Porsche Buys Greyp, Proving Blockchain IPOs Are Viable For Crowdfunding
Croatia’s Greyp, an electric-bike maker and the sister company of Mate Rimac’s Rimac Automobili, has seen a majority stake acquisition by giant German automobile manufacturer Porsche. It is not the exit by the e-bike startup that makes the deal noteworthy, however.
What stands out about the deal is that Greyp had raised funds using Neufund’s blockchain-based public offering platform — marking the first exit following a blockchain-based IPO.
The First Blockchain-based Exit
Porsche, which has been holding a 10% stake in Greyp since 2018, has recently acquired a majority stake in the startup. Notably, Greyp has completed its full investment cycle on Neufund, a fintech startup that creates blockchain-based solutions and services. Zoe Adamovicz, CEO of Neufund, said:
“It’s not a super-huge exit in financial terms. But no one’s money got hacked or lost, proving that it is possible to run a blockchain-based IPO safely.”
Using Neufund, Greyp set up its fundraising campaign in 2019 and raised €1.4 million from over 1,000 small investors on blockchain. Now, after 33 months, shareholders will distribute a total of €1.7 million, approximately 20% ROI — a much bigger return than investment in a bond at 3%.
The median investment, which was around €400 back then, has now turned into €480. Kresimir Hlede, CEO at Greyp Bikes, commented:
“When we started our adventure with Greyp Bikes we had no idea what potential our community had to really make a difference, to make things happen. We are extremely proud of the diverse, globally spread group of investors that made our fully-compliant blockchain-based Public Offering on the Neufund platform work out.”
Launched in 2016, Neufund started with the promise of enabling the mainstream to invest in private startups, something that has been largely available to wealthy angel investors. The company boasts more than 11,000 investors from 123 countries, who are estimated to have around €1 billion assets.
Greyp marks the first blockchain-based IPO that has run safely and delivered a substantial return to investors, proving the model could be used more in the future. However, Adamovicz pointed out that there are still regulatory obstacles to this becoming more mainstream. He said Germany’s financial regulator Bafin should take this as an indication that security token offerings are safe.
“The regulators are still not comfortable with blockchain. They are telling companies to just go ahead and do things, but then, if they don’t like it, they can punish you later. It is very difficult to be in limbo like this. It is very frustrating.”
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How Does a Blockchain IPO Work?
Blockchain-based IPOs enable consumers and fans, who are interested in more than just purchasing products, to invest in a company and own part of it. This is in contrast to conventional IPOs, which are only open to wealthy angel investors.
These IPOs also benefit small companies that find it hard to manage the administrative burden of having thousands of small investors. Using smart contracts on a blockchain, a company can feasibly handle investors while keeping expenses at a minimum.
Arguably, blockchain-based IPOs, which use smart contracts to keep track of investments, are a more effective way to crowdfund for greater transparency of company investments and accountability. Crowdfunding, the practice of funding projects by raising capital from a large number of investors, has been bursting in popularity over recent years.
According to the financial solutions company Fundera, more than $17.2 billion is generated every year through crowdfunding in North America. In 2019, there were over 6,455,000 crowdfunding campaigns worldwide, up by 33.7% compared to the earlier year.
Furthermore, the crowdfunding market is slated to grow significantly, with estimates expecting it to reach $300 billion by 2030. It is speculated that there will be approximately around 12 million crowdfunding campaigns by 2030.
Do you think blockchain-based IPOs are the future of crowdfunding? Let us know in the comments below.