StructuringICO Wild West

Blockchain andICO industriesoverview

Despite the buzz in the industry,Blockchain market is underfinancedand accounts to 2,3% of FinTech market

There is a decreasing tendency towards launchingnew blockchain companies2015 and 2016 showed a very slow growth in the block-chain investments: 33% and 18% respectivelyWhile Blockchain industry has an enormous potential, it was invested only 0.5B USD in comparison with 23B USD invested into Fintech industry, meaning that the Blockchain industry is underfinanced Several companies were already acquired by bigger ones due to lack of funding

2016

542

2015

458

2014

344

2013

83

2012

3

11999

5431

12

Investments in blockchain Key market observations

# of rounds

amount of capital, $M

Major Acquisitions in 2016+314%

+33%

+18%

1 Circle 2013 Late $110M 6/16 $60M US Remittance

2 Ripple 2012 B $90.5M 9/16 $55M US Remittance

3 Blockstream 2014 A $76M 2/16 $55M Canada Bitcoin4 Bitfury 2012 Late $110M 1/17 $30M US Security

5 Bitflyer 2014 C $32M 4/16 $27M Japan Exchange

6 Quoine 2014 A $22M 6/16 $20M Singapore Finance

7 Coibase 2012 Late $117M 7/16 $10.5M US Info, bitcoin

8 Gem 2014 A $10.4M 1/16 $7.1M US Developers

9 Simplex 2014 A $8.4M 2/16 $7M Israel Payments10 Symbiont 2015 A $8.3M 1/16 $7M US Software

11 Tech Bureau 2014 A $6.5M 5/16 $6.5M Japan Developers

12 Zaif 2015 A $6.7M 5/16 $6.2M Japan Finance

13 Lisk 2016 PreA $5.7M 3/16 $5.7M Germany Developers

14 BlockStack 2014 A $5M 10/16 $5M Philippines Banking

15 Elliptic 2013 A $7M 3/16 $5M UK Bitcoin

16 Bitt 2013 A $5.5M 4/16 $4M NZ Payments

17 Chronicled 2014 PreA $3.4M 3/16 $3.4M US Hardware

18 Equibit 2015 PreA $3M 2/16 $3M Canada Finance

19 OB1 2015 A $3M 12/16 $3M US E-commerce

20 OpenBazar 2014 A $4M 12/16 $3M US Consumers

The Blockchain industry is obviously underfinanced: the difference between the 1st and 20th largestinvestment deals in 2013-2016 is 2750% (or $57M) – sign of green industry

Need for new crypto investmentinstruments became a trigger for ICO growth

Raise of

blockchainassets

Raise of

models ofcryptocurrencyapplications

Raise of

cryptocurrencyinvestmentinstruments

2009 2013 2017

The market of Blockchain assets, including crypto curren-cies was very limited to “but/sell” only. Investments in blockchain were also limited by risks and early stage of an industry

New ICO options emerged on a basis of crowdfunding and crowd investing in to a startups. The 1st ICO was held in 2013.

New ICO options emerged on a basis of crowdfunding and crowd investing in to a startups. The 1st ICO was held in 2013.

What is ICO?

Tokens are crowdfunding units, sold by projects in order to develop the product / support the expan- sions / accumulate tokens for other goals

Tokens represent rights, which may be of different types:

In many cases tokens give a right to get some service in future (eg. transactions)

It can be an access to the platform

In certain cases tokens represent rights for dividends or underlying assets (eg, commodities or shares)

In the process of ICO tokens can be sold for fiat (USD, EUR) or more liquid tokens with mature eco-system and cryptocurrencies (bitcoins and ethers)

ICO

ITO

Alternative and better naming for ICO:

ICS

TGE

- Initial Coin Offering

- Initial Coin Sale

- Token Generation Event

- Initial Token Offering

From the business logic, ICO is much closer to crowdfunding than to investments

ICOCrowdfunding

ICO - the new tool to addressfunding challenges of Blockchain industryICO already surpassed VC funding for blockchain companies in 2017

222

145 121

Q2Q4Q3Q2Q1Q4Q3Q2Q1 Q1

20162015 2017

43

173 161

82116

232

96

31

25

21

17

11

3

ICO token sales, $M

# of deals

early stages VC, $M~$300M $1.6B+

Raised through ICOs

2014-2016 1H 2017

Initial Coin Offerings started to gain importance in 2016, with the potential to capture more interest

