Note: Smith + Crown is an advisor to Bnk to the Future.
Bnk to the Future (BF) is a currently operating online investment platform aiming to fulfill a wide range of investment roles through its online platform for trading of securities token and traditional equity. The platform is accessible to accredited and sophisticated investors, and will become more accessible to retail investors in a more limited capacity. BF currently provides access to an array of traditional equity offerings in fintech, cryptocurrency, and blockchain-focused companies as well as token offerings. Following the token launch, they will support equity and token trading and launch a token that offers a range of access, payment, and contribution (ability to play key roles) rights. Those roles largely center on the deal-selection and evaluation process BF currently does but would like to scale using its community. BF has been operating for many years at the intersection of blockchain technology and investment, and while it will continue to be an investment platform, it aims to expand its community and its stakeholders beyond accredited investors.
Background and Context
BF’s roots trace to the United Kingdom in 2010, when the company emerged as one of the first to facilitate online investing in private equity. An early interest in Bitcoin led to a decision to move the business registration to the Cayman Islands, considered an ideally-suited locale for an effort to serve the global crypto community through the development of an online securities platform focused on the crypto sector.
After trading actively through the early 2010s, focusing primarily on Bitcoin, BF joined venture capital firms around 2013 in investing in equity of fundamental cryptocurrency companies. Ultimately this developed Bnk To The Future’s online platform as a venue where a curated selection of private equity opportunities could be marketed to high net worth investors. Bnk To The Future employed a unique structure for these transactions, with the larger equity holding being placed into a dedicated special purpose vehicle (SPV) before being parcelled to investors purchasing a stake in individual SPVs. Portfolio investments included companies like Kraken, Shapeshift, and Factom, as well as token investments in Ethereum, Maidsafe, and others.
The growth of the ICO market in 2017, when attention in the sector shifted to tokens, left many of these same high net worth individuals looking to exit their private equity holdings in order to focus on ICOs. This sentiment became a core influence behind Bnk to the Future’s desire to establish a liquid secondary market where individuals could trade their private equity holdings. The solution that emerged was for BF’s SPVs, through which private equity investors held individual positions, to be tokenized upon the platform, with equity shares being represented by tradeable tokens. The result brings increased liquidity to traditionally illiquid private equity positions. Given the requirement of securities laws, only qualified investors are eligible for these transactions, whether as buyer or seller.
In its next evolution, BF is hoping to expand its reach beyond just qualified investors and allow a broader community to participate in deal selection, evaluation, and updates. While they still can’t participate in deals, they can benefit from the information produced and earn rewards.
The Bnk To The Future Platform
The challenge of creating a platform capable of hosting these trades presented a number of technical and regulatory challenges for the BF team. Specifically, efforts to address the complexities and legalities of creating a trading venue for private equity holdings led to a series of agreements and acquisitions designed to bolster the regulatory footing of the BF platform. Steps included the acquisition of a broker-dealer licensed by FINRA, as well as the acquisition of an SEC-registered Alternative Trading System approved to offer secondary markets in private equity agreements.
A central component of the BF approach, both historically and with current efforts, has been a focus on the regulatory environment. This concern was behind the original move to the Cayman’s in 2010, and has led to the current context where BF has acquired a wide range of regulatory approvals. For the current platform, BF has acquired regulatory approval to host a range of products, including tokenized equity holdings, securities tokens, SAFTs, SAFEs, and Convertible Note agreements, in addition to both securities tokens and equities. Blockchain-based trading will allow rapid settlement and increased transparency relative to traditional venues for the trading of securities, while a wide range of cryptocurrencies will be available and more than 25 fiat currencies will be supported.
By establishing this core infrastructure, but also embedding a decentralized, participatory model where individual platform users can contribute to the overall functioning of the platform, and be rewarded for it, BF is attempting to creating a hybrid securities market and decentralized ecosystem.
What is the token being sold?
