Blockchain Capital is a venture capital firm that invests in both equity and cryptoassets offered by blockchain technology companies. The firm offers their own token, clearly designated as a security, having launched a fund within existing US regulatory requirements. Blockchain Capital has made investments in seventy two companies at varying stages of development and was co-founded by Bart Stephens, Brock Pierce, and Brad Stephens, who also act as the fund’s managing partners. Brock Pierce is a controversial figure and early digital currency entrepreneur who serves as the Chairman of the Bitcoin Foundation, and on the founding boards of blockchain startups including Omni, GoCoin, and Tether among others.
Blockchain Capital invests in both equity and cryptoassets at all stages of development, offering projects access to a network of entrepreneurs, investors, and advisors dedicated to leveraging blockchain technology to create new markets and business models. Blockchain Capital’s token, BCAP, confers holders rights to a portion of the fund’s profits. An interactive platform, b.loop, allows Blockchain Capital’s investment team to update and engage with BCAP holders. The project hoped its token sale, the first explicitly conducted as a Reg D offering, would serve as a blueprint to other teams aiming to conduct token sales under US securities law and communicated their intent to invest in projects exhibiting best practices in their approach to raising capital and growing their company, though the execution was not without criticism. The sale was the first hosted by Tokenhub and was only open to accredited investors and there was a one year lock-up on the tokens sold to US investors, in compliance with SEC guidelines.
Blockchain Capital’s token, BCAP, serves as proof of fund membership and confers holders rights to a portion of the fund’s profits. The goal of the token design is for the collective “market capitalization” to track the fund’s NAV. According the BCAP offering memorandum--available at time of writing on Scribd but not available to non-accredited investors during the sale--the fund’s managing partners collect a 2.5% management fee (based on total assets under management) and a 25% performance fee (a fee on returns). Any realizations in the fund (after the performance fee) are split: 50% to be reinvested in the fund and 50% to be used for optional redemptions or BCAP buybacks. The BCAP token is fully transferable, providing liquidity atypical to traditional venture capital markets. However, BCAP tokens do not have a liquidation option or a redemption right, so investors cannot pull any out of the fund vehicle. The tokens do not have voting or governance rights--not uncommon for Limited Partners in a fund. The fund reserves the right to begin buying BCAP from the market if the market cap of BCAP falls below 75% of the NAV. In addition, after 10 years have passed, Blockchain Capital reserves the option to buy out the BCAP supply at then-current fund NAV.