Thanks for your interest, broadband commentary and very good questions!
Neat idea. Will wait for the final terms, but so far this does not seem attractive to a crypto holder right now.
You predict 10x exit, which is a bit of an overreach. Your 2014 fund 1 has a TVPI of 2.9. Average angel exit is 2.5x after 5 years of investment*. I will assume that the 2016/2017 batch will have an exit of 2.5x in 2021.
Currently, your SPV is valued at 3 million. By selling 1/3 of the SPV for 1.5 mil, you effectively value the SPV at 4.5 mil. In the average scenario, your fund will be worth 3*2.5 = 7.5 million in 2021. You will return a third of it to the cross-coin investors, or 2.5 mil. Thus, in five years your crosscoin investors will make 2.5/1.5=1.66 return or just 11% year interest rate. You incorporate a token firm in Singapore with no legal obligation to repay anonymous investors. 11% yearly is simply too little interest for such high amount of risk.
Good estimations, I'd say not very pessimistic, but I either can't say ours are very optimistic too.
Probably 2,5X average angel exit is based on early stage angel investments. But in the case of Starta portfolio you are investing in 21 tech startups with a traction made in the USA and some of them have already raised further rounds of investment at higher valuations than nominal portfolio value. It reduces risks of investments and increases a probability of profit gain.
And that's why Starta Accelerator partners don't agree on a nominal SPV valuation, now it's should be valued at a hire price.
Also, your assumptions are based on 5-year return expectations, but the first exit of any of startups can take place at any time, even during this year, don't forget that it's a venture business.
After every exit Starta Accelerator 16/17 will distribute a profit to limited partners, including Cross Coin, wich will distribute it through a token buyback at a market price. As you understand, in this case, a token price will rise significantly and token holders will be able to gain profit from it. After that, the number of tokens on a market will reduce after a buyback ant this will help to support the token value.
Do you think it's not interesting for crypto holders and traders?
Furthermore, your token will be effectively tied to the USD rate in the first year. You collect approximately 1.5 mil worth of Ethereum/Bitcoin, and you need to buy the tokens back. Say you did not sell your ETH or BTC proceeds, and ETH and BTC appreciate in value. Now you can buy back all the tokens at a reduced rate, and still have some crypto's in your wallet.
I agree that many crypto holders prefer cryptocurrencies only and it's ok. But many of others are looking for alternative investments including in non-crypto assets to diversify their portfolio. In this case, I think venture investments are more attractive because of potential upside.
Cross Coin committed investing a raised amount in Starta portfolio and will do it.
This project is great for your VC fund - it improves short-term cash flow and reduces your downside risk. For ICO-investors - not so attractive. This is equivalent of investors holding a cash position in USD.
This ICO is good for Starta Accelerator, it's true, just like for many companies launching ICO here. But it's also good for token investors and I explained why. Also is good for a crypto economy, because, in a case of liquidity events, Cross Coin will bring more cash from a fiat economy.
This ICO concept that you propose works great for shares, but not for debt. For individual start-up investments, but not for a portfolio of 21 start-ups. This is why I think it may work well for your startup Suretly. For Suretly, an investors expected return is still 11% per year, but the possible upside is much higher than in a portfolio of 21 start-ups.
You are absolutely right - equity investments are more interesting in a venture business because of potential upside. And in a case of this ICO, Cross Coin is investing in the equity of 21 startups, including mentioned Suretly (Starta Accelerator portfolio company). After any of exits with potentially high valuation, Cross Coin will receive its fair share of profit and utilize it to a token buyback where smart token holders will earn an additional profit on a price volatility.
Thanks for questions again.
If something is still unclear, please don't hesitate to ask again, it will help us to prepare a list of FAQs.
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