[ANN][NEU][FTH] 🚀🚀 Neufund. End-to-end asset tokenization and issuance. 🚀🚀

[panor]

Of course we can respond to your questions. Please find responses from our lawyers below in the text.

his is something we are saying from the very beginning. ICO era will end sooner or later. Fundraising in an unregulated manner when everybody is trying to say that they release utility tokens can't stand. Neufund stands that it's a kind of security (depending on jurisdiction there might be different classification) if you use tokens for funding of the company (which was exactly said in the latest Swiss regulatory publication)....

Well i really like this project. But it would be nice if your lawyer could answer shortly 2 questions. Because in the Whitepaper and with your answer here you (as a company) always dance around 2 questions.

1. What classification under the german laws do you guys hope for how the ETOs (not Neumark) of the companies that you plan to fund will be treated from Bafin?
As "Finanzinstrumente" (financial instruments is a legal term in germany), "Wertpapiere" (securities) or what else and under which of the many laws do you *want* to be classified (WpHG, WpPG, VermAnlG)? What would be your goal?

We expect that equity tokens are qualified as Finanzinstrumente (financial instruments), but not as securities (Wertpapiere). Instead we believe that equity tokens in the current structure are Vermögensanlagen (investment assets). In this case the offering would be subject to the German Banking Act (KWG) and the Investment Asset Act (VermAnlG).

2. In your whitepaper you write that you plan enabling trading of the ETO tokens on your patform. So what kind of license do you think you require from Bafin to do this? No law essay just an answer whether you think you are "multi lateral trading platform" (thats a legal term in germany) or a fully fledged Exchange? A LOT depends on those things.

Currently, we are not planning to enable trading of equity token on our platform. We are focusing strictly on primary market. We plan to organize secondary trading with our partners. However, we think that any platform that allows trading of tokens - regardless whether equity, utility or currency tokens - requires a license as a financial institute (not as a bank).  

The Bafin starting with the end of last year has issued a series of some sometimes quite severe warnings:
the Nov statement is a especially worrisome for this project:

Therefore, undertakings and persons that arrange the acquisition of tokens, sell or purchase tokens on a commercial basis, or operate secondary market platforms on which tokens are traded are generally required to obtain authorisation from BaFin in advance.

source:https://www.bafin.de/SharedDocs/Veroeffentlichungen/EN/Fachartikel/2017/fa_bj_1711_ICO_en.html

so the Bafin states that BEFORE you launch the platform you need to have a permission from Bafin.

When are you planning to apply for this license? I could not find ANYTHING on the web that you have applied. How long do you think it will take to get the license? Do you think you can start with the ETOs this year, or do you think it will take longer?

We are in discussion with Bafin about this and are in ongoing conversations which exact license is required for the platform in the type and form we are intending to run it. We are confident that we will be able to launch ETOs as planned.

If BaFin receives information indicating dealings which might be prohibited, it investigates them and, where necessary, intervenes by administrative means. Independently of this, trading without the required authorisation is punishable by law and the law enforcement authorities are responsible for the prosecution of such criminal offences.

So to sum up you really need your permission before you can start your platform. And therefore you need to think about as what you want to be seen (legally).

We believe that equity tokens are investment assets (as above). Offering those will be similar to crowdfunding and is exempted from the requirement of a permission as a financial institute. However, we are in discussion with Bafin to get this view confirmed. Since the inception, Neufund’s mission has been to bring the Blockchain fundraising out of the regulatory grey zone, and enabling a fully compliant Blockchain-based investment process. For the protection of investors and companies and, last but not least, our platform will be launched only in a fully compliant setup and framework.

As you can also see from yesterdays European Commission meeting (http://europa.eu/rapid/press-release_SPEECH-18-1242_en.htm) where France and Germany already issued common letter on cryptocurrency understanding everything is heading in the anticipated direction. Setting regulations and directions for the future development is all in progress and that's why there is a lot of uncertainty. Projects which are in dialogue with the regulators from the very beginning are part of the movement that's gonna shape the future regulations and directions for the blockchain industry.

