VentureCrowd spends $8m on blockchain social network for investors

The alternative asset business has spent $8m on a blockchain-based platform which will create Facebook-like groups of investors.

VentureCrowd’s Darren Tasker, Elle Georgiou, Glen Barry, Archie Georgiou and Steve Maarbani. Picture: Darren Leigh Roberts

Alternative asset platform VentureCrowd has forked out $8m on its latest investment, a blockchain-based platform designed to cater for Facebook-like groups of investors.

The company has partnered with Web3 platform builder MakerX to build on the Algorand blockchain which will pool angel investors into groups who are passionate about social causes. This will be curated by a community manager platform.

VentureCrowd chief executive Steve Maarbani said the new platform would act as a place for investors to meet and chat about deals.

“Basically, each one of them will be a curated community where a community manager, thought leaders, industry leaders and investment leads will be together with angels to curate a conversation around a particular thematical space,” he said.

The move arrives as investment syndicates are growing increasingly popular in Australia, often forming in parallel to venture capital firms by those who would prefer to work on a deal-by-deal basis rather than have their money managed for them.

Many have said it’s a more democratised approach to venture capital and that it lowered the bar for entry into investing in alternative assets.

There have been several attempts to capitalise on this growing trend, with business platforms, groups and events looking to attract new investors.

“The whole point of what we do is an attempt to open up alternative asset classes and venture capital to as many people as possible,” Mr Maarbani said.

While VentureCrowd’s platform will have a social theme, investors would not be able to post freely.

“There is a level of compliance that we have to worry about in the background, to make the user experience as seamless as a social network that we might be comfortable with,” Mr Maarbani said.

The idea behind the new platform is an attempt to fix “broken” early stage capital markets which Mr Maarbani describes as “still sort of fragmented, inefficient and largely elitist”.

“They don’t operate with the usual forces of demand and supply that they should and because of that it is difficult for founders to raise capital. It’s harder than it should be,” he said.

“If capital doesn’t operate effectively then it is a major barrier to innovation.”

VentureCrowd has long been gung ho about digitising investment platforms and providing investors with a central place to view assets.

“You should be able to go to your phone and see your CBA shares right next to your Bitcoin holding which is right next to the investment you’ve just made,” Mr Maarbani said.

Using Web3 tools provided a couple of major benefits to investors: it allowed records to be immutable and transactions can be processed at a speed of 6000 per second – three times the number Visa is able to process – Mr Maarbani said.

“The bottom line is cryptography, when applied to a financial transaction, provides benefits you cannot get in Web2,” he said.

VentureCrowd’s deal-by-deal investment platform has had strong growth over the past 12 months. It said it seen $65m invested through its platform in the 12 months leading up to July.

Over the past three years, VentureCrowd has had $247m come through its platform, sparking its first international move into Singapore.

The business also went on a hiring spree seeking 10 new staff.