Venture capital (VC) firm Cosimo Ventures has launched a new tokenized VC fund called Cosimo X. The new fund will focus on early stage deep tech companies with a particular concentration on blockchain technology, spanning industries such as artificial intelligence, augmented and virtual reality (AR/VR), Internet-of-Things (IoT), and cybersecurity, the firm said on Thursday.
In addition to capital, Cosimo X will provide its portfolio companies with advice and support, and steer them toward successful initial coin offerings (ICOs) and Series A funding round. Rob Frasca, managing partner of Cosimo Ventures, said there has been a “clear lack of funding options and guidance available to early stage companies as they navigate the complex deep tech landscape,” and Cosimo X aims to fill the void.
Cosimo X will issue so-called Cosimo tokens, which are set to represent “an indirect economic interest” in the fund and backed by investments in the firm’s portfolio companies. Token holders will be able to move more easily in or out of positions in the fund in the open market, the company claims.
The company said the new fund aims to transform the illiquid traditional venture capital market and lower entry barriers. It added that unlike traditional VC funds, which typically require a minimum investment of US$500,000, Cosimo X will accept a minimum investment of US$250,000 for qualifying investors in the US, and US$10,000 for qualifying investors outside of the US.
“The VC investment model has remained stagnant over many decades and has been slow to adapt to new funding structures. Investors – especially high net worth investors and crypto holders – are looking for new ways to diversify their token-based portfolios,” said Ciarán Hynes, managing partner of Cosimo Ventures.
“The tokenized VC model will allow for liquidity that has been absent from traditional VC funds until now. The Cosimo team has been at the forefront of value creation for early stage companies over the past 25 years and has developed a process that we believe will create value for our investors and portfolio companies.
“We believe that blockchain is catalyzing a huge change in both the VC model and landscape and we could not be more excited to provide our investors with this game-changing offering.”
Cosimo X joins the growing list of tokenized funds introduced in recent months to provide liquidity to the global VC ecosystem. These include funds established by the likes of Blockchain Capital, Spice VC, and Life.SREDA.
Most recently, US-Korean VC firm SparkLabs launched a security token to let anyone invest in its accelerator programs. The firm said it is aiming to “democratize” investment opportunities.
In the same fashion, Silicon Valley VC firm 500 Startups’ new 22X Fund permits accredited investors who purchase 22X tokens to own up to 10% equity in the 22nd batch of its portfolio companies. Proceeds from the fund are distributed pro rata to participating companies, with token holders able to trade tokens after a year and receive proceeds from liquidity events.