SparkLabs Group, a US-Korean firm that runs early-stage accelerator programs in Asia as well as several global venture capital funds, has launched a security token offering, allowing anyone to buy into its accelerator programs.
The venture capital (VC) firm, whose successful investments in the past include Siri (sold to Apple), DeepMind (acquired by Google), music streaming service Spotify and ride-sharing app Lyft, is incorporatingcrypto into its operations through the “Smart City & Smart Planet Fund”, which would be the first startup accelerator security token offering.
Aiming to “democratize investment opportunities,” SparkLabs allows anyone to invest just like a limited partner of the VC firm.
The SparkLabs token, according to the VC firm, is simply a crypto token that represents an investor’s equity into its fund vehicle that will have equal holdings in startup companies associated with SparkLabs’ IoT & Smart City Accelerator in Songdo, South Korea and Cultiv8, an accelerator for agriculture and food tech in Australia.
TechCrunch reports that the firm aims to bring in at least US$6 million from the token sale, with the hard cap of US$30 million.
Traditional limited partners for VC firms have to wait for the fund’s lifecycle to see financial returns, or else seeking a secondary share sale. TechCrunch notes that introduction of a security token aims to bring liquidity for investors by listing the token on security exchanges in the future, which make the tokens tradable.
SparkLabs said in its announcement that graduates of its accelerators have an average raise-size of over US$3.5 million with 80 percent of the startups receiving funding after the program. It now has a portfolio of over 160 startups from more than 60 countries, the VC firm claims.
But the company doesn’t advise US-based investors to trade it since that is almost certain to violate the law. The US securities regulator has been conducting an investigation into companies that raised money via initial coin offerings (ICO).
According to previous reports, the US regulators have indicated they are considering that crypto tokens issued through ICOs should be registered as a security, of which the issuers need to have paperwork filed with regulators and can only be traded on regulated exchanges, like those where stocks and commodities are bought and sold.
The rise of ICO, a less regulated alternative for startups and existing firms to traditional VC fundraising, which sold digital tokens to raise money for their projects, led to thousands of different virtual currencies available on the market.
Over the past year, more than US$6 billion has been raised through initial coin offerings.
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