Until 2017, all the token launches were less than 1% of global crowdfunding activity, suggesting opportunity

45135 23

148121

794

Market dynamics & expectations

4513 235

148121

794 771873

9751077

650

520

Q2Q4Q3 Q4Q3Q2Q1Q4Q4 Q3Q2Q1 Q1

2016 2017 2018

Core observations:Currently – there were around 300 ICOs done up to date, the number grows at a quicker pace

Huge amount of crypto capital is underused, new investment instruments are still on the rise

Expectations are high enough, market shall correct itself in the near future, and become more stable

The number of ICOs is growing faster than the volume of new money on the market

Market saturates quickly, many low quality projects / risky ideas appear

The industry sees an influx of high quality talents and smart capital

Market observations:Large institutional investors get interested in tokenized economy

Growth of new business / ownership models that come along with tokenized experiments

ICOs brings an interest from governments, new regulation activi-ties shall boost the industry forward;

ICO token sales, M $

ICO token sales forecast, M $

ICO market cooling downdue to decrease of "hype" level

Market renaissance due to entering of VC fundsand institutional investors to ICO market

Money. Big Money!So, what is the reason for this craziness?

Why ICOsare so

popular?

Democratization of access

Everyone can participate

Not limited by geography

Opportunity to invest accumulated cryptocurrency

People still don’t have many ways how to spendcryptocurrency except conversion into fiat.This problem is especially acute for crypto ‘whales’,who don’t have a way to withdraw their tokens into fiat without losing much value

Opportunity to trade tokens immediately

Unlike in case with VC investments, new tokens can usually be traded almost immediately on an exchange

Crypto-community inborn passion for moderntechnologies and applications

They are trying to support any initiativesthat are disrupting existing rules and standards

Today ICO is like a show, which is even bigger thanmatch of the year “Floyd Mayweather Jr. vs. Conor McGregor”

Money Fight 2017

$600М“SHOW”

$1.6B“SHOW”

VS

“The Money Fight”

More and more companies are comingto ICO, creating big opportunitiesfor any kind of investorsNotable ICOs ($M)

Tezos 208

EOS.IO 200

Bancor 153

Status 95

Tenx 80

MobileGo 53

Sonm 42

Basic A Token 35

Civic 33

Storj 30

Polybius 29

Aragon 25

Aeternity 22

OpenAnx 19

Cosmos Network 17

Qtum 16

GigaWatt 15

Mysterium 14

Nimiq 14

TokenCard 13

Dao Casino 12

Gnosis 12

IEX.EC 12

ABT coin 12

Blockchain Capital Fund 10

Taas 7.7

Zrcoin 7.1

Matchpool 5.6

Chronobank 5.4

Humaniq 5.2

Starta 5.1

Excudo 5

Dimcoin 4.7

Wetrust 4.6

Encryptel 4.5

Cryptotel 3.8

Dfinity 3.8

Lunyr 3.4

Trueflip 3.1

Melon 2.9

Quantum Resistant Ledger 2.8

Edgeless 2.7

Skincoin 2.5

Done, ongoing and pending ICOs

314

Total proceeds

$1,27M

Average Proceeds

$23M

Median Proceeds

$5.5M

ICOs allow startups fundraisemillions of USD within minutes/hours

Project Country ICO volume Duration of ICO

Tezos Switzerland $206.33M 14 days

EOS Cayman Islands $200M 341 days

Bancor Protocol Switzerland $153M 3 hours

The DAO Stateless $152M n/a

Status.Im Switzerland $95M 17.2 hours

MobileGo USA $53M 1 month

Basic Atention Token USA $35M 30 seconds

Polybius Estonia $31.64M 6 weeks

Aragon Estonia $25M 15 minutes

æternity Liechtenstein $24.75M 3 weeks

Solidx Trust ETFCurrently denied

by Sec on up listing

N/A N/ASize ICO status

First VC funds are entering ICO marketand fundraising through ICO, but it’s overall quantityand funding amount is still very low (3-5% of the whole ICO industry)

