Blockchain technology can be used in many different ways to serve any purpose one can think of. Until this point, no venture capital firm has itself used the blockchain for any specific purpose, despite investing in companies which do. Spice VC may be the first mover in this regard, as it aims to solve the liquidity problem right now. It’s an interesting concept that warrants a closer look.
Spice VC and Blockchain Technology
One issue haunting the investment ecosystem is how funds are slowly drying up. While large amounts of money still change hands on a monthly basis, there has been a decline in liquidity. In the worst case scenario, this will eventually lead to illiquid markets, which should be avoided at all costs. Unfortunately, that is much easier said than done right now, especially with the situation not having improved in the slightest.
Spice VC feels they have found the answer to this problem, although it is not a conventional solution by any means. Rather, they are looking toward the blockchain for additional liquidity. More specifically, the company will use the Ethereum blockchain as a way to create its own custom token. It is a bit unfortunate to see yet another ICO on the horizon, especially when there may not be a need for it whatsoever.
Spice VC managing partner Tal Elyashiv commented as follows:
“Until now, the privilege of investing in tech was reserved for very few. The new model makes the VC model available and attractive to three huge new investor groups. First, the major institutional investors, which in Europe allocate much less to the VC asset class than in the U.S. Second, thousands of smaller accredited investors which until now could only invest in tech as angels or in crowdfunding sites without any liquidity, and last, a new class of crypto investors looking to diversify into general tech.”
The main purposes of this token are to provide liquidity and serve as a tradable asset. It’s an intriguing combination, albeit not one that can be achieved out of the blue by any means. It is commendable that this firm wants to combine aspects of VC funding with blockchain technology, though. No one can deny there are some intriguing opportunities which may or may not work out in the long run. If nothing else, it will certainly open VC to pre-qualified investments, which isn’t a bad thing.
At the same time, the company has to take regulatory measures into account. This is a fund and not your average initial coin offering by any means. This means Spice VC’s tokens will be considered securities. All regulatory compliance has been taken care of already, meaning US investors must adhere to very specific guidelines in order to be eligible. It will be interesting to see how things play out in this regard, though, as it is the first time we’ve seen a project of this type come to market.
Whether or not Spice VC will be a successful venture is very difficult to know right now. No one can deny the combination of blockchain and venture capital opens up exciting opportunities. However, solving liquidity issues with yet another proprietary token may not necessarily attract the attention this team is hoping for. An interesting future awaits; that much is certain.