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Financely-VC Investment Agreement

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Financely-VC Investment Agreement INFORMATION MEMORANDUM & CO-INVESTMENT AGREEMENT VERSION 2.3.3 Risk Disclaimer Cryptocurrency is a relatively new asset class. High risk is associated with Cryptocurrency Trading. Cryptocurrency Trading is generally unregulated, highly volatile, and may result in losses. Co-Investor acknowledges the Risk Disclaimer provided in this document by Financely. 2% Rule Since digital asset trading is high risk, Co-Investors should be aware of the 2% rule in order to stay within specified risk management parameters. The capital at risk (CaR) must factor in any bank transfer, or credit card costs when purchasing crypto, network fees for buying, selling and transferring digital assets in order to determine the maximum permissible amount of capital at risk. The 2% rule is a restriction that some Investors impose on trading activities. For example, an Investor who uses the 2% rule and has a 100,000 USDC trading account, risks no more than 2,000 USDC- or 2% of the value of the account- on a particular investment. Risk Capital Risk capital refers to funds allocated to speculative activity and used for high-risk, high-reward investments. Any money or assets that are exposed to a possible loss in value is considered risk capital, but the term is often reserved for those funds earmarked for highly speculative investments. Diversification is key for successful investment of risk capital, as the prospects of each investment tends to be uncertain by nature although the returns can be far above average when an investment succeeds. Moreover, an investor needs to ensure that only a portion of total capital is considered risk capital. Risk capital is typically used for speculative investments in penny stocks, angel investing, private lending, futures and options trading, private equity, day trading and swing trading of crypto currencies, stocks and commodities. Many of these markets indirectly influence who can put risk capital in them. Classifications like sophisticated investor and accredited investor are used to limit the highest risk, highest reward investments to investors with a certain threshold of net worth and income. The idea is that these individuals were able to amass wealth by understanding their risks and mitigating them intelligently, so they are given access to markets with complex engineered financial instruments commonly used by institutional investors. Risk Disclosure Statement ❏ The Client acknowledges and confirms that they understand that the prices of the asset in Portfolio fluctuate, sometimes dramatically. The price of a Portfolio may move up or down and may become valueless. It is as likely that loss will be incurred rather than profit made as a result of buying and selling the Portfolio. Introduction Cryptocurrency A cryptocurrency is a digital or virtual currency that is secured by cryptography which makes it nearly impossible to counterfeit or double spend. Most cryptocurrencies are decentralized networks based on blockchain technology, which keeps an online ledger of all transactions ever been conducted, thus Financely Group info@financely-group.com | www.financely-group.com INFORMATION MEMORANDUM & CO-INVESTMENT AGREEMENT VERSION 2.3.3 providing a data structure for this ledger that is secure and is shared and agreed upon by the entire network of an individual node, or a computer maintains a copy of the ledger. Cryptocurrencies are generally not issued by any central authority, therefore immune to government interference and manipulation. Investors see potential advantages in cryptocurrencies, like the preservation of value against inflation and facilitating exchange while simultaneously being easier to transport and divide than real life assets under the regulations and requirements of central banks and governments. Altcoins Altcoins are cryptocurrencies other than Bitcoin. They share characteristics with Bitcoin but are also different from them in other ways. For example, some altcoins use a different consensus mechanism to produce blocks or validate transactions. Or, they distinguish themselves from Bitcoin by providing new or additional capabilities, such as smart contracts or low-price volatility. Best Performing Altcoins in a 90 Day Bull Cycle Coin Price Increase in 90 days % 1. SHIBA INU +258,879% 2. hoge.finance +105,815.4% 3. Jupiter +4,659.2% 4. Kirobo +4,455.5% 5. Non-Fungible Yearn +3,777.6% Source: CoinMarketcap Best Performing Altcoins in a 365 Day Bull Cycle Coin Price Increase in 365 days % 1. Unisocks Edition 0 +74,898.79% 2. Dev +26,241.20% 3. CelerToken +20,939.93% 4. HuntToken +14,896.47% 5. Fantom Token +12,726.72% Source: CoinMarketcap USE OF PROCEEDS Our funds will deploy capital in small-cap crypto assets that we believe to have a long term growth potential, within a 6 to 36 month cycle. Financely Group info@financely-group.com | www.financely-group.com INFORMATION MEMORANDUM & CO-INVESTMENT AGREEMENT VERSION 2.3.3 We may convert the stablecoins directly into those digital assets through both centralized and