The traditional VC industry is facing several challenges and pain points that are hindering its growth and effectiveness. One of the most significant issues faced by VCs is the time and effort spent on fundraising, which diverts them from their main job of assessing deal flow, conducting due diligence, and deploying capital. This can have a significant impact on the quality of investment decisions and ultimately the performance of the fund.

Another significant challenge is the illiquidity of investments, which makes it difficult for investors to access their capital for an extended period. Typically, VC funds have tenors of ten years or more, and investors must be prepared to wait a long time before seeing any returns. This can be particularly challenging for individual investors who may have liquidity constraints or require regular access to their capital.

Furthermore, investors in VC funds have little control over the deployment of their capital into different portfolio companies. Most VC funds invest in hundreds of different startups, and investors do not have the autonomy to deploy more capital into companies that they have an affinity for or less into those that they do not.

On the other hand, founders spend a considerable amount of time fundraising and meeting with VCs, angels, and other potential investors. This can be a significant distraction from their primary job of building their business, and the process can be lengthy, frustrating, and unpredictable.

In this context, security tokens may offer a solution to these challenges by enabling the development of a VC2.0 platform. This platform would provide investors with a native security token that gives them access, or a “whitelist,” to the deal flow of startups brought in by VC companies and syndicate groups who act as promoters.

Each startup would issue its own security token, putting all their offering on the platform for investors to conduct their research and diligence, interact directly with the promoters and founders, and ultimately make their own decision on whether or not to invest or how much to invest in each startup.

Once they have made their decisions, investors can swap their native security tokens for the startup tokens they have picked, resulting in a varied investment portfolio from one investor to another. Along the way, investors are afforded the opportunity to trade their startup tokens with other investors, managing their portfolio independently, with the advantage of a liquid secondary market.

The VC2.0 platform would be available 24/7, and its native security tokens would be minted on demand, providing an “evergreen” fundraising opportunity for founders and promoters. This would enable them to raise capital more efficiently, reducing the time and effort spent on fundraising and freeing them to focus on building their business.

Overall, the development of a VC2.0 platform based on security tokens could revolutionize the traditional VC industry, offering investors greater control over their investments, enabling founders to raise capital more efficiently, and creating a liquid secondary market that benefits all stakeholders. As the world becomes increasingly digital and interconnected, the use of security tokens in VC investing may become more common and widespread, paving the way for a more efficient and effective investment landscape.

As a pioneering platform, InvestaX is dedicated to innovation and the utilization of blockchain technology towards the evolution of Security Tokens, we encourage you to contact us to take your first step towards the digital revolution and position yourself at the forefront of the next generation VC industry today.