Our Telegram community during the ICBM is awesome, but it also can be demanding. We’ve been answering tons of interesting questions.

One of the conversations with a community member was particularly engaging, so I turned it into this Medium post, edited for clarity and comprehension.

Q: Please help me understand: Your token is equity, right?

A: The platform token generated initially in the ICBM — the NEU token — is not an equity token. However, the tokens in the ETOs (Equity ​​Token​​ Offerings) conducted on the Neufund Platform in the future will be equity tokens.

Q: Is ICBM your term for an ICO?

A: It is a new kind of an ICO, yes. ICBM stands for Initial Capital Building Mechanism. It’s not technically an ICO since we do not sell any coins.

We solely reward investors for their commitments of funds and willingness to invest in companies in the future.

Q: So, it is your version of an ICO?

A: Yes

Q: Ok. You don’t sell tokens, but raised almost 18K ETH. What does it mean?

A: It means that 18K* of ETH has been reserved by over 400 investors to invest in companies on our platform in the future. The investors remain to keep full control of their funds. We, Neufund, don’t get any of that and don’t have access to the ETH raised.

(*19K ETH as of now — check the current status here )

Q: So, the investors don’t pay anything now?

A: No, the investors just reserve the ETH in a smart contract, which was especially created for that purpose.

REACTION: 😳😳😳

Q: Like I have 100 ETH and go to the “bank” and put it into a savings account without interest rate?

A: Well, yes. It is the best way to HODL at the moment ;)

Q: I can’t touch this reserved money and should wait for something?

A: You can withdraw your ETH after the ICBM with a 10% fee until 18 months. After that, you can withdraw the full amount without a fee — but to get back the ETH you’ve committed, you’ll also need to give back your initial amount of NEU. Apart from that, your Ether just sits there and waits until the platform is launched so you can start to invest it into companies.

Q: Ok, so there are two ways. Before 18 months, I can get my 100 ETH back, but should pay 10 ETH. Or I wait for 18 months and get back my 100 ETH and return all my NEU?

A: In both cases, you’ll need to return your NEU if you want to get your ETH back, but the rest is correct.

Q: You offer NEUs and ETOs. The idea of NEUs is to hold ETH in a smart contract, right? What about the ETO?

A: The idea of NEU is to be part of Neufund and benefit from the profits and success of the whole platform.

ETOs are the Equity Token Offerings companies are conducting on our platform. This is the offered service: investing in companies in return for equity tokens that represent company shares.

Q: So, let’s say you are a hedge fund. As a fund, you have NEU and pay dividends (or other profits) to holders. At the same time, inside your fund, I can convert NEU to the ETO by choosing a fancy project. And in this case, will I get profit from dividends on the ETO token which will be paid by the company which I supported?

A: Not exactly, you invest your ETH in ETOs, not NEU. By holding NEU you get a share of all profits made on the platform. By investing in an ETO you receive the equity tokens from the particular company and then you get a share of their dividends via the equity token. These are two separate revenue streams :)

REACTION: 🤔

A: You can also sell your NEU and still own equity tokens and enjoy dividends from the company.

Q: Will the ETO be changed to something that a particular company offers?

A: An ETO is like an ICO where instead of utility tokens, equity tokens are offered. We as the Neufund Platform offer the legal and technical framework for conducting ETOs for any kind of companies. So companies come to us to do an ETO. Think of ETOs as IPOs and us as a decentralized NASDAQ.

Q: You as a NASDAQ have your own stock (NEU) which gives me a profit from all IPOs?

A: Yes!

Q: In this case how will I get NEU?

A: If you participate in the ICBM you will get your NEU now (hint: open until Dec 17!). After the ICBM, you will get NEU once you invest in a company. The benefit of participating now is that you can get more NEU than later on, due to the structure of the issuance curve.

Q: Invest in your company?

A: No. Any company that will conduct an ETO on the Neufund Platform.

Q: Let’s say that ICBM ended. You have a fund. Your fund offers NEU tokens. I did not buy NEU during the ICBM. I come to the platform and want to invest ETH to the particular company which places their ETO on the platform…

A: Yes, in that moment you will be rewarded by us and will receive NEU for your investment in an ETO. You have to remember though, we are not a fund. We are just a platform allowing investors to invest in cool companies :)

Q: Like kickico?

A: Yes, but with equity tokens, not utility tokens.

Q: So, I will get NEU and company’s tokens (for example ‘cartoken’)?

A: Yes!

Q: ETO is not a token in this case?

A: ETO (Equity Token Offering) is a mechanism, not a token, it’s just like an ICO.

Q: If cartoken is a security token how can I buy it without KYC?

A: There is a KYC (Know Your Customer) requirement on the platform, once you want to invest in the first company.

Q: I have to pass KYC?

A: Yes

Q: No anonymous transactions?

A: No, since we are offering real equity this is for the benefit of both sides. By investing in an ETO, you become a shareholder in that particular company.

Q: If I have to pass KYC, why does the company which offers ‘cartoken’ need to use your platform? Couldn’t this company run their own ICO and ask investors to pass KYC?

A: True. There are plenty of companies doing ICOs, of course. How Neufund as a platform is different is that it enables companies to offer actual equity tokens (ETOs). The company would need to figure out a legal way to do this on their own if they would want to issue tokens as equity. Also, Neufund opens their ETOs also for non-blockchain companies. Furthermore, we offer a set of legal and technical frameworks that works always and you can be sure you do it legally. We also help with the prospectus.

Q: I heard about some companies which use ICO just to raise money for their real business. They are not Blockchain companies. They just sell their token to raise money and use money to grow bananas for example :)

A: Yes, but they don’t offer company equity in those ICOs.

Q: Right. The token is a utility in this case. 1 token = 1kg of something

A: Yes, that’s a different approach.

Q: What is the problem in this case? Why is utility bad?

A: There is nothing wrong with utility. However, not every business model has a use case for a utility token. It can even endanger the model (we go into more detail on our reasoning on this in a separate blog post).

Q: Ok. Next example: I have a business. I do not know how to use blockchain in my business and do not even need blockchain. But I can run an ICO and say to investors who have to pass KYC— guys, if you don’t hide your name come to me and I will make you officially a company owner. I will register you as a holder of the authorized capital. What are the benefits to use your platform in this case?

A: The benefits of using our platform: you do not have to figure out how to do this legally, how to do this technically and how to talk to BaFin, or other governmental institutions, and how to interact with token holders afterwards… we provide the whole framework :)

REACTION: Thank you, Aga. Now I got a full understanding of the project. And as I said before the idea is absolutely great!!!

Q: Can you give me the contact details of a person who I can talk to personally to discuss opportunities for us as a company?

A: Yes you can write to startups@neufund.org and send me a pitch deck or your questions there ;)

If you’re convinced you can still participate in our ICBM