Become a Core Investor in the Latin Silicon Valley - Mango Startups, a decentralized LATIN AMERICAN SEED CAPITAL FUND
I am a big fan of Football (Soccer), and since I found my love of this sport, I have always thought of countries like Brazil’s Ronaldinho, Argentina’s Messi, Chile’s Sanchez and many more. Though this Latin region was always under my radar due to my love of football, with the passage of time, I came to know that these are not just football-playing nations; they have their own history, identity other than football, as well as economy.
Indeed, the world economic recession has almost hit every country in the world and these Latinos were no aliens to it. However, we should underpin the thought that with every fall there is a rise. It was really a surprise for me when I first heard that Brazil has become the next level economy (when BRICS nation formed an alliance). It was the first time I looked at Latin America in a different way, and as an economic student, I started reading more and more and was overwhelmed with the ideas and new phenomena happening in that region, one of which was Venture Capital Investing and other investment vehicles that support these startups; InvertUp is one of them.
“InvertUP is a private investment vehicle specialized in investing in small amounts of seed capital in early stages of new innovative enterprises. It is the first investment vehicle that allows the investor to settle the shares acquired through a private offering of shares in the map of the National Stock Exchange of Costa Rica, ensuring transparency and international best practices program.”
Please note that Latin America hosts 5 of the world’s Unicorns (companies worth more than 1 billion USD). With the interest to test my model of worldwide portfolio investment, I started to dig further; however, it came to my knowledge, through the FAQs of InvertUp, that the minimum investment is $25,000/-. For a small individual investor, that is quite a big amount. Therefore, there was no way to invest as low as I needed to. Suddenly, I found out about this project based on Blockchain technology, which has an option to invest in up to 35% in the InvertUp portfolio. With a sense of comfort, and achievement, I decided to solve the similar problem for other people like me. Behold! Here comes the
“Mango Startups - decentralized Latin American seed capital fund”
So, the question is how this Blockchain project will help me to invest in these Latin startups. You can see on the whitepaper a pictorial image of how it will be done. As I can’t insert the same here, let me do it in bullet way:
The process of investing:
- Investor will buy a token @ 0.10 USD of Mango token.
- Funds will go to the Mango Startup, which will further invest up to 75% of total token sales in the InvertUp Fund, thus holding a proportion of units in the fund.
- InvertUp Fund will generate returns and the same will be distributed to the investor via the mechanism discussed below.
Benefits to the Token Holder:
● No need to transfer FIAT to Latin America, saving currency conversion cost charged by banks and intermediaries.
● Highly level of liquidity available through listing of Mango tokens in different exchanges. Please note that in case of seed investing, the usual time for exit is 3-5 years or more. This restriction has an opportunity cost to an investor in traditional VC investments.
● All eggs should not be put in one basket - With the diversification, risk is minimized, whereas returns are maximized in a decent manner.
● No risk of Agency Problem, as the InvertUp fund is the first seed capital fund listed on the National Stock Exchange of Costa Rica, so there is compliance with corporate governance and international best practices. Imagine, all these services at the cost of just $0.10.
● One of the advantages of having Mango tokens is to have an exposure to those startups which have gone through a rigorous incubation and acceleration process. All underling businesses have a proven business model and are generating positive cash flows.
(Just for the sake of curiosity, the 5 Latin countries rank in the top 20 for financial attractiveness, people skills and business environment.)
I would like to restate some points from my previous article:
“Don’t you think a person with sane mind should have the freedom to make his own financial decisions and have an opportunity to raise his living standard?”
Why the use of Blockchain and Crypto Market:
As quoted in the whitepaper of the Mango Startup as their reason to adopt this technology:
“Our core mission is to democratize venture investments and become a bridge between crypto and fiat economies. We help venture funds, accelerators and startups to raise capital using crypto assets in order to scale their products.
ICOs are democratizing this industry by providing an opportunity to smaller investors to participate in early stage venture deals, with minimal entry capital requirements due to the high liquidity that describes crypto assets. At the same time, ICOs act as an additional fundraising vehicle for early stage startups to raise capital from a larger pool of investors, attract early followers and create communities that fund and support the project.”