[panor]

Our latest blog post with information how to register on the Neufund Platform to invest in ETOs:
https://blog.neufund.org/how-to-register-on-the-neufund-platform-to-invest-in-etos-618d4d8bd32b

[identifyuser]

Our latest blog post with information how to register on the Neufund Platform to invest in ETOs:
https://blog.neufund.org/how-to-register-on-the-neufund-platform-to-invest-in-etos-618d4d8bd32b

thank you for the detailed description of functionalities platform, it will be useful to potential investors who are interested in the project

[panor]

Neufund's CEO just got mentioned in the Frobes article: https://www.forbes.com/sites/montymunford/2018/02/27/five-female-rock-stars-leading-the-crypto-scene-in-2018/2/#11ba79234cd0

[BNO]

@panor: Thank you for taking time and writing this good answer! I appreciate it! I am getting tempted to invest in this more and more.

One more question about this. Lets say the Bafin says the ETOs are securities, how difficult /what problems would this cause?
I googled this a bit and read in the law/statements from Bafin and i must say it doesn´t even sound that bad if it would be a security and you would be classified as "Finanzdienstleistungsunternehmen" (financial service enterprise). For examplef the minimum capital requirement to be an "Investment bank" ("Wertpapierhandelsbank") was a staggering LOW number of unbelievable 730.000€. You might need 2 CEO´s with experience in banking tho.
For companies that are in the placement business the minimum capital requirement is just 50.000€ - what is basically nothing.

And since your Fifth Force GmbH raised 12 Mill. euro and is backed by Private Equity giant KKR, you have good access to capital.
I was really surprised how undramatic this all sounded.

Am i overlooking something, or why is it from your perspective important/or better if the classification is "Finanzinstrumente" over securities?

[panor]

@panor: Thank you for taking time and writing this good answer! I appreciate it! I am getting tempted to invest in this more and more.

One more question about this. Lets say the Bafin says the ETOs are securities, how difficult /what problems would this cause?
I googled this a bit and read in the law/statements from Bafin and i must say it doesn´t even sound that bad if it would be a security and you would be classified as "Finanzdienstleistungsunternehmen" (financial service enterprise). For examplef the minimum capital requirement to be an "Investment bank" ("Wertpapierhandelsbank") was a staggering LOW number of unbelievable 730.000€. You might need 2 CEO´s with experience in banking tho.
For companies that are in the placement business the minimum capital requirement is just 50.000€ - what is basically nothing.

And since your Fifth Force GmbH raised 12 Mill. euro and is backed by Private Equity giant KKR, you have good access to capital.
I was really surprised how undramatic this all sounded.

Am i overlooking something, or why is it from your perspective important/or better if the classification is "Finanzinstrumente" over securities?

The answer is a bit “legal”. Securities and Finanzinstrumente is not necessarily something different. Actually, securities (Wertpapiere) are a subcategory from financial instruments (Finanzinstrumente). Investment Assets (Vermögensanlagen) are a further subcategory from financial instruments. Hence, we do not mind if equity tokens are classified as financial instruments, we even advocate this. The issue is not so much the license to obtain, the issue is more that securites come with a lot of other obligations. Many of those we also do not mind, anything that is related to prospectus, publishing information etc. we even very much favor as we stand for transparency and compliance. But one requirement blockchain cannot fulfill and that is a required connection to Clearstream which is the central settlement agency for any transfer and trade of securities. Not only would it contradict the basic philosophy of blockchain of being decentralised, but it would also not be technologically possible.

One more thing - 12Mil Euro was not raised by Fifth Force. It's a capital which still belongs to investors to further use on the platform (it was just commited in the smart contract). Fifth Force is in any way in control to commited funds.

[jk9694]

thanks to the first I see that the team so thoroughly worked through the questions and answered them in detail, but there is not enough advertising for the project

[Camus]

Neufund's CEO just got mentioned in the Frobes article: https://www.forbes.com/sites/montymunford/2018/02/27/five-female-rock-stars-leading-the-crypto-scene-in-2018/2/#11ba79234cd0

Rock Stars on the Crypto Scene is a worthy title, congratulations to Zoe, she's done a lot for the crypto industry.