decentralized exchanges. DEFAULT CURRENCY The default currency for incoming and outgoing payments is USDC. Digital dollars work like other digital content — they move at the speed of the internet, can be exchanged in the same way we share content, and are cheaper and more secure than existing payment systems. USDC is issued by regulated financial institutions, backed by fully reserved assets, redeemable on a 1:1 basis for US dollars, and governed by Centre, a membership-based consortium that sets technical, policy and financial standards for stablecoins. However, Investors can utilize bank wire transfers or other stablecoins to participate. TRANSPARENCY & REPORTING We will send monthly reports every first Friday of the month to our Co-Investors. Every quarter, an audited balance sheet is shared with Co-Investors. STRATEGY We allocate 20% of our capital to the highest risk projects that end up generating most of the revenue upon exit. Usually those projects would have a market cap below 5,000,000 USDT. The remaining 80% is allocated towards digital assets with a market cap above 500,000,000 USDT. HEDGING As a hedging mechanism, we sometimes borrow stablecoins from decentralized liquidity pools against our fund’s digital assets. Those stablecoins are then used to purchase high market cap digital assets such as bitcoin or ethereum during a bull cycle. We may trade those digital assets with up to 5X leverage. This enables profit maximization, and a steady portfolio growth, uncorrelated with Venture Capital Investments. LIMITED LIABILITY OF INVESTORS The liability of the Co-Investor shall be limited to its Capital Contribution as and when payable under the provisions of this Agreement. No Investor Member shall have any other liability to contribute money to, or in respect of the liabilities or obligations of, the Company except as provided in the Act, nor shall any Investor Member be personally liable for any obligations of the Company, including, but not limited to, any obligations, financial or otherwise, of the Company under the Project Documents. No Investor Member shall be obligated to make loans to the Company. DIVERSIFICATION We do not invest over 5% of our liquidity in a single position. However, we may decide to keep a position open if its market cap grows and subsequently represents more than 5% of our total AUM. INVESTMENT PROCEDURE Financely Group info@financely-group.com | www.financely-group.com INFORMATION MEMORANDUM & CO-INVESTMENT AGREEMENT VERSION 2.3.3 1. Review and signature of the Information Memorandum and Co-Investment Agreement. 2. Deposit funds in USDC, to Financely’s Wallet. Investors who don’t have crypto, can order USDC for their placement directly through our OTC-desk, subject to KYC approval. Currency exchange and network fees apply. Link to our OTC-desk: https://www.financely-group.com/otc-trading DISBURSEMENT PROCEDURE At the end of the investment cycle in a particular venture, Financely will sell the totality of the Co-Investor’s positions or exercise the right of first refusal and purchase the Co-Investor’s stake. Investment returns shall be paid to the Co-Investor in USDC, bitcoin or Ethereum equivalent. Investment returns due to the Co-Investor are determined in proportion to the Co-Investor’s Capital Contribution. Exit Simulation A. Initial Pool Size: 250,000 USDC 25% — Co-Investor’s Participation: 50,000 USDC 75% — Financely & Other Investors: 200,000 USDC B. Exit Pool Size: 1,500,000 USDC 25% — Co-Investor’s Share: 375,000 USDC 75% — Financely & Other Investors Share: 1,125,000 USDC EXTENSION OF LOCK UP PERIOD Financely reserves the right to suggest the extension of a lock up period to Co-Investors within 45 days of the initial disbursement date for approval or refusal by the Co-Investors. Each redemption request is treated individually. Co-Investors only dispose of voting rights over the funds they invested with Financely. EVENT OF LIQUIDATION In the event the fund incurs losses by the end of the lock up period, Financely will proceed with the sale of all of a fund's assets and the distribution of the proceeds to the fund Co-Investors. Disbursements are made in proportion with the Co-Investors’ participation in the fund. PAYMENT OF TAX Our funds are decentralized organizations, and in principle do not pay capital gains tax on crypto currency investments. In the event a special purpose entity is incorporated for the sole purpose of handling fiat payments, such an entity will be structured as a tax-optimized vehicle. Financely Group info@financely-group.com | www.financely-group.com INFORMATION MEMORANDUM & CO-INVESTMENT AGREEMENT VERSION 2.3.3 The vehicle will be located in jurisdictions that don’t impose taxes on crypto currency gains, hereby minimizing or completely eliminating capital gains tax. To the extent Financely is required by Applicable Law to deduct and withhold taxes on any payment to Co-Investors, Financely shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to the Co-Investors an official tax certificate or other evidence of such withholding sufficient to enable Co-Investors to claim such payment of taxes, if required.
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