Brings SEC and regulatory bodies’certainty to industry

Narrow focuses emerge:bitcoin trading, protocol investments

New investment instrumentsare killing the fraud due to higher control

New instruments owners are unexperienced

Bitcoin and crypto assets are easy to purchase,no need for dedicated funds

Inability to acquire other digital assets

High risks, unnecessary fees,low quality DD analysis

Pros Cons

Taas FundHedge fund focused

on trading cryptocurrencies

$7.5M DoneSize ICO status

Blockchain CapitalTokenized Blockchainventure capital fund

$10M DoneSize ICO status

Pantera CapitalHedge fund focused

on trading cryptocurrencies

$35M DoneSize ICO status

Starta CapitalAcceleration program

$5M GoingSize ICO status

BB FundVenture capital fund focused on investments in Blockchain

N/A ComingSize ICO status

Finshi CapitalTokenized venture capital fund

N/A GoingSize ICO status

Grayscale Trust ETFCurrently trading OTCQX, seeking up-listing to BYSE

N/A N/ASize ICO status

Tokenized Funds comparison

Target orRaised (AUM)

Registered/Based

Structure & license

Fees

Profit share /dividends

Own tech platform,audit and wallet

Previous investmentexperience andrelevant background

Geo Focus

Strategy focusand industry

Investors

TaaS

$8M

Singapore / No info

LLC, No any legal information available

Diverse ICOs,no focus

-

Non-accredited individuals, no KYCUnlimited # n

Entry fee– 15%Success – 25%

TradableNo

Quarterly

Yes

No

Finshi Capital

n/a

Singapore/Russia

LLCNot licensed

No strategy

-

Non-accredited individuals, no KYCUnlimited #

Entry fee – 12.5%Success fee – 20%

Tradable on exchangeNo

After exits

No

No

Blockchan Capital

$50M

Singapore/US

FMC Licensed foraccredited investors

Blockchain startups

Global

Accredited with KYC

Limited #

Annual fee – 2.5%Success fee – 25%

Noprivate deal with CEO

1 year lock-up, private sale

No

63 investments /5 exits

Mainstreet Capital

$50M

Singapore/US

FMC, LP-GPNot licensed

Manufacturing,Healthcare, Real estate

Midwest US

Non-accreditedindividuals, KYCUnlimited #

Entry fee– 10%Success – 25%

No, private deal with CEO

After exits

No

No

Monkey Capital

$50M

Singapore/Singapore

LLCNot licensed

Aerospace, Blockchain, Fintech, Real Estate

USA, SE Asia, Europe

Non-accreditedndividuals, KYCUnlimited #

-

Tradable on exchangeNo

-

No

No

Starta Capital

$5M

Singapore/US

LLCNot licensed

Seed stage techstartups, no focus

Eastern Europe

Non-accreditedindividuals, KYCUnlimited #

Annual fee – 2.5%Success fee – 20%

TradableNo

No

No

Accelerator activities /no exits

BB Fund

$200M Singapore/Singapore

FMC, LP-GPLicensed in Singapore

Tokenized Fintech and Blockchain companies

Asia, Europe, US

Accredited with KYCLimited #

Entry fee – 4%Annual fee – 2%Success fee – 20%

TradableYes, semiannual redeem

Semiannual

Yes

23 investments / 7 exits

Token liquidity,Exit possibility

We can say today that ICO becamea stand-alone industry

Protocols

Protocols investing in other protocols

Exchanges

Financial & Legal Advisors

HNWI traders

Crypto hedge funds

VCs with equity and tokens

VCs with EquityMarket Makers

Market data General Market research ICO Market research

non-tokentransaction

tokentransaction

Why it can be interesting for VC funds?

Traditional VC Crypto investments

Investment horizon 7-10 years 1-5 years

Ownership model Privileged shares Crypto tokens, crypto currency

Entry stage Angel, Seed, A/B rounds Pre-mine, Genesis, pre-ICO, ICO

Exit options IPO, M&A IPO, M&A, placement on exchange

Business model Product or service sell Closed loop – economy, based on crypto

Legal structure Limited partnership No Jurisdiction for DAO registration

Entry Sources Private investors, family, Crowdfunding, innovative funds

institutional investors and private investors, future users

Currencies Fiat ($, RUR, £) Fiat and cryptocurrency

Criteria New or emerging business models New business models creation

Going to ICO– not easy, but still can be done quickly

Pre-announcement PR-Campaign Start of sales in the ICOOffer

1-2 months

Announcement of the project in the communities of crypto-currency investors

Bitcointalk, Reddit, others;

Purpose is to explain the essence to investors and receive the first feedback

Proposal for conclusionof the transaction;

Addressed to a particularperson, a limited orunlimited #;

Offer covers all the nuancesof the project, specifies tokens;

After signing the offer, the start date of the sale of tokens is announced

Presentations and various conferences;

Road show – meetings with prospective major investors and analysts;

Target audience - participants of crowdfunding program, so-called ”business angels”;

Collect a min amount of money, specified by the offer, and then release the tokens;

Sell the tokens on the crypto-currency exchanges. It’s neces-sary to release it in advance;

2-5 weeks 1-3 months 1-12 months

ICO is goodfor every participant of the market?