[panor]

thanks to the first I see that the team so thoroughly worked through the questions and answered them in detail, but there is not enough advertising for the project

Thx, marketing will come later. We are currently in a process of building the marketing department while working on the platform launch.
We AIM to build a product and create marketing around it, not the other way around. Hype driven projects are not ending well. It helps for the short term goal and quick revenue, but in the long run it makes a lot of problems for the product as it's becoming hype driven.
We are aware of that and are working on the next steps in this area.

[BNO]

But one requirement blockchain cannot fulfill and that is a required connection to Clearstream which is the central settlement agency for any transfer and trade of securities. Not only would it contradict the basic philosophy of blockchain of being decentralised, but it would also not be technologically possible.

Clearstream... I am investing in stocks for 20 years now and i didn't think a second about it!!
Oh thanks i really love those substantiated "a bit legal" and honest answers  

I more and more see your strategy here and i think this is really the way to go. Try to meet regulatory demand as far as possible. And the for last 20%, trust that regulators will have a friendly look on this. They did with crowdfunding and i think they will with tokens. Because if they would reject neufund its very clear what means: the legal way is killed, so all the more illegal scammy ICO from overseas... I don't see the BAFIN as anti-Blockchain, they are more prudent, but hey that's how regulators are...

One more thing - 12Mil Euro was not raised by Fifth Force. It's a capital which still belongs to investors to further use on the platform (it was just commited in the smart contract). Fifth Force is in any way in control to commited funds.

Oh no i know, i read every single page of white- and lightpaper, legal documents and whatever you have online. I wasn't talking about the 12 mill from your ICBM, i was referring to you crunchbase profile which states that you as a company got 12mill (kinda coincidence that both amounts are the same):
https://www.crunchbase.com/search/funding_rounds/field/organizations/funding_total/neufund

partly from the legendary firm KKR. Which is impressive in itself.

Thx, marketing will come later. We are currently in a process of building the marketing department while working on the platform launch.
We AIM to build a product and create marketing around it, not the other way around. Hype driven projects are not ending well. It helps for the short term goal and quick revenue, but in the long run it makes a lot of problems for the product as it's becoming hype driven.

Oh this is really strucking a chord with me!! Say no to this BS hyping and keep building this up in a calm and collected way. This project has enough potential and does not need hyping.

For the people here always asking for "PUMP IT MORE BRO" a little story from my experience of the potential of this idea:
I was 18 when the "german Nasdaq" ("Neuer Markt" ~ New Market) launched. I remember it well how it started and it became a HUGE success in 2 years. I was immediateley hooked, even started managing funds for other people. I never had a summer of 69 but i sure had my summer of `99 there was an unbelievable energy and optimism. Companies from all over the world wanted to get listed here. 2,5 years after the segment startet they had around 120 companies with a total worth of 56 billion market cap (imagine you get a 2% cut of this) 3 years later at the All-time-High they had over 200 companies listed with total worth over 230 Billion €. Larger than the GDP of many countries. This project reminds me a lot of the New Market, its even better in many ways.... (earlier financing, first mover advantage, new technology with clear advantages, creating an new asset class...)

Not that you guys would need it but there are 2 lessons one can take away from the cometic rise (and fall) of the new market:

• If the first 2 emissions are a homerun there is no holding back, segments that provide capital to new promising technologies tend to explode in unbelievable ways.. The first Company that got listed on the Neuer Markt was Mobilcom. If i remember it correctly they trippled in the first month or so. After that the ball got really rolling: Investors flocking in in hordes, companies would "chopp of an arm" to get in (on a side note the 3%/2% fee is nothing, companies would pay 9%/4% in an blink of an eye if they see that they raise large amounts of capital quickly), first germany, than it spread over europe, than companies even from overseas wanted to get a listing.
• Why did it end? Well the quality of the companies that got a listing detoriated over time tremendously. Scam artits entering the scene, false bookkeeping, market manipulation. Some of the CEO's got prison for this . It was a huge shock for the public, that the CEOs that were treated as rockstars, now sitting in court sounding like total idiots (The CEO of "Comroad" got inglouriously famous because he could not explaing in court what "Sales" are), and going to prison later. The public image of the New Market got so bad the "Deutsche Börse" (German Exchange) had to close the segment and rebrand the index to "TecDax".

