Crowdfunding Matrix

The Crowdfunding industry has grown from $16 billion in 2014 to an estimated $34 billion in 2015. However, many still wonder, what is Crowdfunding? Crowdfunding is the practice of funding a project by raising contributions from a large number of people, typically via the Internet. The market is flooded with various types of Crowdfunding options like donation, reward, lending, equity, royalty, and even hybrid versions.

The two most popular types of Crowdfunding methods are Reward and Equity. For Rewards based Crowdfunding, entrepreneurs pre-sell a product or service to launch a business, and some times even in return for gifts or thank you notes. E.g. Pebble Technology Corporation used Kickstarter to raise $10.3 million in order to develop the Pebble smart watch and pre-sold it to contributors.

For Equity Crowdfunding, the backer receives share of a company, usually in exchange of the money pledged. E.g. Neil Young used Crowdfunder to raise over $6 million in order to continue development on PonoMusic. In case of NIN.VC, it would be limited partner interest in the NIN Ventures Technology (QP) Fund.

So what is the difference between direct investing in a company using a Crowdfunding portal and NIN.VC?

01. Diversification

As a fund NIN Ventures Technology (QP) Fund makes multiple investments in companies in different sectors (i.e. 3D Printing, Cloud Computing, Education Software, etc.) during Series A and / or B financing, this strategy helps diversify the fund’s portfolio, which is not the case when one invests in a company directly. Think of it as investing in a Mutual Fund vs. Stock.

02. Low Risk

Given the diverse portfolio the fund reduces it’s risk, where as direct investing in a company exposes that investment to higher degree of risk, an appropriate analogy would be to put all your eggs in one basket.

A logical follow up argument would be, what if one makes multiple direct investments in companies of their choice using a Crowdfunding portal over investing in NIN.VC? Given 90% of the startups fail, even if one invests in several companies via a Crowdfunding portal, it becomes solely a numbers game i.e. Quantity over Quality. On the other hand the fund management invests in an Entrepreneur because Entrepreneurs build companies and not the other way round. We (NIN.VC or any venture fund) not only provide adequate financing (including follow up financing rounds and access to our syndicate partners), but also lend our domain expertise and network of partners to help companies with recruitment, PR and marketing, and a viable exit strategy. 

03. Professional Management

Direct investing in a company requires time, expertise, due diligence, constant follow up and / or monitoring. On the other hand NIN.VC acts like a financial advisor and works for the investor and in the fund’s best interest. The fund also provides quarterly audited financial statements to the investor on the progress at the fund.

04. Board Representation

A $1,000 direct investment in a company using a Crowdfunding portal does not give an individual enough rights, while as a fund we take board seat on all our investments. Thus we are in the loop with the company management when it comes to keeping tabs on the progress at the company and are in a position to help / make suggestions on several occasions. And also in a position to gauge and be a part of the valuation process when it comes to addressing dilution and follow up financing rounds. 

05. Liquidity at Exit

When one invests in the NIN Ventures Technology (QP) Fund, they are locked in with the fund and the management for a good 10 (+2) years. Redemptions are extremely rare and liquidity happens as and when the fund makes an exit in a company via an IPO or M&A transaction. On the other hand direct investment in a company can be offered in the secondary market for a transfer of ownership, but valuation, timing, and the choice of investment will dictate that transaction.

Five Reasons to Invest Digital Currency

In January 2015, NIN Ventures let Bitcoin owners attain liquidity via SnapCard in return for investment in the NIN Ventures Technology (QP) Fund. Given the popularity of that initiative and the momentum behind other digital currencies, we have now opened doors for Litecoin and Dogecoin owners to invest in NIN.VC.

Bitcoin is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence. Bitcoins current market capitalization is approximately $ 3.31 billion.1

Litecoin is a peer-to-peer cryptocurrency and open source software project released under the MIT/X11 license and inspired by Bitcoin. Litecoin differs from Bitcoin in aspects like faster block generation rate and uses a proof of work scheme. Litecoin has a current market capitalization of approximately $ 57.17 million.2

Dogecoin is a peer-to-peer open source digital currency and falls under the category of altcoins. Dogecoin is scrypt based (i.e. based on a password key) and enables fast payment to anyone across the globe. Dogecoin has a current market capitalization is approximately $ 13.33 million.3

So why should digital currency owners invest?

