Crypto Crowdfunding: A Great Way to Invest Digital Assets in Real Companies
(Photo : Crypto Crowdfunding: A Great Way to Invest Digital Assets in Real Companies)

  • An overwhelmingly large number of startups fail due to lack of funding

  • Many unsuccessfully turn to Crowdfunding as an option

  • Now, Crypto Crowdfunding allows retail crypto investors to fund startups

  • Crypto tokens give portfolios the best of two worlds - they enable crypto exposure and venture equity stakes 

Because of their relatively "untested" new and innovative ideas, and the high risk involved in backing those visions, many traditional investment houses (Banks, VCs, Hedge Funds) shy away from investing in them. So, where do such fledgling companies go? They typically turn to Crowdfunding - albeit largely unsuccessfully!

According to Entrepreneur.com less than a third of start-ups, seeking funding via the Crowdfunding model, fail to meet their capitalization targets through those platforms. For those unlucky entrepreneurs, the consequences of that failure can be devastating: Business shut down; jobs are lost; and promising ideas and concepts fail to see the light of day

Hypothetically speaking, a possible cure of a deadly pandemic might have been on the horizon. Who knows what might have happened, if only one of those biopharma startups, that folded and went under, had received appropriate venture capital? We'll never know!

Introducing Crypto Crowdfunding

Cryptocurrencies and other digital currencies are fast becoming mainstream, with large financial institutions, like JP Morgan (JPM), now offering crypto exposure to their clients. Even the U.S. Federal Reserve Bank has now approved a digital bank - the first of its kind. Until now, however, most Cryptocurrencies and digital assets had few "real world" applications - and none in the investment financing domain. 

But now, QuiverX, a crowdfunding investment platform, has created crypto-based financing vehicles to raise capital for real world startups. The platform is using cryptocurrency to not only provide seed capital to new startups, but also enabling crypto investors to get partial ownership of real-world assets, stocks, and other digital investments. With their app on IOS and Android having been released recently, all of that has become way more convenient and with digital wallet fully released investors have all the tools they need for increasing and managing their crypto capital.

Like the traditional Crowdfunding venues, this Crypto Crowdfunding vehicle offers a financial lifeline to startups struggling to raise capital to fund their innovative ideas. However, the similarity stops there! The digital currency-based Crowdfunding investment platform takes decentralized financing (DeFi) to a new level by using specially designed crypto tokens to give ordinary (retail) crypto investors the power of partial ownership in a real-world company's equity. In many respects...it's much like buying stocks in small cap companies listed on a national stock exchange - but using digital currency to do so.

Filling a Void

The QuiverX Crypto Crowdfunding approach fills several voids left by the dearth of startup capital: Firstly, it gives struggling venture startups yet another avenue to seek funding for their vision. Crypto Crowdfunding doesn't have to be exclusive, at the expense of traditional Crowdfunding or VC financing. So, if a venture intended to raise $50 million through traditional financing (Crowdfunding plus others), and they don't reach their target (like a third of them don't!) - there's still Crypto Crowdfunding to turn to, that'll help bridge that gap.

But there's another void that's plugged through this new venture financing model, and that's from a retail investor's point of view. Until now, digital currency ownership only provided price arbitrage (capital gains) opportunities to portfolios. Investors used the "buy low - sell high" approach to boost portfolio gains. Crypto Crowdfunding changes that. It allows ordinary crypto holders (investors) to buy an equity stake and participate in earning revenue from early-stage investment opportunities in (potentially) high-growth companies. 

To participate in that stake, investors simply buy/own a digital token - called QRX tokens. They don't have to worry about technicalities, such as Bid-Ask spreads, Stop Loss indicators etc., like they do when purchasing stocks and ETFs. Entrepreneurs receive much needed financing, and portfolios get exposure to a new revenue stream and (potentially) price appreciation down the line. 

Pooling and Raising the Stakes

Investors may contribute to this digital pool of funds until it grows to a predetermined size, or when the subscription clock runs out. The QRX tokens an investor owns, along with tokens from other like-minded investors, are pooled together and then offered as seed capital to Crypto Crowdfunded ventures. This gives the pool of investors a stake in a startup venture.

Investors must, however, be aware that there is a "lockout" period (30 days) during which the funds can't be withdrawn without an early withdrawal penalty (currently at 10% APY). But there's significant up-side (currently 42% APY) to staking those tokens to full maturity (60 days).

Typically, when crypto investors buy Cryptocurrency tokens, and "stake" them in a Crypto Crowdfunded venture, they become part equity-owners in that business. They also claim a stake in a proportion of that venture's revenue.  However, some startups use initial stage funding to do a proof-of-concept to get the Big Guys (Hedge Fund Managers, Banking Giants and Venture Capitalists) interested in their idea. 

That usually opens the door to going public via an IPO (Initial Public Offering). If that were to happen with a Crypto Crowdfunded entity, token owners lose their stake - they don't automatically become shareholders in the public company. And that's the challenge for many Crypto Crowdfunding participants: When their investment targets do well...they could (potentially) lose their stakes!

QuiverX has designed its Crypto Crowdfunding solution to address that challenge. They've "tokenized" (it's a technical and technological process involving "smart contracts" and "meta data") a company's equity and offer those digital tokens (called equity tokens) to digital asset investors. As a retail investor, then, if you buy an equity token, you'll have a stake in the company - even after it's successful IPO. 

Best of All Worlds

The QuiverX Crypto Crowdfunding platform is a welcoming financing lifeline to fund-starved early-stage ventures. It provides entrepreneurs that have been locked out of traditional capital markets, an additional option to finance their ventures. Simultaneously, it gives digital currency owners a chance to supercharge their portfolio returns. No longer is that part of their portfolio just waiting to leverage price change arbitrage. The portfolios can now actively generate both regular income (revenue from startups) and potential price appreciation if the venture succeeds. 

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