So what to take from this: Imho quality does matter. Hype can make anything a giant for a short period of time, but in the end only quality passes the test of time...

O.K. i got a bit carried away with memories - i hope it wasn't boring for anybody.

To sum it up: I must say my point of view on this project has quite changed from "yeah hell of a potential, but how to make this legal", to "damn i really should have gotten in this earlier at ICBM time"

Everybody have a good one!

[panor]

@BNO thank you for the kind words.

Something that might interest everybody. We just released a one pager with a summary of our ETO process:
https://neufund.org/docs/onepager

[BNO]

@panor: could you or somebody else shortly answer those 3 questions, since i want to participate now, so that i can mentally mark this done for me. Thx.

First question would be on which communication channel will you communicate first when the plattform opens for investors (i mean the ones that come after the ICBM like me). I am usually quite busy and need a secure mechanism to remind me when this thing launches. This thread here? Reddit any other option better`?

• in the whitepaper it states:
  

  Funds locked during the ICBM gain priority access to company ETOs, so
  investment tickets acquired for those funds will be executed before tickets coming
  from the general public ( first look right ).

  Lets say gina locks up during the ICBM funds worth 1000€.
  The first ETO of the SUPER CORP she likes so much that she wants to invest more than the 1000€ she deployed originally, it is still 1 week till the launch of the ETO, so she decides to send another 1000€ to her account.
  
   Tim who has not participatd in the ICBM sends his funds the same day but many hours earlier then Gina.
  
  Now the question: For the first 1000€ of Gina´s account the case is clear she has participated with them in the ETO, so she gets served before Tim (first look right). But what about the 1000€ she deployed later who gets the ETO´s shares first Tim or Gina?
  The question boils down to whether only the funds originally deployed have a first look right or the person participating can refund unlimited and those funds still have first look right. Which from my perspective would be really sad because than it probably makes no sense to invest as a "latercomer" (aka "me")
  
• So lets say the first ETO successfull, Gina invested her 1000€ in the SUPER CORP. Now comes the 2nd ETO the EVEN BETTER CORP. She likes it so she sends another 1000€ and bids for the 2nd ETO. Does this 2nd batch still have first look rights or is she processed in the qeue of investors who didn´t partake in the ICBM on a first come first served basis like everybody else. Or to put it another way do investors that partake for e.g. 1000€ in the ICBM have a lifetime first look right to invest 1000€ in every ETO there is (given that they "reload" the capital every time) or is it only the original capital that partook in the ICBM that has firstlook rights ? Then againg i don´t need to bother with NEU to long since the first 12mill have "unbeatable" adavantage

thx! And good luck with everything...

[panor]

@panor: could you or somebody else shortly answer those 3 questions, since i want to participate now, so that i can mentally mark this done for me. Thx.

First question would be on which communication channel will you communicate first when the plattform opens for investors (i mean the ones that come after the ICBM like me). I am usually quite busy and need a secure mechanism to remind me when this thing launches. This thread here? Reddit any other option better`?

We communicate big news on all channels, so it goes at the same time to: bitcointalk, reddit, twitter, facebook, telegram, blog and will go to newsletter (you can sign up here: https://neufund.org/#newsletter). So if you monitor only one channel that's enough for the NEWS. Of course it's harder to spot in places like forum where it might get scrolled up.

• in the whitepaper it states:
  

  Funds locked during the ICBM gain priority access to company ETOs, so
  investment tickets acquired for those funds will be executed before tickets coming
  from the general public ( first look right ).

  Lets say gina locks up during the ICBM funds worth 1000€.
  The first ETO of the SUPER CORP she likes so much that she wants to invest more than the 1000€ she deployed originally, it is still 1 week till the launch of the ETO, so she decides to send another 1000€ to her account.
  
   Tim who has not participatd in the ICBM sends his funds the same day but many hours earlier then Gina.
  