Digital Currency Instability

Bitcoin has plummeted about 80% in value since its peak just over a year ago and has been gradually declining ever since. At it’s peak on November 30, 2013 the price of Bitcoin was roughly $ 1,124.76 and on May 19, 2015 the price was $ 232.79.4

At its peak on December 4, 2013, the price of Litecoin was $ 39.59 and on May 19, 2015 the price had dropped to $ 1.45, which is a 96% decrease in value.  Litecoin is also gradually declining in value given it is highly influenced by Bitcoin.5

At its peak on January 21, 2014, the price of one DogeCoin was $ 0.0019. A year later on May 19, 2015, the price was $ 0.0001, which shows a 94% decrease in value, as it follows Bitcoin and Litecoin.6

Liquidity

There are many vendors that accept Digital Currency eg. Target, Apple, Tesla, but NIN Ventures is a unique opportunity for them to invest or attain liquidity instead of just spending it.

Tap into Venture Capital 

Investing in Venture Capital means investing in groundbreaking technologies that have tremendous growth / return opportunities. Traditionally, venture capital had been the domain of the wealthy and institutions but with NIN.VC digital currency owners can now tap into the venture capital asset class with a low minimum of $ 100,000.

Return on Investment

All digital currencies experience a high degree of fluctuation, thus investing your digital currency can result in a higher degree of stability and / or returns. An individual's traditional portfolio consists of stocks and bonds. Historically, if you look at United States Venture Capital Index and S&P 500 you will notice the USVC Index tends to outperform the S&P 500 and they also have an inverse relationship. Thus adding venture capital to ones portfolio will help mitigate that risk and yield higher returns.

Diversification     

Harvard & Yale are the biggest and best performing Endowment Funds. Their long-term approach and investments in alternatives (e.g. Venture Capital) allow them to achieve true diversification and help mitigate the risk involved in having only a stock-bond or digital currency portfolio. With NIN.VC digital currency owners can now invest like Harvard and Yale.8

     To invest in NIN Ventures using Bitcoin, Litecoin, or Dogecoin via SnapCard, one must first sign up on http://www.nin.vc and verify accreditation. The next step is to complete the subscription documents, then select payment with SnapCard and the type of currency i.e. Bitcoin, Litecoin, or Dogecoin. Given the daily fluctuations in digital currency pricing, the settlement price will be based on the day of the initial / final close of the fund.

1  Market Cap, Cryptocoincharts.info

2  Market Cap, Cryptocoincharts.info
3  Market Cap, Coinmarketcap.com
4  Historical and Closing Price as of May 19, 2015, Cryptocoincharts.info

5  Historical and Closing Price as of May 19, 2015, Cryptocoincharts.info   

6  Historical and Closing Price as of May 19, 2015, Coinmarketcap.com

⁷  Cambridge Associates LLC, Dow Jones Indices, Standard & Poor’s, and Thomson Reuters Datastream. The Cambridge Associates LLC U.S Venture Capital Index is an end-to- end calculation based on data compiled from 1,420 U.S. venture capital  funds, including fully liquidated partnership, formed between 1981 and 2012. 

⁸ Harvard and Yale 2008-2013 Endowment Report

How to Invest in NIN.VC?

NIN.VC INTRODUCTION

NIN Ventures (or NIN.VC) is a first-of-its-kind technology venture capital fund to be raised via World Wide Web. NIN.VC will invest in early / growth stage financial services, education software,  internet and digital media, mobile communication, cloud computing, 3D printing, and other path breaking companies. The fund will invest $1,000,000 - $5,000,000 in early / growth stage companies as a part of a syndicate or lead. 

HOW TO INVEST IN NIN.VC?

STEP 1: Log on to www.nin.vc and watch our introduction videos. 

STEP 2: To (1) SIGN UP, enter your first and last name, email address, and acknowledge that you are an accredited investor. Once you are signed in, you will get access to marketing materials and events. The (2) MARKETING MATERIALS page includes our Private Placement Memorandum and Investor Presentation to help you learn more about our fund. You will also get access to our (3) EVENTS and you would able to (4) SCHEDULE APPOINTMENTS with our investment team for one-on-one meetings. After carefully reading the marketing materials, click the (5) INVEST WITH US button to start your investment process.

