FAQs
What is a syndicate?
Investment Syndication involves assembling a group of partners, known as a syndicate, to engage in large-scale financial transactions. Syndication enables companies and projects to raise more capital than could be obtained from individual investors and provides access to a diversified group of investors with various expertise.
To learn more, check out our blog post on decentralized investment syndicates and how they can supercharge your portfolio.
What is an SPV?
A Special Purpose Vehicle (SPV) is a legal entity designed for investing in a specific deal or asset. 100% of the SPV's capital consists of acquired shares or rights over the underlying utility assets. SPVs are not allowed to engage in commercial activities and serve only as a pass-through vehicle to own the utility assets.
What are issuance instruments?
Equity
Equity represents ownership in a company, typically in the form of common or preferred shares. Equity holders have a claim on the company's profits and assets and usually have voting rights that allow them to influence company decisions.
SAFE
A SAFE is an agreement that gives investors the right to receive equity in a company at a future date, typically when the company raises its next round of funding. It’s a flexible instrument that delays valuation negotiations until a later stage and is popular among startups.
Tokens
Traditional tokens represent various rights or utilities within a specific ecosystem, often Web3 native. They can be used for different purposes, including as a medium of exchange, a reward system, or for platform discounts. Tokens can be either fungible (like cryptocurrencies) or non-fungible (like NFTs).
SAFT
A SAFT is a financial instrument used in the blockchain space, where investors provide capital in exchange for the right to receive tokens at a later date, usually once the project or platform is developed and operational. It’s similar to a SAFE but specifically designed for token-based projects.
Warrants
Warrants are financial instruments that give the holder the right, but not the obligation, to purchase equity or tokens at a specified price (the exercise price) before a certain date. Warrants are often issued as part of a financing package or as an incentive to investors.
Economic Rights Units
This structure grants economic benefits without conferring ownership or voting rights. ERUs would entitle holders to a share of profits or distributions but wouldn’t make them members of the issuing entity.
Promissory Notes
This is a debt instrument where the issuer promises to pay the holder an amount based on the profits from a specific asset. It can be structured in many ways, including as a “participation loan,” where the payout is tied to the performance of the asset.
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Do SPV tokens provide voting rights?
Currently no. In the future, we plan to structure some SPVs as DAOs depending on the use case. This would provide voting rights if the issuance instrument being acquired includes them.
Is there a minimum size to participate in a deal?
Primary Market
Each deal will have a minimum entry price. This price is based on factors like the lot size and the number of available tickets to invest. Additionally, the price already includes the costs for registering and tokenizing the SPV, which are deferred and shared among all investors.
Secondary Market
SPV tokens traded on secondary markets are priced by the free market, allowing smaller investors to acquire fractionalized shares.
In either case, investors need to account for the required gas fee for each transaction they submit, as this will add to their final execution price.
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