3. Despite the buzz in the industry,
Blockchain market is underfinanced
and accounts to 2,3% of FinTech market
There is a decreasing tendency towards launching
new blockchain companies
2015 and 2016 showed a very slow growth in the block-
chain investments: 33% and 18% respectively
While Blockchain industry has an enormous potential, it
was invested only 0.5B USD in comparison with 23B
USD invested into Fintech industry, meaning that the
Blockchain industry is underfinanced
Several companies were already acquired by bigger
ones due to lack of funding
2016
542
2015
458
2014
344
2013
83
2012
3
119
99
54
31
12
Investments in blockchain Key market observations
# of rounds
amount of capital, $M
Major Acquisitions in 2016+314%
+33%
+18%
4. 1 Circle 2013 Late $110M 6/16 $60M US Remittance
2 Ripple 2012 B $90.5M 9/16 $55M US Remittance
3 Blockstream 2014 A $76M 2/16 $55M Canada Bitcoin
4 Bitfury 2012 Late $110M 1/17 $30M US Security
5 Bitflyer 2014 C $32M 4/16 $27M Japan Exchange
6 Quoine 2014 A $22M 6/16 $20M Singapore Finance
7 Coibase 2012 Late $117M 7/16 $10.5M US Info, bitcoin
8 Gem 2014 A $10.4M 1/16 $7.1M US Developers
9 Simplex 2014 A $8.4M 2/16 $7M Israel Payments
10 Symbiont 2015 A $8.3M 1/16 $7M US Software
11 Tech Bureau 2014 A $6.5M 5/16 $6.5M Japan Developers
12 Zaif 2015 A $6.7M 5/16 $6.2M Japan Finance
13 Lisk 2016 PreA $5.7M 3/16 $5.7M Germany Developers
14 BlockStack 2014 A $5M 10/16 $5M Philippines Banking
15 Elliptic 2013 A $7M 3/16 $5M UK Bitcoin
16 Bitt 2013 A $5.5M 4/16 $4M NZ Payments
17 Chronicled 2014 PreA $3.4M 3/16 $3.4M US Hardware
18 Equibit 2015 PreA $3M 2/16 $3M Canada Finance
19 OB1 2015 A $3M 12/16 $3M US E-commerce
20 OpenBazar 2014 A $4M 12/16 $3M US Consumers
The Blockchain industry is obviously underfinanced:
the difference between the 1st and 20th largest
investment deals in 2013-2016 is 2750% (or $57M) – sign of green industry
5. Need for new crypto investment
instruments became a trigger for ICO growth
Raise of
blockchain
assets
Raise of
models of
cryptocurrency
applications
Raise of
cryptocurrency
investment
instruments
2009 2013 2017
The market of Blockchain
assets, including crypto curren-
cies was very limited to
“but/sell” only. Investments in
blockchain were also limited by
risks and early stage of an
industry
New ICO options emerged on a
basis of crowdfunding and
crowd investing in to a startups.
The 1st ICO was held in 2013.
New ICO options emerged on a
basis of crowdfunding and
crowd investing in to a startups.
The 1st ICO was held in 2013.