BF’s BFT token has wide range of complex, tiered membership and reward roles within the BF ecosystem. The token is designed to incentivize the community of platform users to contribute to sourcing, researching, performing due diligence upon, and monitoring the performance of investment opportunities on the platform. Members stake tokens to constitute memberships, are rewarded with tokens for the value of their contributions, and themselves contribute to evaluating the contributions of other platform members. Certain token uses are also restricted, only available to registered, qualified investors–a mechanism that balances a desire to create an inclusive community with the demands of securities laws that restrict certain roles and opportunities to qualified investors.
For instance, while only accredited investors can trade on the platform, anyone can stake tokens to access research and other information existing upon the platform. Non-accredited investors have the same rights to earn tokens by successfully fulfilling roles such as providing third-party research to the community, or commenting on news, in exchange for token rewards for useful, high quality contributions.
Other examples of specific member roles, and uses of the BF token, are illustrated by the example of a user nominating a project for listing upon the BF platform. The nominating member would stake tokens while nominating the project, an effort to guard against spam listings. After nomination, the core BF team would evaluate the basic company materials for suitability, while BF members would be incentivized to contribute additional due diligence, for which they could be rewarded with BF tokens.
The token also serves to incentivize the behaviour of companies listing on the platform. For instance, companies listing on the platform will be required to stake tokens. Those same companies can earn additional tokens by sharing regular investor updates on the platform, just as platform members can be rewarded for sharing press releases or forum discussions, or commenting upon them. Misleading or poor quality information can be punished in a manner commensurate with the rewards allocated to useful information.
While non-accredited investors, even if they hold tokens, can’t participate in deals, they can get access to the information the community produces. This includes nomination and initial community evaluation. BF typically is not the sole fundraising platform for its deals (it will take 10% of a round and sell to its members), so companies and projects may have other avenues of participation that non-accredited investors can use.
Several reward pools are responsible for distributing rewards for useful contributions to the platform at regular intervals. These pools are periodically refilled whenever BF completes a deal (so release tracks platform growth) or if BF decides to ‘top it up’ with their tokens to spur more community activity. BF will be iterating on the rewards parameters as it builds out its community and adds these features to the platform. It also reserves the right to add new token functionality to both accredited investors and its broader community.
Token Sale Terms
In terms of the upcoming token sale, BF will be selling its one third of its 1 billion total BFT tokens in two phases, at a price of $0.10 per token. Phase I is for accredited investors purchasing an investment contract entitling them to BFT tokens in the future. Phase II, set to being on February 16, 2018, is to be a sale to the public, with a minimum of $1,000 and maximum of $10,000 worth of tokens to be sold to up to 3,000 non-US platform users. The intention with this component of the sale is to ensure a relatively wide distribution of tokens to a number of potential users. That all tokens sold are at the same price, with no discounts, seems to be an effort to be inclusive that animates core elements of the BF platform. Beyond the $3 million sold to non-accredited investors, a further $30 million, or 300 million tokens, will be sold in Phase I. Beyond the amounts distributed in the sale, 30% will be retained by Bnk To The Future Capital SPC Company, subject to a two-year lock-up. 20% will be allocated to the Rewards Pools, with 7% dedicated to token sale costs and 10% retained for advisors and shareholders.
Note: interested participants must complete KYC registration for sale participation prior to the start of the sale.
Who is the team behind the project?
BF e is led by CEO and co-founder Simon Dixon, a former investment banker and early advocate for Bitcoin and decentralized systems. Simon was an early investor in a wide range of blockchain and fintech startups. His co-founder, Bliss Dixon, serves as COO of Bnk To The Future as well as being an early-stage investor in a range of fintech and blockchain startups. They are supported by an extensive team working from offices around the world. Bnk To The Future equally boasts a strong collection of advisors, From Civic co-founders Vinny Lingham and Jonathan Smith, to Li Huo, senior director of the Huobi.pro crypto exchange in Hong Kong to Sunny Ray, co-founder and president of Unocoin, India’s leading Bitcoin company.