Institutional investors are constantly on the lookout for new opportunities to better serve the clients they represent. They seek our better returns and more safety for their investments. Fewer traditional financial instruments can meet those needs amid increasing economic uncertainty and the ever-changing financial landscape. But with the advent of digital assets there has been a shift in how investors approach financial instruments.

Blockchain-based digital assets are steadily gaining in popularity and few deny their rising role in the financial world. According to a survey of institutional investors conducted by the Global Blockchain Business Council, 19% believe that digital assets will be regularly invested in and traded by 2021. Moreover, 80% of investors think that, by 2025, blockchain and similar technologies will fundamentally change the industry according to Fidelity’s Global Institutional Investor Survey.

Today digital assets go beyond cryptocurrencies, they include many new asset-backed financial instruments. Tokenization and blockchain stand behind many of these products. Tokenization of art, real estate or even stocks is no longer new but an entirely different financial instrument is beginning to take center stage: tokenized venture capital.

Tokenized venture capital simply put is a VC fund’s startup portfolio that is turned into a multitude of digital tokens that can be bought and sold on a secondary market by qualified institutional and retail investors. VNX Exchange is a trading platform that offers exactly that. It aims to become Europe’s first regulated marketplace for venture capital investments.

VNX Exchange works as a bridge between traditional financial institutions and blockchain-based technologies. It operates similarly to a traditional stock exchange and utilizes distributed ledger technology to digitalize a whole new type of financial instruments. It creates a whole new asset class - tokenized venture capital portfolio.

The trading process is transparent and involves two sides. VC funds, startup accelerators and incubators have their portfolios assessed and tokenized after careful due diligence. The resulting blockchain-based tokens are backed by future returns from these portfolio investments. This is a perfect financial instrument for qualified institutional investors who can purchase these tokens on the platform.

The reason is simple, unlike real estate or art whose prices fluctuate with the changes in economy, VC can weather almost any storm. It hedges against risks through diversification: if one portfolio company fails, the whole VC ship won’t sink. VCs also offer the soft skills that are worth millions. Through financial acumen and expertise of managing portfolio companies, exposure to countless products and services, VC fund managers have been trained to seek out the best ideas. Moonshot startups could generate outsized returns, sometime 50x to 70x. Finding the next Uber or Airbnb is what drives VCs and ensures that out of a pool of many portfolio companies quite a few will become unicorns.

Tokenized VC is a great bet not solely because of a solid, real-life underlying asset but also because it is traded in the digital-native form - on the blockchain. It offers immutability, transparency, safety of all record-keeping, custodial advantages, 24/7 transactions and security of investments.

For the most forward-thinking institutional investors tokenized venture capital may pose a solution to customers’ fears for their future and an increased appetite for bigger returns amidst uncertainty. It is reliable, profitable and safe. But what is more important, it is also traded on a regulated platform. Without legal compliance, no numbers matter. And VNX Exchange aims to provide that.

No one can crack the code on what the future holds which is why ensuring that an asset-backed instrument offers substantial returns, safety and regulatory compliance is the key to a sound investment strategy. VC can offer the benefits of all three, it offers a path to smart investing and a roadmap for a different future.


Communicated by VNX Exchange

Publié le 15 mai 2019