  Now the question: For the first 1000€ of Gina´s account the case is clear she has participated with them in the ETO, so she gets served before Tim (first look right). But what about the 1000€ she deployed later who gets the ETO´s shares first Tim or Gina?
  The question boils down to whether only the funds originally deployed have a first look right or the person participating can refund unlimited and those funds still have first look right. Which from my perspective would be really sad because than it probably makes no sense to invest as a "latercomer" (aka "me")
  

Whitelisted are addresses of the ICBM participants and the amount of money they commited. So to answer your question currently if somebody would send another 1K then this person would have still ony 1K whitelisted. (response was fixed due to the wrong information in the previous version - clarified in the post https://bitcointalk.org/index.php?topic=2335433.msg31322774#msg31322774).

• So lets say the first ETO successfull, Gina invested her 1000€ in the SUPER CORP. Now comes the 2nd ETO the EVEN BETTER CORP. She likes it so she sends another 1000€ and bids for the 2nd ETO. Does this 2nd batch still have first look rights or is she processed in the qeue of investors who didn´t partake in the ICBM on a first come first served basis like everybody else. Or to put it another way do investors that partake for e.g. 1000€ in the ICBM have a lifetime first look right to invest 1000€ in every ETO there is (given that they "reload" the capital every time) or is it only the original capital that partook in the ICBM that has firstlook rights ? Then againg i don´t need to bother with NEU to long since the first 12mill have "unbeatable" adavantage

Currently ICBM participants are whitelisted only for the money they commited. If the want to receive new NEU they they can use new funds and keep their whitelisted for further investment.  (response was fixed due to the wrong information in the previous version - clarified in the post https://bitcointalk.org/index.php?topic=2335433.msg31322774#msg31322774).

[BNO]

Post deleted. I don´t want to confuse new readers, what only matters are the corrected (new) answers from Neufund, you can find them below.

[rudolfix]

Hey BNO

Thanks for this analysis. This is exactly why first look right is limited just to funds stored in ICBM smart contracts. No "new money" is whitelisted and it does not matter who holds the funds - "old investors"'s "new money" is not privileged in any way (in other words we give first look right to funds not people). Please also note that whitelisted "old money" will not receive new NEU for the investment. They already got them during ICBM. They are still incentivised or to skip whitelist or do add new money later to get more NEU.

You are right that having unlimited whitelist would discourage new investors from coming.  Considering this (long time ago) we had same conclusions as you are.
I'm sorry for the confusion, when talking here with Panor we indeed used "forever whitelisted" but this means "forever for icbm funds - until you spend them" not "forever for certain investors". It's like communication in aviation, we constantly improve how we talk about platform but sometimes some inconsistency slips in

[panor]

Rudolfix clarified what I wrote - sorry for the mistake in the previous post. I misunderstood one internal document.

I will fix it in the history so people who will go through the forum won't get the wrong response. Thank you for pointing it out.

[BNO]

No "new money" is whitelisted and it does not matter who holds the funds - "old investors"'s "new money" is not privileged in any way (in other words we give first look right to funds not people).

Huge relieve!!

but this means "forever for icbm funds - until you spend them" not "forever for certain investors".

So to REALLY clarifiy this: lets say investor x invested during the ICBM 1000€, he invests them in the 1. ETO (for this he has first look rights which is ok).
Could you explain what "happens to his first look rights regarding the future"? Lets say he sells his shares of the first ETO, does he then have for the next ETO for 1000€ again first look rights  (since he sold on another plattform the ETO shares) or not? My question here boils down  to the point if first look right is basically a 1 time right (You can fire your 1000€ one time only and thats it for eternity) or if after you sold your ETOs, or a certain period of time for example you can use the 1000€ again for the next ETO? That´s still unclear to me even with the corrected answers.

It's like communication in aviation, we constantly improve how we talk about platform but sometimes some inconsistency slips in Smiley

Thank you for handling this so good, answering quickly. Grows confidence in you. Big Kudos to you panor as well for checking back so quickly, not having ego play a role etc..

