Tokenizing Crowdfunding

Earlier this week, the Ethereum blockchain protocol and community has been included on the annual FinTech50 List as a form of recognition of its status as a potentially disruptive worldwide phenomenon, CNBC reported.

Last February, Oliver* | *AllThingsCrowdfunding got in touch with Vega Fund,

the first truly decentralized VC/Crowdfunding platform on Ethereum.

Main aim of the US-based venture, as the founders declared on Reddit announcing the project, is to provide

a funding base for projects and individual developers in the Ethereum community.

While making the ‘token market’ more safe, standardized, and accessible, the company, inspired by prediction markets, in a recent update stated that the wisdom of the crowd is often misconstrued.


 In their own words:

It’s not about simply aggregating information from as many people as possible, but rather doing so while also distinctly incentivizing those with high-level knowledge on the topic to come forward. Wisdom of the crowd effects would not manifest in prediction markets without this, and it is paramount to their successful implementation that those who can consistently make the right calls come forward.

Oliver* got in touch with George K. Van Hoomissen and William Russell, co-founders of the project, in order to find out more on what’s going on and what’s next regarding their project.

The wisdom of the crowd is often misconstrued.



Oliver*: Hi guys and thank you for your time again. We know that you are crazy busy relentlessly developing… So getting straight to the point, it seems that you are going to disrupt the crowdfunding industry as we know that.

George: Hi Oliver* and welcome back. Actually, it depends… 

O*: More precisely, what will be the impact of your innovation on the crowdfunding industry as a whole? We think, for example, at your effort of modifying the idea of a ‘finder’s fee’ alongside the use of certain prediction market incentive concepts to promote increased deal flow and maintain quality control…

William: We agree that it certainly brings about disruption to the crowdfunding space. However it doesn’t necessarily affect the whole space.

O*: What do you mean?

G: Well, not all use cases for crowdfunding make sense in the context of token issuance.

O*: Can you give us an example?

W: Sure! Let’s think about individual crafts projects on Kickstarter, for instance. Those are really just about bringing a single physical product to fruition. On the other hand, when regarding businesses seeking funding or software projects where a token issuance would actually make a lot of sense for fundraising, I think we’ll see this innovation become increasingly popular as it gives access to a global audience with few road-bumps such as transaction costs.

O*: What is likely to be the role of professional investors in this new setting?

W: There is a role for pros within Vega itself as well. Via incentive structure we plan to specifically encourage individuals with high-level knowledge to step forward and make project proposals/facilitate the creation of new deals. We can also foresee professional investors having a role in their more traditional sense – this is already being seen with groups like Polychain or Blockchain Capital.

O*:  Are you considering growing enterprises in your project as well?

G: Assuming by ‘growing enterprises’ you mean facilitating the growth of a project in a somewhat ‘hands on’ way from inception to launch, or some other longer time-frame, then the answer is yes. In this respect, we’d like to have some mechanism for people with the necessary knowledge/expertise on Vega’s end connect and assist with projects seeking funding. However, this is a somewhat abstract goal and is not a core-function of the platform, so the actual implementation of this is far out.

“The ways corporate governance could go depend on the function of the tokens that project issue.”

O*: You said that your business model sources decisions from a global network of knowledge, rather than a centralized party. I am assuming that this is going to have an impact on corporate governance processes. From your perspective, what is likely to be the impact on corporate governance of growing companies?

W: This is an interesting question because there are so many ways this could go. It really depends on the function of the tokens that projects issue. If people issue tokens as a sort of equity, that obviously has huge implications for new corporate governance structures if, say, ‘Vega’ owns 30% of a newly ICO’d project and ‘Vega’ consists of thousands of individuals. This of course changes drastically if the tokens are more along the lines of ‘Software Access Tokens’ (SATs). Overall I think it is a big unknown – right now most projects ultimately are not DAOs and as such the original teams control corporate governance – this is for both practical and regulatory reasons. With all the projects being developed with each passing day we’ll run through a lot of possibilities really quickly and the answer to this question will become clearer.