6. What is ICO?
Tokens are crowdfunding units, sold by projects in
order to develop the product / support the expan-
sions / accumulate tokens for other goals
Tokens represent rights, which may be of different
types:
In many cases tokens give a right to get
some service in future (eg. transactions)
It can be an access to the platform
In certain cases tokens represent rights
for dividends or underlying assets
(eg, commodities or shares)
In the process of ICO tokens can be sold for fiat
(USD, EUR) or more liquid tokens with mature eco-
system and cryptocurrencies (bitcoins and ethers)
ICO
ITO
Alternative and better naming for ICO:
ICS
TGE
- Initial Coin Offering
- Initial Coin Sale
- Token Generation Event
- Initial Token Offering
From the business logic, ICO is much closer to crowdfunding than to investments
ICO
Crowdfunding
7. ICO - the new tool to address
funding challenges of Blockchain industry
ICO already surpassed VC funding for blockchain companies in 2017
222
145
121
Q2Q4Q3Q2Q1Q4Q3Q2Q1 Q1
20162015 2017
43
173 161
82
116
232
96
31
25
21
17
11
3
ICO token sales, $M
# of deals
early stages VC, $M
~$300M $1.6B+
Raised through ICOs
2014-2016 1H 2017
Initial Coin Offerings started to gain importance in 2016,
with the potential to capture more interest
Until 2017, all the token launches were less than 1%
of global crowdfunding activity, suggesting opportunity
45135 23
148
121
794
8. Market dynamics & expectations
4513 235
148121
794 771
873
975
1077
650
520
Q2Q4Q3 Q4Q3Q2Q1Q4Q4 Q3Q2Q1 Q1
2016 2017 2018
Core observations:
Currently – there were around 300 ICOs done up to date, the
number grows at a quicker pace
Huge amount of crypto capital is underused, new investment
instruments are still on the rise
Expectations are high enough, market shall correct itself in the
near future, and become more stable
The number of ICOs is growing faster than the volume of new
money on the market
Market saturates quickly, many low quality projects / risky ideas
appear
The industry sees an influx of high quality talents and smart capital
Market observations:
Large institutional investors get interested in tokenized economy
Growth of new business / ownership models that come along with
tokenized experiments
ICOs brings an interest from governments, new regulation activi-
ties shall boost the industry forward;
ICO token sales, M $
ICO token sales forecast, M $
ICO market cooling down
due to decrease of "hype" level
Market renaissance due to entering of VC funds
and institutional investors to ICO market
10. Why ICOs
are so
popular?
Democratization of access
Everyone can participate
Not limited by geography
Opportunity to invest accumulated cryptocurrency
People still don’t have many ways how to spend
cryptocurrency except conversion into fiat.
This problem is especially acute for crypto ‘whales’,
who don’t have a way to withdraw their tokens into fiat
without losing much value
Opportunity to trade tokens immediately
Unlike in case with VC investments, new tokens can
usually be traded almost immediately on an exchange
Crypto-community inborn passion for modern
technologies and applications
They are trying to support any initiatives
that are disrupting existing rules and standards
11. Today ICO is like a show, which is even bigger than
match of the year “Floyd Mayweather Jr. vs. Conor McGregor”
Money Fight 2017
$600М
“SHOW”
$1.6B
“SHOW”
VS
“The Money Fight”
12. More and more companies are coming
to ICO, creating big opportunities
for any kind of investors
Notable ICOs ($M)
Tezos 208
EOS.IO 200
Bancor 153
Status 95
Tenx 80
MobileGo 53
Sonm 42
Basic A Token 35
Civic 33
Storj 30
Polybius 29
Aragon 25
Aeternity 22
OpenAnx 19
Cosmos Network 17
Qtum 16
GigaWatt 15
Mysterium 14
Nimiq 14
TokenCard 13
Dao Casino 12
Gnosis 12
IEX.EC 12
ABT coin 12
Blockchain Capital Fund 10
Taas 7.7
Zrcoin 7.1
Matchpool 5.6
Chronobank 5.4
Humaniq 5.2
Starta 5.1
Excudo 5
Dimcoin 4.7
Wetrust 4.6
Encryptel 4.5
Cryptotel 3.8
Dfinity 3.8
Lunyr 3.4
Trueflip 3.1
Melon 2.9
Quantum Resistant Ledger 2.8
Edgeless 2.7
Skincoin 2.5
Done, ongoing
and pending ICOs
314
Total proceeds
$1,27M
Average Proceeds
$23M
Median Proceeds
$5.5M
13. ICOs allow startups fundraise
millions of USD within minutes/hours
Project Country ICO volume Duration of ICO
Tezos Switzerland $206.33M 14 days
EOS Cayman Islands $200M 341 days
Bancor Protocol Switzerland $153M 3 hours
The DAO Stateless $152M n/a
Status.Im Switzerland $95M 17.2 hours
MobileGo USA $53M 1 month
Basic Atention Token USA $35M 30 seconds
Polybius Estonia $31.64M 6 weeks
Aragon Estonia $25M 15 minutes
æternity Liechtenstein $24.75M 3 weeks
14. Solidx Trust ETF
Currently denied
by Sec on up listing
N/A N/A
Size ICO status
First VC funds are entering ICO market
and fundraising through ICO, but it’s overall quantity
and funding amount is still very low (3-5% of the whole ICO industry)
Brings SEC and regulatory bodies’
certainty to industry
Narrow focuses emerge:
bitcoin trading, protocol investments
New investment instruments
are killing the fraud due to higher control
New instruments owners are unexperienced
Bitcoin and crypto assets are easy to purchase,
no need for dedicated funds
Inability to acquire other digital assets
High risks, unnecessary fees,
low quality DD analysis
Pros Cons
Taas Fund
Hedge fund focused
on trading cryptocurrencies
$7.5M Done
Size ICO status
Blockchain Capital
Tokenized Blockchain
venture capital fund
$10M Done
Size ICO status
Pantera Capital
Hedge fund focused
on trading cryptocurrencies
$35M Done
Size ICO status
Starta Capital
Acceleration program
$5M Going
Size ICO status
BB Fund
Venture capital fund focused
on investments in Blockchain
N/A Coming
Size ICO status
Finshi Capital
Tokenized venture capital fund
N/A Going
Size ICO status
Grayscale Trust ETF
Currently trading OTCQX,
seeking up-listing to BYSE
N/A N/A
Size ICO status
15. Tokenized Funds comparison
Target or
Raised (AUM)
