There is growing realization among investors that blockchain technology is not just a tech flash-in-the pan, but a legit emerging asset class, with broadening financial opportunity, worthy of serious capital allocation. Cryptocurrency is now a growth industry.
However, despite surging interest in the sector, many investors view bitcoin, ethereum, Initial Coin Offerings (ICOs) and other cryptocurrency markets as the “The Wild, Wild, West.”
The novelty of the sector, the inscrutability of its technology, anonymous transactions, and crazy price volatility all contribute to hesitation on the part of cryptocurrency investors.
For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More
Enter Finles Capital’s offering of FundCoin — an ICO designed to give participants the upside of blockchain growth, while also offering lower volatility and capital preservation through a diversified private equity portfolio.
Finles will issue digital tokens (“FundCoin”) by means of an initial coin offering (“ICO”) to invest the proceeds of the ICO in Finles Lowestoft Equities Fund, a managed private equity fund that invests in the blockchain industry alongside traditional investments.
>Finles is a Dutch boutique management firm founded in 1977 which has half a billion euros under management.
Certainly the time is right to raise investment capital in the cryptocurrency space:
- Total cryptocurrency market cap increased by 700% in the last year, while average trading volumes increased 30-fold.
- The sector is becoming better regulated within the legal systems of different jurisdictions. For example, Japan now recognizes bitcoin as a legal payment method.
- Cryptocurrencies – particularly bitcoin – are being accepted by major tech corporations, including Microsoft, Dell, Expedia and Time Inc.
- Initial Coin Offerings (ICOs) are emerging as a major new fundraising tool, with more than $2 billion raised by 100+ projects and over $1 billion in 2017 alone.
Still, as a whole, blockchain platforms only amount to $100 billion of value — a tiny fraction of the wealth stored in conventional asset classes. Cryptocurrency is in its infancy.
According to Rob van Kuijk, CIO of Finles Capital Management, “The blockchain market is predicted to grow at 58% CAGR over the next six years. However, price volatility, with some cryptocurrency prices fluctuating by 25% in a day, along with the recent spate of ICOs, have created uncertainty and some criticism. Industry commentators have argued that many ICOs are designed to make money from the buyers rather than for them.”
“FundCoin is different. Not only does it use blockchain technology to open up access to retail and cryptocurrency buyers, it solely invests in a fund that is run by professional managers and so linked to the structure that provides a more safe harbor in the highly volatile blockchain market,” added Van Kuijk.
The FundCoin ICO will open up a new class of cryptocurrencies backed by a high-performance asset class rather than a single company or currency. It thus provides investors with a more diversified way to invest in blockchain through a structure that was previously only accessible to professional investors.
As a whole, blockchain platforms only amount to $100 billion of value — a tiny fraction of the wealth stored in conventional asset classes. Cryptocurrency is in its infancy.
Most of the €100m that Finles Capital expects to be raised in the ICO will be allocated to traditional and private investments, with up to 30% invested across the blockchain industry. The fund is targeting an Internal Rate of Return (IRR) of 25%, driven mainly by the high growth of the blockchain industry.
Private Equity (PE) refers to a class of assets relating to companies that are not publicly traded. While retail investors can easily buy and sell publicly-traded stocks on major stock exchanges, as well as bonds and other types of securities, private equity investments cannot readily be accessed without specialist information or contacts. Thus PE investments are typically made by dedicated private equity firms, individual angel or high net-worth investors, and venture capital firms.
Private equity is, by nature, exclusive. More and more professional investors are allocating funds to private equity, and assets under management (AUM) now total over $2.5 trillion. However, it remains out of reach for most retail investors.
PE as a whole has significantly outperformed almost every other asset class over the past 20 years, with performance that has averaged 12.3% annually. At a time when interest rates remain at or near all-time lows, bond yields are close to zero, and dividend yields are historically low, PE represents very attractive levels of returns.
By combining private equity with cryptocurrency opportunity, Finles is attempting to bridge the gap between two worlds — traditional investing and the new frontier of cryptocurrency.
Finles Capital is anticipating oversubscription for the €100m ICO of FundCoin which will launch on September 30th, 2017. Due to regulatory restriction, the tokens will not be available in the US, Singapore or the European Economic Area.
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