Efficient fundraising: fast, low-cost,convenient, less documentation etc

Relevant Investors from the community (and first users/advocates)

Branding and marketing due tocommunity building

“Skin in the game” with early adopters

Share both the risks and the benefitsof their efforts with the investors

Angel/VC/CVC/corporate funding is much more intrusive on the founder’s vision

Democratization and low entry barriers (almost everyone from everywhere can participate, at least whil it’s not regulated)

High liquidity

Divest from main cryptocurrenciesinto coins

Some transparency (eg, with an escrow)

Early access to a tokenwhich has the potential for capital growth

”Gaming” - the returns from investingin ICOs can be in the 1000% and also complete losses

Diversification of assets (no link to macro economics, fiats, stock markets etc)

Involvement - Investors can be part of a community and first users

Just a new innovative and trendy wayto deploy capital

Internet revolution: new companies and their tokens/coins will help building a new decentralized web, independent from any central entity.

Finance revolution: Blockchain is assumed to be at the cutting edge of fintech, the technology and business model being proposed will benefit the whole community.

Education and Time to mature: more competition in the crypto space makes the competitors better and stronger, the Blockchain projects are getting mature and prepared for the real competition (tradition-al enterprises, banks and other incumbents)

For Founders and Entrepreneurs For conventional “investors”/crowdfunders

Cryptocurrency community

What value VC Funds bringto investors ICO market?

Pre-ICOsignificantdiscounts

VC funds are usually invited to participate at so-called “private presale” or “pre-ICO”

Opportunity to get significant benefits and discounts: 10-40% off

Accessto closedofferings

More mature and established startups prefer to offer their tokens to closed loopof professionalinvestors, where the general crowd will not get an access

Lowerrisks in fraud,scam

The team of VC fund is able to execute proper due diligence

Specialists in block-chain, lawyers and analysts are on board

Betterinvestmentanalysis

Only professional knowledge of the market, demand, trends can help to make a rightinvestment decision

Usual players on a market have an under-standing of Product market fit

Ability to create valueof investment>

Portfolio managers of VC Fund had experience on value management and provide strong support for investees (networking, interna-tional connections, business development, mentoring etc)

Lack ofpostinvestmentsupport

Misunderstandingof valuationmetrics

But

ICO market has huge problems today:overvaluations, scams, fraud, speculations

Existing problems of ICO market create a demandfor professional investors, coming from VC industry

Misunderstandingmarketand business

Low qualitydiligence checks(tech, legal, fin)

Regulatory risksand lack of legalinvestigation

Lack ofprofessionalinvestors

Source of ICO industry problems

Risks

Regulatory and Legal ICO risksICO Taxes Risk

Risks related to Regulations.

ICO documents do they have a legal basis?

Connection between the token holdersand holding company

Intellectual property

Investment/Contributionfinancial risks

No real financial planning and economics behind

No previous traction of metrics(usually only MVP or descriptions)

Post-ICO slowdown(no real value creation, no media coverage)

Business ICO risksMarket demand and macroeconomics

Traditional players offerings

New competitors

Technological shifts

Regulatory challenges (licenses for business)

Voting? Control? Participation?

ICO founders risksUsually no real world business experience

Motivation after big ICO?

Control over funds?

Salaries?

Financial statements?

Token risksLost or stolen tokens

Hacked wallets

Challenge of smart contract

Traditional VC Crypto investments

Investment horizon 7-10 years 1-5 years

Ownership model Privileged shares Crypto tokens, crypto currency

Entry stage Angel, Seed, A/B rounds Pre-mine, Genesis, pre-ICO, ICO

Exit options IPO, M&A IPO, M&A, placement on exchange

Business model Product or service sell Closed loop – economy, based on crypto

Legal structure Limited partnership No Jurisdiction for DAO registration

Entry Sources Private investors, family, Crowdfunding, innovative funds

institutional investors and private investors, future users

Currencies Fiat ($, RUR, £) Fiat and cryptocurrency

Criteria New or emerging business models New business models creation

ICO founders risksUsually no real world business experience

Motivation after big ICO?