Registered/Based
Structure & license
Fees
Profit share /
dividends
Own tech platform,
audit and wallet
Previous investment
experience and
relevant background
Geo Focus
Strategy focus
and industry
Investors
TaaS
$8M
Singapore / No info
LLC, No any legal
information available
Diverse ICOs,
no focus
-
Non-accredited
individuals, no KYC
Unlimited # n
Entry fee– 15%
Success – 25%
Tradable
No
Quarterly
Yes
No
Finshi Capital
n/a
Singapore/Russia
LLC
Not licensed
No strategy
-
Non-accredited
individuals, no KYC
Unlimited #
Entry fee – 12.5%
Success fee – 20%
Tradable on exchange
No
After exits
No
No
Blockchan
Capital
$50M
Singapore/US
FMC Licensed for
accredited investors
Blockchain startups
Global
Accredited with KYC
Limited #
Annual fee – 2.5%
Success fee – 25%
No
private deal with CEO
1 year lock-up,
private sale
No
63 investments /
5 exits
Mainstreet
Capital
$50M
Singapore/US
FMC, LP-GP
Not licensed
Manufacturing,
Healthcare, Real estate
Midwest US
Non-accredited
individuals, KYC
Unlimited #
Entry fee– 10%
Success – 25%
No,
private deal with CEO
After exits
No
No
Monkey
Capital
$50M
Singapore/Singapore
LLC
Not licensed
Aerospace,
Blockchain, Fintech,
Real Estate
USA, SE Asia, Europe
Non-accredited
ndividuals, KYC
Unlimited #
-
Tradable on exchange
No
-
No
No
Starta Capital
$5M
Singapore/US
LLC
Not licensed
Seed stage tech
startups, no focus
Eastern Europe
Non-accredited
individuals, KYC
Unlimited #
Annual fee – 2.5%
Success fee – 20%
Tradable
No
No
No
Accelerator activities /
no exits
BB Fund
$200M
Singapore/Singapore
FMC, LP-GP
Licensed in Singapore
Tokenized Fintech
and Blockchain
companies
Asia, Europe, US
Accredited with KYC
Limited #
Entry fee – 4%
Annual fee – 2%
Success fee – 20%
Tradable
Yes, semiannual
redeem
Semiannual
Yes
23 investments /
7 exits
Token liquidity,
Exit possibility
16. We can say today that ICO became
a stand-alone industry
Protocols
Protocols investing in other protocols
Exchanges
Financial & Legal Advisors
HNWI traders
Crypto hedge funds
VCs with equity and tokens
VCs with EquityMarket Makers
Market data General Market research ICO Market research
non-token
transaction
token
transaction
17. Why it can be interesting for VC funds?
Traditional VC Crypto investments
Investment horizon 7-10 years 1-5 years
Ownership model Privileged shares Crypto tokens, crypto currency
Entry stage Angel, Seed, A/B rounds Pre-mine, Genesis, pre-ICO, ICO
Exit options IPO, M&A IPO, M&A, placement on exchange
Business model Product or service sell
Closed loop – economy,
based on crypto
Legal structure Limited partnership No Jurisdiction for DAO registration
Entry Sources
Private investors, family, Crowdfunding, innovative funds
institutional investors and private investors, future users
Currencies Fiat ($, RUR, £) Fiat and cryptocurrency
Criteria New or emerging business models New business models creation
18. Going to ICO
– not easy, but still can be done quickly
Pre-announcement PR-Campaign Start of sales in the ICOOffer
1-2 months
Announcement of the project
in the communities of crypto-
currency investors
Bitcointalk, Reddit, others;
Purpose is to explain the
essence to investors and
receive the first feedback
Proposal for conclusion
of the transaction;
Addressed to a particular
person, a limited or
unlimited #;
Offer covers all the nuances
of the project, specifies tokens;
After signing the offer, the start
date of the sale of tokens is
announced
Presentations and various
conferences;
Road show – meetings with
prospective major investors
and analysts;
Target audience - participants
of crowdfunding program,
so-called ”business angels”;
Collect a min amount of
money, specified by the offer,
and then release the tokens;
Sell the tokens on the crypto-
currency exchanges. It’s neces-
sary to release it in advance;
