Funderbeam, an Estonian company that offers data-intelligence on startups for angel investors, has announced it will launch a blockchain based trading platform for startup-investment. By doing so, the company that is – among others – funded by Skype co-founder Jaan Tallinn sets out to create liquidity in the startup marketplace.
Currently, Funderbeam offers a guide to help angel investors and entrepreneurs discover, benchmark, and analyze startups, using data from services like AngelList and CrunchBase. Next, the company is planning to add two new layers to its product: automated investment syndication and a cross-trading platform.
Through the syndication layer, investors can create an investment syndicate for one or several startups listed on Funderbeam. If a certain startup requires, for instance, €100,000 in funding, this money can be put up by a syndicate of one lead investor and 99 backers all putting up €1,000, or a syndicate of one lead investor and one backer both putting up €50,000, or any other combination adding up to €100,000. Diminishing the current threshold to invest in startup companies, digital verification and regulatory compliance are offered by Funderbeam.
Once a syndicate is complete, and the startup (or startups) is funded, Funderbeam will establish a blockchain based aftermarket. Using colored coins, all members of a syndicate will own a digital representation of their stake in that syndicate. These stakes are then immediately tradable on Funderbeam's blockchain based market platform. As such, backers can for instance sell their share once they have made a decent return - or if they want to cut their losses.
Speaking to Cointelegraph, Funderbeam CEO Kaidi Ruusalepp explained:
“The main problem we are trying to solve is that startup investments are very illiquid right now. If you want to be an investor, you need to start with at least €10,000 to €30,000, and you will be stuck in that investment for at least five, maybe even six, seven or eight years. Our required minimum to invest, on the other hand, will be closer to €1,000, and you can immediately start trading the shares in these startup syndicates once they are funded.”
Funderbeam believes that by utilizing the Bitcoin blockchain, it can cut out a lot bureaucracy and needless intermediaries that are usually associated with stock markets and trading platforms. Furthermore, it expects to be able to deliver speed, transparency, and liquidity to early-stage investing.
Ruusalepp:
“Blockchains are going to do for the financial sector what the internet did for daily live as we know it. Stock exchanges have very many intermediaries between the money and the company. Securities depositories, central banks, central counterparties, brokers, dealers, account operators [...]. The blockchain is taking the role of some of these intermediaries. So it's making the process easier, cheaper and cross-border.”
Funderbeam's announcement is another indication that the financial markets are warming up to blockchain technology. Greenwich Associates published a report last week in which the financial industry consulting firm predicted that blockchain technology would be embraced by capital markets. The NASDAQ stock exchange, moreover, expects integrate blockchain technology before the end of this year, while the former CEO of the Chi-X stock exchange launched a blockchain startup earlier this week.