The principle purpose of the crowdfund is to raise money to refinance a pool of tech startups. All the startups in the group successfully passed the Starta Accelerator programme in 2016-17. Starta Accelerator’s team helped them integrate into the business environment of the promising US market. In the future, these companies will continue developing their business, receiving additional backing from new investors and increasing their capitalisation.
The ultimate purpose of these startups is to sell the business to a strategic investor for the highest possible price. As a rule, such buyers are large companies that need a service, technology or a product developed by the startups to increase their competitiveness. In venture terminology this is called an ‘exit’. Investors sell their shares with high profits and exit the startup business.
It is, but unlike normal crowdfunding, a secondary token market will be active here, increasing the liquidity of the instrument. Our mission is to democratise venture investment and bridge the gap between the new blockchain and traditional financial sectors of the economy.
Starta Accelerator is an acceleration program launched by Starta Capital VC in 2015. The mission of Starta Accelerator is to expand the capabilities of technology companies in Eastern Europe and bring them to the US market. The programme is designed for startup founders in Eastern Europe who want to adapt to the cultural and business environment of the USA, enabling them to compete and ensure product conformity with the market, to advance and to become a part of the American ecosystem of startups and investing.
The crowdfunding campaign is being carried out using an ICO (Initial Coin Offering). Cross Coin will create Starta tokens on the Waves blockchain platform. Such a solution offers convenience and transparency for all participants in the process.
The value of startups in the accelerator is enhanced by the development of technological and business competencies within the US entrepreneurial ecosystem. Starta Accelerator engages the best American professionals, who become a fully-functional part of the startup team for the duration of the programme. The programme is held in New York and lasts for 3.5 months.
$1 500 000 will be invested in 33% of "Starta Accelerator 16/17" SPV, holding a portfolio of twenty-one technology startups from Russia and other Eastern European countries, which went through Batch 2 and Batch 3 of Starta Accelerator. The companies operate within the adtech, fintech and agrotech fields. These promising companies have already passed the initial stages of their development and attracted funds from early investors. Some of them have already received offers for sale to strategic investors, but prefer to pursue independent development at this stage. A full list and description of the startups is attached in the white paper on this site. Funds above $1 500 000 will be invested in future Starta Accelerator portfolio startups with similar investment focus.
The nominal value of each of the companies within the investment pool averages $1.9 million. However, most of them have already raised funding that reflects a higher valuation.
iCoinSoftware is developing a business model based on blockchain technology. Thanks to their work, we have established a connection with the crypto community and strongly believe in the potential of these new technologies – in particular, the future of the ICO. iCoinSoft is a platform that allows any user to launch a digital currency exchange in two weeks, and to receive revenues from trading commissions on blockchain assets (crypto currencies, shares, smart contracts, etc.).
Starta Accelerator team’s experience and expertise in the Eastern European market allows us to buy shares in startups at a lower cost than would be the case in the US market. The cost of acquisition is up to $2 million, whilst the planned valuation at exit is $10-50 million. Statistics indicate that roughly 80% of mergers and acquisitions are performed at valuations in the range of $10-50 million.
We are offering everyone the exciting opportunity to become a venture investor. Previously, this was only available to larger investors with significant available capital. We are removing this barrier.
During the ICO, Starta tokens will be sold at $1 each. The most popular cryptocurrencies accepted are are bitcoin (BTC), Litecoin (LTC), WAVES and Ethereum (ETH) / Ethereum Classic.
The ICO will last for 30 days, during which time potential investors will be able to submit an application for any amount of Starta tokens via their personal accounts at StartaICO.com. They will then receive an address to which to transfer funds from their cryptocurrency wallet.
After the ICO ends, the collected funds will be made available to Cross Coin. Investors will receive Starta tokens, which will be issued on the Waves blockchain platform within two days of the end of the ICO. The number of tokens will be based on the total collected funds and the token price of $1.
To purchase 33% of the Starta Accelerator portfolio, we need to collect $1.5 million. If a smaller amount is collected, a proportionally smaller share in the portfolio will be purchased. If demand is higher, we will be able to sell up to $5 million of tokens, and any funds over $1.5 million will be invested in the next tranche of startups participating in the Accelerator.
Cross Coin issues the Starta tokens which will be distributed only during the ICO. After completion the ICO, the issued tokens will be available on the secondary market; they will be freely transferred and traded on exchanges.
Two main scenarios are available. The first one is to sell your token on the secondary market, on any exchange, when it will grow in price. And the second one is to sell it to Cross Coin that will purchase out the tokens at a market price every time when an exit of one of the 21 startups of the investment pool takes place. Cross Coin is obliged to spend the net profit, which it will receive upon the exit of the startups, to purchase out the Starta tokens.
The mechanism for re-purchasing the tokens creates a transparent model for the profit distribution to exits and, at the same time, creates an opportunity for investors to get profit from the volatility of the market price of the tokens.
The tokens will be purchased out from the market via the TIDEX exchange.
Cross Coin will direct 5% of the total amount of the ICO to reimbursement of its expenditures, and will receive 2.5% of the profit as a compensation for the organization of the financing startups.
A scheme of the crowd funding campaign is transparent. Cross Coin is a company registered in Singapore as a SPV for the ICO. It is a technical partner. Cross Coin will be engaged in raising investors’ funds and the subsequent distribution of profits among them by means of re-purchasing the tokens from the market at exits of the startups.
Cross Coin will immediately send the funds raised during the ICO for purchasing 33% of shares of Starta Accelerator 16/17, LLC within the option made specifically for establishing the crowd funding campaign.
Starta Accelerator 16/17, LLC owns 7% of each of the 20 startups and 2% of the 21st company in the investment pool.
In case of exit of one of the 21 startups, Starta Accelerator 16/17, LLC will transfer a proportional share of the profit after the payment of all taxes to Cross Coin in amount of 33%. The entire amount will be sent to purchase out the tokens at a market price. The token price is constantly growing, and investors take part in the distribution of the venture capital.
Previously, an average age of a new technologic company, which is absorbed by a major strategist with a 10-20-fold valuation of invested capital, was 6-8 years. Now, the terms decrease, and the average age is 5 years. Two of our companies from the investment pool have already received offers for exit, but rejected them – i.e., the period can be 2-3 years from the time the startup was established. The first exits of the pool can take place in the coming 1-2 years.
Investors can get an income before exits, by selling tokens on the secondary market during the period of the price growth.
All startups of the pool have working business models, a quality product or a service, which are popular in their country and in the US market. Some of them have already raised additional rounds of investment at a higher assessed value than the nominal portfolio valuation.
We expect high activity and volatility of the secondary token market as news about the development of 21 companies within the pool will affect their price. For example, media can get to know some information about the interest of a major player to one of the startups, and this will push the quotes of the Starta tokens to go up. Other startup can get as a partner or a customer a well-known corporation that will accelerate its business. This will again support the Starta quotes.
In addition, the step-by-step repurchase of the tokens will reduce their volume in the market, and as a result, their value will go up as well.
This is an interesting speculative story. And it won’t be boring.
Everyone who wants to participate in venture investment may be interested in it. The startup can be especially interesting for traders – as thanks to high volatility and venture investors, even with small funds they get access to a diversified portfolio and holders of crypto assets, to diversify assets by investing in the fiduciary sector of economy, ordinary investors, thanks to the liquidity of the secondary market.