2-5 weeks 1-3 months 1-12 months
19. ICO is good
for every participant of the market?
Efficient fundraising: fast, low-cost,
convenient, less documentation etc
Relevant Investors from the community
(and first users/advocates)
Branding and marketing due to
community building
“Skin in the game” with early adopters
Share both the risks and the benefits
of their efforts with the investors
Angel/VC/CVC/corporate funding is much
more intrusive on the founder’s vision
Democratization and low entry barriers
(almost everyone from everywhere can
participate, at least whil it’s not regulated)
High liquidity
Divest from main cryptocurrencies
into coins
Some transparency (eg, with an escrow)
Early access to a token
which has the potential for capital growth
”Gaming” - the returns from investing
in ICOs can be in the 1000% and also
complete losses
Diversification of assets (no link to macro
economics, fiats, stock markets etc)
Involvement - Investors can be part of a
community and first users
Just a new innovative and trendy way
to deploy capital
Internet revolution: new companies and
their tokens/coins will help building a new
decentralized web, independent from any
central entity.
Finance revolution: Blockchain is assumed
to be at the cutting edge of fintech, the
technology and business model being
proposed will benefit the whole community.
Education and Time to mature: more
competition in the crypto space makes the
competitors better and stronger, the
Blockchain projects are getting mature and
prepared for the real competition (tradition-
al enterprises, banks and other incumbents)
For Founders and Entrepreneurs For conventional “investors”
/crowdfunders
Cryptocurrency community
20. What value VC Funds bring
to investors ICO market?
Pre-ICO
significant
discounts
VC funds are usually
invited to participate at
so-called “private
presale” or “pre-ICO”
Opportunity to get
significant benefits and
discounts: 10-40% off
Access
to closed
offerings
More mature and
established startups
prefer to offer their
tokens to closed loop
of professional
investors, where the
general crowd will not
get an access
Lower
risks in fraud,
scam
The team of VC fund is
able to execute proper
due diligence
Specialists in block-
chain, lawyers and
analysts are on board
Better
investment
analysis
Only professional
knowledge of the market,
demand, trends can help
to make a right
investment decision
Usual players on a
market have an under-
standing of Product
market fit
Ability
to create value
of investment>
Portfolio managers of
VC Fund had experience
on value management
and provide strong
support for investees
(networking, interna-
tional connections,
business development,
mentoring etc)
21. Lack of
postinvestment
support
Misunderstanding
of valuation
metrics
But
ICO market has huge problems today:
overvaluations, scams, fraud, speculations
Existing problems of ICO market create a demand
for professional investors, coming from VC industry
Misunderstanding
market
and business
Low quality
diligence checks
(tech, legal, fin)
Regulatory risks
and lack of legal
investigation
Lack of
professional
investors
Source of ICO industry problems
22. Risks
Regulatory and Legal ICO risks
ICO Taxes Risk
Risks related to Regulations.
ICO documents do they have a legal basis?
Connection between the token holders
and holding company
Intellectual property
Investment/Contribution
financial risks
No real financial planning and economics behind
No previous traction of metrics
(usually only MVP or descriptions)
Post-ICO slowdown
(no real value creation, no media coverage)
Business ICO risks
Market demand and macroeconomics
Traditional players offerings
New competitors
Technological shifts
Regulatory challenges (licenses for business)
Voting? Control? Participation?
