Instead of selling shares of their company through private equity, crypto firms often raise funds by issuing tokens that may have uses other than simply representing fractional ownership.
Last year, Senator Andrew Bragg suggested the government consider redefining “financial assets” to recognize tokens that give holders governance rights or other permissions, as part of the Australia as a technology and financial center report.
King River’s new digital asset fund is the latest in a series of Web3-focused venture pools hoping to get in early. AirTree launched a $50 million web3-focused fund this month, and TPG’s Jack Teoh backed a $50 million metaverse-focused fund run by 22-year-old Ishan Haque.
Venture capitalist Mark Carnegie is also grabbing new Web3 tokens through his MHC Digital Asset Fund. These funds are domiciled in Australia and can access crypto token sales.
In addition to their initial checks, Australian venture capitalists make extensive use of SAFTs (simple agreement for future tokens) to ensure that they can participate in future token sales. These contracts mirror the more common SAFE (simple agreement for future equity) provisions used by tech start-ups across the country.
The development of Web3 projects has exploded alongside the proliferation of non-fungible token technology (NFT), which gives digital assets unique identifiers and tracks their provenance on a blockchain.
Web3 is often characterized by users owning and controlling their data, which they can then monetize.
By comparison, Web2 offers access control platforms such as Google, Facebook or Amazon that persuade consumers to spend money in exchange for a digital service that exploits their data.
“A great feature of Web3 is that it’s open source,” Rice said. “Imagine if Amazon’s one-click shopping or AI recommendation engine were open source, how much competition and markets we would have now.”
Still in their infancy, many Web3 projects have taken the form of video games where players buy in-game assets that they can own and trade, as well as earn money while playing.
“Asset ownership in a digital environment is a sea change for many business models,” Barter said.
“Tokenomics is changing the way value is distributed. It returns it to the user who modifies his behavior, his spending, his allegiance to a product or service and develops a new type of “hive mind”.
Communities of connected people
By issuing tokens, rewarding gamers for their attention, and giving them marketplaces to trade and barter those assets, Web3 companies aim to create valuable communities of connected people, Rice said.
King River Capital’s new fund aims to invest in Web3-related tokens, crypto infrastructure technologies, NFTs and related tools, DeFi (decentralized finance) protocols, metaverse and gaming businesses.
The company has previously invested in Immutable, a Sydney-based scaling solution that recently signed a deal with popular “memestock” Gamestop to create an NFT marketplace and launch its own $100 million ($140 million) fund. of dollars).
The fund also claims investments in Discord, a widely used chat platform; FinClear, a local start-up based on the ASX distributed ledger; Splash, an AI-based music game; and Paystand, a business-to-business payments company.
NFTs have been in the news lately as speculative investors flock to highly prized digital artworks that are minted on a blockchain. While Mr Barter said the central idea of artists solidifying ownership of their work immutably was a breakthrough, rampant speculation in NFT markets showed the immaturity of the industry.
“There’s an elite type of investor who puts money into digital art, and a lot of that is more status than art,” Barter said.
“But the usefulness of NFTs will soon start to take hold and, no doubt, when interest rates move, the heat will start to come out of the market.”