Caught this on Securitize's updates
SPiCE VC just became the first tokenized VC fund to distribute an investor payout from a successful exit – a huge deal seeing that traditionally it would take an average of around 10 years to unlock liquidity in Venture Capital investments.
Founded in 2017, SPiCE VC was the first tokenized VC firm to go to market and just last week did something that no VC firm has ever done before.
Before I tell you what they did, let's look at some of the successes the team and token have had.
For starters, the SPiCE token appreciated by 350% in 2021, which was the top-performing tokenized fund (Sourced via STOmarket.com).
The SPiCE VC team also spun off a company called Securitize (heard of them?), after they mastered how to compliantly issue security tokens.
After a successful exit of their investment in OTOY, SPiCE VC became the first tokenized VC firm ever to successfully distribute an investor payout to its LPs!
If I were an investor in this fund, I'd be pretty happy!
I mean, in the traditional VC world - you could have to wait 10-15 years before receiving any sort of liquidity.
That sounds horrific
In the tokenized VC world - you have the opportunity to not only trade your position on a secondary market, but still have rights to distributions upon exits.
Seems like a no-brainer to me.
Via the successful exit - the 400 LPs in the SPiCE VC fund received distributions in either USDC or fiat (up to the investors' discretion).
I had the pleasure to speak with Tal Elyashiv, the Co-founder and Managing Partner of SPiCE VC, who helped shed some light on the intricacies of this process.
Firstly, let's talk about NAV.
Let's get basic on NAV:
NAV (net asset value) per security is calculated like this:
NAV per security = (Assets - Liabilities) / Total number of outstanding securities.
It tells us what the value of the fund is per security at any point in time.
Read more here!
Now that you are a NAV expert, you would realize that the value of the trading token in relation to the fund makes things very interesting.
For example, if the NAV is $1, but the token is trading at $2 - it might be a good time to sell, or on the contrary, if the NAV is $1 and the token is trading at $0.5 - it might be a good time to buy!
That brings me to my next point: "What happens to the NAV when there's an exit?"
Well, since there was an exit, all exit proceeds would be distributed to LPs, therefore, decreasing the NAV.
But, because this token is live-trading, it doesn't look great optically.
Why?
Logically speaking, because the fund had an exit - it shows signs of a succeeding fund and the token price should rise.
The SPiCE VC team had to think out of the box to alleviate this concern.
They decided to buy back shares and burn them, which reduced the supply and increased the price back to the initial NAV.
Here's a graphic directly sourced from the team that may help:
https://newsletter.stomarket.com/p/spice-vc-gettin-spicy
Additionally, SPiCE VC’s NAV has recognized 227% growth from inception to their most recent Q4 2021 NAV report.
FYI SPiCE is not so hot at $2.65
