didn't want to risk anything like this then you have a shareholders agreement with them as a founder if you want to

buy some bitcoins on crack and then you go through a very lengthy procedure and this is true for most exchanges because we're all obliged and regulated to do it this way and also you know in particular after the July SEC announcement right from the from the US supervisory the financial supervisory but there is an interpretation or I could think that you know that suddenly all the exchanges in America that we're trading or are still trading utility tokens they unknowingly were actually trading securities the result is that you know I guess on American exchanges I

have seen almost no new coins since July right because you know they are not licensed to trade security so they do not accept any new coins to list and I know for a fact that many of them are trying to obtain these licenses right now so you know what is going to change very soon is the text we're going to see a lot of exchanges that are gonna be able to trade securities that's simply where this market is going so in theory if and when equity tokens start working on block chains this is an enormous opportunity for crypto currency exchanges right because they started as crypto currency exchanges now they are handling

shares and ultimately who knows like if if this technology succeeds on a massive scale in 20 years not just Noah fund but everything else that comes then this could be the global stock market of the world that's right this is the go but you know this is the global stock market of the world and I know for a fact actually not sure if I can disclose it but you know let me just say it that you know I know for a fact that the major exchanges are looking at that and getting licenses as we speak okay so I know the third factor looking at many of those because of course for us it was essential to find like the secondary markets for those equity tokens yes for sure and how beautiful is that but of course if

you're if you're in exchange if you're a crypto currency exchange today yes you have this huge opportunity in front of you that you might be able to very seamlessly offer sick like not seamlessly would offer securities and those securities could grow and grow and grow those lists of securities but on the other side you have this decentralized exchange technology thread that may be all of these tokens on unlocked chains may not need exchanges at all yeah I mean this is something that you know for me to be honest is difficult to wrap my mind around because you know that today the way it works the decentralized exchanges kind of escaped their regulation or some regulation and because they they kind of are like

facilitators of peer-to-peer transactions right and this is regulated completely differently you don't grow me on that because I do not know that it is of it and I guess many lawyers you know what which would have difficulty to understand how to how to do that but but what you know as common sense what is a bit difficult for me to imagine is that uh is that is that you know that they're not only the regulator but you know the law as a as a set of rules that we ask you mind you want to operate within would allow an existence of some kind of gray market for real securities just because it technically works different so I think some kind of regulation should be there as well because

otherwise you know this could you know if there is equity topes or actually securities registered we no securities real money real connected to the real world right and they can be traded or operated with it some market were any kind of money including black man tourists money could be potential oh I don't think that this is something we should I don't think this is hope this is going to hold right oh it will be super messy in the beginning but I don't know you know I somehow I actually believe we gonna solve it because all of this is moving faster than the one thinks you know so so what's the timeline for now fund what can you tell us about kind of the

biggest events and dates that are you know coming up yeah Christmas this is going to be the time for holy days we're all looking forward to and then you know the late q1 we're gonna do our first idios already and before that you're gonna of course see some you know launch of the platform you're gonna be able to look at the product because Noah fund that from actually is almost ready I mean there's so some stuff to do but we're almost ready to do eto s and we're heading for a light q1 for that yeah and I guess maybe you should add also that right now

there so this is what type of building mechanism going on this month you're also going to see some cool announcements because there is really really really cool people join again yeah and it's gonna be going kind of mid-december and after that and after that we are getting ready for the first video so so so q1 first Ichiro's now are there some interesting features that you guys are planning or you know what's the feature set that you guys are launching with in q1 well you will be able as a so first of all the first companies that are

gonna eto works we're gonna you know we're kind of good at this almost incubated environment you could say so it's not like we're gonna open the platform and in one kinesio because this you know has a huge potential for explosion so the first it use is going to just a few first ones like companies that agree to test that with as the brave you the brave guys in the future said this yes you can you know configure your token or equity token you can launch it as a proposal propose the investors to buy it investors can purchase it with ether or euro they can manage this investment so there's like a dashboard and you see how many deals you have how much euro or

ether you have to spend on the platform and and yeah and and how many tokens of what companies do you have and of course also how many know what's your ownership of the ecosystem and then after that there is also for the for the founder there's like a capital manager you could say so you know you will have many shareholders so you will as an entrepreneur so you will wanna for example the shareholders resolution I don't know I don't know whatever you want to exit the company for example right and you'd be considered a shareholders so there's gonna be also smart contract coverage couple table manager right where you will be able to do those and this is

like the very first initial feature set for us cool that's exciting well Zoe thanks so much for coming on it's a pleasure talking with you and about this exciting project thank you thank you guys yesterday of course gonna link to some of the resources to have a comprehensive white paper and a shorter more digestible light paper yes as well and yeah so people want to check that out they can do that and yeah thanks so much to our listener for once again tuning in we're gonna be back next week in the meantime if you want to support the show you can do so by being a review for us also the nation if you would like to yeah thanks

so much for the quote see you next [Music] [Music]