Control over funds?

Salaries?

Financial statements?

If we compare it with traditionalfintech-backed startups:

$392M 14 rounds

in 10 years

$440M8 Roundsin 7 years

$217M 5 rounds

in 3 years

$355M13 rounds

in 12 years

VS

1-2 year

No traction

No recognition

on the market

Almost 0 money

raised previously

Some ICO problems are already visible(after only few months of its boom),so what will be in the future?

-$7M -$250K-$32M-$50M

ICO is just a new tool for making investments,not an all-in-one solution that can transformeach person into sophisticated investor As well as in any other industry (like medicine),for success in investments you need:

Education (math/finance/economics/research)

Experience and expertise (VC/PE/IB, fintech, blockchain etc)

Balanced supportive team (finance + analytics + tech + legal)

Right skillset (communication, psychology)

Network and connections

BB Fund executive overviewBB Fund, launched by top-minds from Blockchain and Fintechindustry and VC fund Life.SREDA, is a tokenized close-end fund, aimed to bring professional investment expertise to the growing ICO/ITO market.

The Mission of BBFund is to make ICO market efficient, reliable and trustful for all participants (investment crowd, startups, regulators etc)

BB Fund: from “Banking on Blockchain” to “Based on Blockchain”

BB Fund initially started in 2016 as a Banking on Blockchain fund, specifically dedicated to FinTech ventures on the blockchain technology.Read on Bitcoin.com or VentureBeat

In 2017 BB Fund team decided to expand its investment focus to all blockchain-related initiatives (including ICO/ITO) and the BB Fund was renamed to Based on Blockchain Fund and submitted its plans for fundraising through ITO

Investment strategy Investment stages

BB Fund value proposition and USP Experienced, prominent and trustful teamof Blockchain and FIntech experts

Backed by professional VC fund Life.SREDA (Singapore)with 5 years experience in the Fintech space

Open and transparent investment process:information is available to all token-holders

BlockchainSectors

ICO/ITO market opportunities and challenges

ICO/ITO (initial Coin/Token Offering) is the new way of funding blockchain startups, which is getting more and more popular across FinTech and Block-chain crowd and already hit a record of $1B invested in 2017 only.

However the market is very young and immature, which leads to a high inflow of unreliable companies, scams and fraud as well as other risks for investors: financial, legal, technical. The market needs the entrance of professional investment players who will bring trust and transparency to the ICO market.

Team of professional VC investors

Strong traction: 23 investments, 7 exits

Supplychain

E-wallets,Digital banks RegTech, KYC

Payments

Big Data,scoring

BankTech

Infrastructure,BAAS, BAAP

Pre-saleand

Pre-ICOstages

ICO roundsand

actual sales

Secondary salesand

new rounds

GovTech

Lending, p2p,Crowdfunding

e-Commerce,marketplaces

Life.SREDA– professional VC fund on ICO market

Team of professional

VC investors

Own Accelerators& R&D lab

Strong traction:

23 investments, 7 exits annual venture research

leading fintech newsportal

bringing Traditional Banking,Fintech and Blockchaintogether www.fintechranking.com

www.fintech-research.com

Innopolis, Russia

Singapore

London, UK

BB Fund is ready to take off with you on ICO

Size of entry, minimum to efficient scale

Order of entry

Industry life cycle

Degree of strategic innovation

Complementary assets

Relatedness to the market BB Fund’s partners are Fintech and blockchain frontiers

Industry influencers, 23 Fintech investments

Partners of a fund – ex-Barclays, ex-Lloyds, ex-Fidor

Consulting, accelerators, R&D lab, own venture

Deep industry knowledge, the leading Fintech fund

Built an ecosystem of Fintech – sreda.vc

Early stage of the industry life cycle

Solid odds to succeed in the shakeout

Not the first movers – early birds show the points

BBF is a more experienced player – less risky

BBF is entering with a significant own resources, which is more efficient and viable

Predictor BB Fund’s PositionDegree

Significant

Significant

Significant

Early stage

Early stage

Significant

Industry knowledgeand influential powerIndustry knowledgeand influential power

www.ito.sginfo@ito.sg