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Gooood morning Rainmakers!
I am coming to you live from Cape Town, South Africa on a business trip 🇿🇦
Here's a quick roundup for all of you short-attention peeps 😉
1️⃣ Blockchain Capital released their Q2 NAV report and I have to say it was not as exciting as the last report, but there were still some highlights to report on!
2️⃣ Innovation always moves faster than regulation. Even though the technology is there, it doesn't mean it is legally authorized!
Without further ado, let's dive right in and…
Get liquid 💧
BCAP Still Ain't Cappin’ 🧢
Founded in 2013, BCAP is a VC fund (and the first security token created) that invests in blockchain-based companies, as well as a myriad of different cryptocurrencies.
At the time of the primary raise, the NAV was $1.00/share.
Let's get basic:
NAV, AKA ‘net asset value’ is calculated like this:
NAV = (Assets - Liabilities) / Total number of outstanding shares.
It tells us what the value of the fund is per share at any point in time.
Some of my avid readers may remember this overview of NAV and BCAP, but I have to take into account our new subscribers to get them up to speed - I know you'll understand.
Last quarter, the BCAP NAV finished up 273.5% for Q1 at $23.83; unfortunately, for Q2 of 2021, the BCAP NAV finished down 31.3% at $16.37, but still up an impressive 158.6% for 2021.
Currently, the BCAP token is trading at $20 a share.
In other words, the secondary trading BCAP token is approximately 22% above the NAV!
This could potentially mean a market correction is on its way, but we will have to monitor that at stomarket.com 😎
Here are a couple of observations of why the NAV lowered this quarter:
Approximately 25% of BCAP's portfolio is in Coinbase and Coinbase's recent IPO saw a dramatic sell-off, which lowered their valuation greatly.
The recent sell-off in cryptocurrencies has also played a role. BCAP's top-owned cryptocurrency, Filecoin, which was worth ˜$60MM last quarter, is now only $10MM.
With every diversified investment portfolio, you can't hit a home run on every investment, but I am happy to report a couple of positive investments in Q2 for BCAP:
BCAP's investment in OpenSea, the NFT marketplace, is up 1,100% from just last quarter. The OpenSea investment was worth ~$760K and is now worth almost $10MM!
Another one of BCAP's portfolio companies, Securitize, raised $48 Million in a Series B.
I also noticed a few additions to their cryptocurrency portfolio:
$5MM into Yearn Finance
$3.5MM into Balancer
$3MM into Sushiswap
$550K into BitClout
They are placing a huge bet on the blockchain space to succeed, and I fully support their efforts.
Innovation Moves Faster Than Regulation 💡
It sucks, I know.
You develop a product or service that will disrupt an entire industry and the world won't let you use it.
You know it will benefit the greater good and be a great success, but you can't operate until it is authorized by the jurisdiction you are domiciled in.
So, what can you do?
The best thing to do is wait, be patient, and offer resources & time to help educate the regulators in charge.
The issue is that technology moves at an exponential pace, but legal systems change at an incremental one.
“Why is that Jonah? Have regulators tried to amend this dilemma?”
I believe there is a myriad of reasons why this dilemma exists today, but I believe one of the main reasons is fear.
Fear of a catastrophe occurring.
Oftentimes, regulators define success as the avoidance of catastrophe.
I believe regulators define success as this because they have experienced catastrophic economic collapses and fraudulent activity time & time again, so obviously they are going to want to take their sweet time to approve any new innovations.
It is quite annoying from the entrepreneurial point of view, but fortunately, regulators have taken small strides to speed up-regulation with the onset of the regulatory sandbox.
The ‘sandbox’ is essentially a playground where issuers can test new technologies with oversight from the respective jurisdiction they reside in before going live.
The Monetary Authority of Singapore has arguably the most successful sandbox.
We have all been waiting years for regulators to clearly define what security tokens are so we don't have to operate in any grey areas.
In order for regulators to catch up with the speed of innovation, more jurisdictions at the very least should experiment with regulatory sandboxes.
It will happen, it's inevitable, but it will take time!
What else is making it rain ☔️
Security Token Show: #100 - Security Tokens Automatically Generate Income: This past week, The Security Token Show recorded and published their 100th episode!
Realio and Valentus Capital Jointly Issue $20mm in Lmx Tokens on Algorand: Another security token issuer utilizing Algorand 👀
Connect with us ☎️
Thanks for tuning in! Keep an eye out each Monday for the next security token adventure 🧗♀️
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Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.