(1) SIGN UP

 (2) MARKETING MATERIALS  

(3) EVENTS

  

   

(4) SCHEDULE APPOINTMENT

STEP 3: The INVEST WITH US button will direct you to our RISK & DISCLOSURE statement. An investor must accept the RISK & DISCLOSURE statement that explains Venture Capital investing and the risks associated with it prior to proceeding. After carefully reading the Risk and Disclosure statement, click the “I agree” to begin your Accreditation process.

STEP 4: Select the appropriate Accreditation form for (1) INDIVIDUAL OR (2) ENTITY. Complete the form and upload satisfactory supporting documents (in PDF format).

(1) INDIVIDUAL

(2) ENTITY

STEP 5: Please download, read, complete, sign and then upload the SUBSCRIPTION AGREEMENT and W9. Proceed to the online payment process.

STEP 6:  There are multiple ways of investing in NIN Ventures Technology (QP) Fund. A. Checking/Savings account B. Defined Benefit Plan C. Self-Directed IRA D. Pay with SnapCard (Bitcoin).

(A) CHECKING/ SAVINGS

Fill out banking information and payment amount (minimum $100,000).

(B) DEFINED BENEFIT PLAN (RSW)

A Defined Benefit Plan is a retirement plan that can invest in a wide range of securities and investment products including venture funds. All contributions made to this plan and subsequently are top line tax deduction for the business whether it is a sole proprietorship, an LLC, an LLP, a P.C., a C Corp. or an S. Corp. The investment growth is also tax deferred under the umbrella of the Defined Benefit Plan. For this purpose NIN Ventures is working closely with Robin S. Weingast & Associates (or RSW). RSW would help establish this plan using a separate account with a new plan tax id number and RSW would also prepare the legal plan trust documents. RSW will calculate the maximum contribution that could be made to the plan and then the client would invest directly in NIN Ventures as the plan’s investment.

To invest in NIN Ventures using your Defined Benefit Plan, you must first sign up to invest in NIN Ventures by visiting www.nin.vc and verify that you are an accredited investor. Next, establish a Defined Benefit Plan with Robin S. Weingast & Associates. Once the plan is established and the contribution is calculated, you can complete the subscription to the NIN Ventures Private Placement and process your payment online at www. nin.vc

(C) IRA (ENTRUST)

‘Self-directed’ is a descriptive term that is used to describe how some IRA providers administer the assets they hold. With a self-directed IRA the client controls what their IRA is invested in. Self-directed IRAs allow investors to hold ‘alternative’ assets within their tax deferred retirement plan; assets like private placement in a venture capital fund. Like any IRA investment a self-directed IRA has built in tax deferred growth and thus an individual will not pay capital gain tax on the growth of the investment. The return will flow back to the self-directed IRA and will not be taxable to the account holder. A self-directed IRA allows for true diversification that is not otherwise achievable in a standard IRA portfolio. In order to facilitate this NIN Ventures has teamed up with The Entrust Group, which will help set up an IRA with the Entrust Group and direct that investment into NIN Ventures Technology (QP) Fund. 

To invest in NIN Ventures using your IRA account, you must first sign up on www.nin.vc, begin your investment process, and verify that you are an accredited investor. Then, set up a self-directed account with The Entrust Group. After setting up and funding your self-directed IRA Account, you will be able to direct Entrust to invest in NIN Ventures. Once the investment is made, NIN Ventures will report quarterly activity to The Entrust Group, and Entrust will then update the IRA and that change in value will be reflected on your Entrust IRA statement.

(D) BITCOIN (SNAPCARD)

Bitcoin is emerging as a new form of alternative payment and a global currency. NIN Ventures understands the significance of this change and has teamed up with SnapCard to let Bitcoin owners tap into venture capital. We allow Bitcoin owners attain liquidity via SnapCard in return for investment in the NIN Ventures Technology (QP) Fund.

To invest in NIN Ventures using SnapCard, you must first sign up on www.nin.vc and verify that you are an accredited investor. The next step is to complete the subscription documents, then finally select payment using SnapCard. Given the daily fluctuations in Bitcoin pricing, the settlement price will be based on the day of the initial/final close.

Note: At the moment, NIN Ventures Technology (QP) Fund is only open to accredited US investors and entities. Dates for both initial/final close will be notified to investors in advance. The initial close will be when the fund reaches $$10 million and final close at $25 million.

STEP 7: Once you have completed the subscription process and your documents and payment are verified, you will gain access to our Fund Performance Reports.