ICO founders risks
Usually no real world business experience
Motivation after big ICO?
Control over funds?
Salaries?
Financial statements?
Token risks
Lost or stolen tokens
Hacked wallets
Challenge of smart contract
23. If we compare it with traditional
fintech-backed startups:
$392M
14 rounds
in 10 years
$440M
8 Rounds
in 7 years
$217M
5 rounds
in 3 years
$355M
13 rounds
in 12 years
VS
1-2 year
No traction
No recognition
on the market
Almost 0 money
raised previously
24. Some ICO problems are already visible
(after only few months of its boom),
so what will be in the future?
-$7M -$250K
-$32M
-$50M
25. ICO is just a new tool for making investments,
not an all-in-one solution that can transform
each person into sophisticated investor
As well as in any other industry (like medicine),
for success in investments you need:
Education
(math/finance/economics/research)
Experience and expertise
(VC/PE/IB, fintech, blockchain etc)
Balanced supportive team
(finance + analytics + tech + legal)
Right skillset
(communication, psychology)
Network and connections
26. BB Fund executive overview
BB Fund, launched by top-minds from Blockchain and Fintech
industry and VC fund Life.SREDA, is a tokenized close-end fund,
aimed to bring professional investment expertise to the growing
ICO/ITO market.
The Mission of BBFund is to make ICO market efficient, reliable and
trustful for all participants (investment crowd, startups, regulators etc)
BB Fund:
from “Banking on Blockchain” to “Based on Blockchain”
BB Fund initially started in 2016 as a Banking on Blockchain fund, specifically
dedicated to FinTech ventures on the blockchain technology.
Read on Bitcoin.com or VentureBeat
In 2017 BB Fund team decided to expand its investment focus to all blockchain-
related initiatives (including ICO/ITO) and the BB Fund was renamed to
Based on Blockchain Fund and submitted its plans for fundraising through ITO
Investment strategy Investment stages
BB Fund value proposition and USP
Experienced, prominent and trustful team
of Blockchain and FIntech experts
Backed by professional VC fund Life.SREDA (Singapore)
with 5 years experience in the Fintech space
Open and transparent investment process:
information is available to all token-holders
Blockchain
Sectors
ICO/ITO market opportunities and challenges
ICO/ITO (initial Coin/Token Offering) is the new way of funding blockchain
startups, which is getting more and more popular across FinTech and Block-
chain crowd and already hit a record of $1B invested in 2017 only.
However the market is very young and immature, which leads to a high inflow
of unreliable companies, scams and fraud as well as other risks for investors:
financial, legal, technical. The market needs the entrance of professional
investment players who will bring trust and transparency to the ICO market.
Team of professional VC investors
Strong traction: 23 investments, 7 exits
Supply
chain
E-wallets,
Digital banks RegTech, KYC
Payments
Big Data,
scoring
BankTech
Infrastructure,
BAAS, BAAP
Pre-sale
and
Pre-ICO
stages
ICO rounds
and
actual sales
Secondary sales
and
new rounds
GovTech
Lending, p2p,
Crowdfunding
e-Commerce,
marketplaces
27. Life.SREDA
– professional VC fund on ICO market
Team of professional
VC investors
Own Accelerators
& R&D lab
Strong traction:
23 investments, 7 exits annual venture research
leading fintech news
portal
bringing Traditional Banking,
Fintech and Blockchain
together www.fintechranking.com
www.fintech-research.com
Innopolis, Russia
Singapore
London, UK
28. BB Fund is ready to take off with you on ICO
Size of entry,
minimum to efficient scale
Order of entry
Industry life cycle
Degree of strategic innovation
Complementary assets
Relatedness to the market
BB Fund’s partners are Fintech and blockchain frontiers
Industry influencers, 23 Fintech investments
Partners of a fund – ex-Barclays, ex-Lloyds, ex-Fidor
Consulting, accelerators, R&D lab, own venture
Deep industry knowledge, the leading Fintech fund
Built an ecosystem of Fintech – sreda.vc
Early stage of the industry life cycle
Solid odds to succeed in the shakeout
Not the first movers – early birds show the points
BBF is a more experienced player – less risky
BBF is entering with a significant own resources, which
is more efficient and viable
Predictor BB Fund’s PositionDegree
Significant
Significant
Significant
Early stage
Early stage
Significant