[BNO]

@rudolfix: Thanks for answering.

but now i read this:

   ts say the first ETO successfull, Gina invested her 1000€ in the SUPER CORP. Now comes the 2nd ETO the EVEN BETTER CORP. She likes it so she sends another 1000€ and bids for the 2nd ETO. Does this 2nd batch still have first look rights or is she processed in the qeue of investors who didn´t partake in the ICBM on a first come first served basis like everybody else. Or to put it another way do investors that partake for e.g. 1000€ in the ICBM have a lifetime first look right to invest 1000€ in every ETO there is (given that they "reload" the capital every time) or is it only the original capital that partook in the ICBM that has firstlook rights ? Then againg i don´t need to bother with NEU to long since the first 12mill have "unbeatable" adavantage


Currently ICBM participants are whitelisted only for the money they commited. If the want to receive new NEU they they can use new funds and keep their whitelisted for further investment.  (response was fixed due to the wrong information in the previous version - clarified in the post https://bitcointalk.org/index.php?topic=2335433.msg31322774#msg31322774).

what means "new funds and keep their whitelist for further investment" Back to unlimited again??

Could you come up with a precise as possible answer for my question from the last post:

So to REALLY clarifiy this: lets say investor x invested during the ICBM 1000€, he invests them in the 1. ETO (for this he has first look rights which is ok).
Could you explain what "happens to his first look rights regarding the future"? Lets say he sells his shares of the first ETO, does he then have for the next ETO for 1000€ again first look rights  (since he sold on another plattform the ETO shares) or not? My question here boils down  to the point if first look right is basically a 1 time right (You can fire your 1000€ one time only and thats it for eternity) or if after you sold your ETOs, or a certain period of time for example you can use the 1000€ again for the next ETO? That´s still unclear to me even with the corrected answers.

And i would like to add to my question from last paragraph: or does he have for every new ETO first look right for 1000€?

And one more thing while we are at it: What would your guess be is the first ETO more Micro, like 1mio € or more in the direction of 10mio or more.
I know you have no crystall ball and it depends on the future but what range of projects do you guys see yourself in, at least for the start....

Thanks!

[rudolfix]

So to REALLY clarifiy this: lets say investor x invested during the ICBM 1000€, he invests them in the 1. ETO (for this he has first look rights which is ok).
Could you explain what "happens to his first look rights regarding the future"? Lets say he sells his shares of the first ETO, does he then have for the next ETO for 1000€ again first look rights  (since he sold on another plattform the ETO shares) or not? My question here boils down  to the point if first look right is basically a 1 time right (You can fire your 1000€ one time only and thats it for eternity) or if after you sold your ETOs, or a certain period of time for example you can use the 1000€ again for the next ETO? That´s still unclear to me even with the corrected answers.

Funds from ICBM are "single use". Once you spend them they are out of any constraints and additional rights like whitelisting. If you sell your equity tokens and invest resulting funds it is "new money" - no difference from other investors. I hope it is clear now..

And i would like to add to my question from last paragraph: or does he have for every new ETO first look right for 1000€?

No, he does not. First look right is for exact amount of funds you have in ICBM contract. And if you spend those funds your right in gone.

And one more thing while we are at it: What would your guess be is the first ETO more Micro, like 1mio € or more in the direction of 10mio or more.

We plan first ETO to be 7-8 digits, more than 1 mio, from a well established company with solid product, team and user base

[panor]

@rudolfix: Thanks for answering.

but now i read this:

Currently ICBM participants are whitelisted only for the money they commited. If the want to receive new NEU they they can use new funds and keep their whitelisted for further investment.  (response was fixed due to the wrong information in the previous version - clarified in the post https://bitcointalk.org/index.php?topic=2335433.msg31322774#msg31322774).

what means "new funds and keep their whitelist for further investment" Back to unlimited again??

Ok, I hope this will finally clarify your doubts.
- you commited 1K Euro during ICBM. This funds are whitelisted
- platform opens and you send another 2K for the investment. This is not whitelisted
- you can choose which money you want to put in the ETO:
   - you dont have to invest 1K from the ICBM first. You can keep it for the ETO that you choose or withdraw it in the future if you like.
   - you can firstly invest your new 2K and still keep 1K whitelisted
   - whitelisted is always only 1K from the ICBM but it might be spend later than new money you put on the platform - everything you add is with the same right as all other new users