A San Francisco-based technology fund, Andra Capital recently raised up to $500 million for a token through which investors can support late-stage venture capital firms. Managing Partner at Andra, Haydar Haba told Reuters that the firm has raised $500 million through the tokenized fund. He explained the whole concept of the Fund:
“Rather than issue paper certificates to our investors, ownership in our fund is unitized and digitized through seamless smart contracts, which are embedded with legal structures, regulatory requirements, and ownership transfer conditions. Investors benefit from the option to hold our asset-backed security token, Silicon Valley Coin, like a stock or trade it at its current market value without having to wait 10 years for liquidity, as with traditional VCs.”
Silicon Valley Coin (SVC) Offering
Andra’s new fund will use a token called Silicon Valley Coin (SVC) is developed on the Ethereum blockchain and will each coin be worth an investment of at least $1. The Fund hopes to raise $1 billion and has already raised $500 million from traditional investors and token holders. Managing partner, Dr. Hermann Liu announced the start of the private presale yesterday.
Haba said that only accredited investors in the US are eligible to participate in the offering while Non-US investors can also participate depending on their home country’s regulations.
“Leveraging blockchain technology is a very important part of our disruptive fund structure and business model,” – Dr. Hermann Liu, Managing Partner, Andra Capital
According to fund details, the investments will focus on late-stage firms that have raised two rounds of from established VCs while 20 percent will be invested early-stage ventures. Haba explained to Reuters that many late-stage private investments are limited to wealthy limited partners and only a few institutional investors.
The SVC can be sold immediately after the initial issuance and Andra hopes that investors can make significant gains on their investment within 30 to 60 which is a standard indicator of the success of such late-stage investments. In more factual terms, Andra Capital has set a goal of an Internal Rate of Return (IRR) of 30 percent over a 10 year period.
The document showed that the top 5 percent of VC funds achieve 40 percent IRR while the average IRR for median and top quartile VCs over the past ten years is 12 percent and 20 percent respectively.
Silicon Valley Coin follows a new trend of tokenized funds—that is creating tokens on a blockchain and selling them to investors. The Industry is still yet to embrace this although VC firms like Spice VC are adopting it.