As I assume, till now, readers have grasped the basic understanding of the Blockchain technology and do have an idea what a decentralized ledger can bring. Just for the sake of surety, please find below some of the benefits associated with Blockchain technology:
❖ Distributed ledger reduces the risk of backup
❖ Data storage not in one place
❖ Use of cryptography techniques to secure the data
❖ Irreversible transaction with no external interference
❖ No need to trust a party involved in a contract
❖ One world, one economy and democratic way
I hope you guys are waiting to learn more about the other ancillary details of every Initial Coin Offering, so let me also do that for you from the whitepaper. As I always advise, don’t trust my words; have a look at whitepaper yourself to thoroughly understand the project. What I try to do is to make it simple for readers to have a basic idea of what the project is, and of course, to tell people about my love of Blockchain.
Token, Value and other details
Name of Token : Mango Token
Total no of tokens: 40,000,000 non mineable
No of tokens for Pre-Sale: 10,000,000
Token Price at Pre Sale: 0.1 USD alongwith 33% bonus
Minimum token buy at Pre-Sale : 10,000 Mango Token
Target Amount to Raise: 3,000,000$ out of which 1,000,000$ will be invested in InvertUp, whereas others will be invested in similar fashion.
Pre-Sale Date: March 1, 2018 till March 20, 2018
Main Sale: March 21, 2018 till April 21, 2018
Please note that details mentioned token details mentioned above are for Pre -sale, rest of the tokens will be sold at main sale.
Token Allocation:
75% will be sold to the community, whereas 25% will be held by the team for bonus distributions. This bonus distribution will take place if any underlying company issues a dividend to the fund, thus, their proportion of dividend (-management fee)Mango tokens will be awarded through Airdrop.
Conclusion:
The purpose of the article was never to be investment advice; however, I must say that the more I read about the Latin region startup stories, the more I am impressed with the results. It is highly advised to the stakeholders to have their own numbers.
Further, the token must have a reason to be valued more; in the case of this token, its value will be dependent on the performance of the underlying asset. The more the asset performs well, the more value the Mango token will have. Applying the theory of Perfect Market, if an underlying asset values around, let’s say, $10 and the tokens listed at crypto exchange are valued at $5 (assume zero fee), the market will have an arbitrage opportunity, which will attract traders to buy tokens. With the surge in demand, the price will start rising and rise till the opportunity is net off.
Readers, let me share one more fact arising from the whitepaper, the mechanism of token distribution. There are two ways by which profit will be generated for token holders:
- Via Airdrop – This replicates the fact that the dividend is distributed by the underlying asset.
- Via Buyback of Tokens - This action will be taken by the Mango Startup at the time of exit, for example, an underlying asset which costs $100 is sold for $500, thus, net of expenses, Mango Startup will buy back the tokens from the crypto market from the cash generated from the event of “Exit.”
With due respect to the project, there is a certain volatility of cash flow, risk, for example, if an investor bought a token at $0.10 (assume no Airdrop in this example), at the event of exit, asset will be sold and cash generated, which will be used for buyback from the market @ Market Rate. Despite the fact that the token value will be the same as of the value of the asset, it is only subject to the utopian concept of Perfect Market, which does not exist in the real world. So, each investor, selling early in the market at the event of buyback, will face reduction in its return. With the demand from the Mango Startup, the price will tend to increase, some will sell early and some will sell later until the generated funds are exhausted. ROI for Investor A, selling at $0.15 will be lower from Investor B, selling at $0.20, whereas holders will gain from the event of buyback, at the cost of other investors. This way of rewarding capital gain is against the concept of “Parri Passu inter se” (each holder has equal right).
Moreover, the whitepaper does not disclose the event of closure of the fund. Upon my queries raised, following were the answers reproduced below for your ready reference:
- Q: When will the fund close?
- A: Mango Startups Team: Regarding the closure of the fund, it will continue to exist until all startups in the portfolio have an exit. There is no finite timeline for the life of the fund. This is because the funds will continue to operate as long as it owns a share in any startup.
- Q: What happens in the event of a buyback were no investor wants to sell their tokens?
- A: Mango Startups Team: In the case of a buyback where no investors want to sell their tokens, the funds will get invested in new startups. While the decision is made on which companies to invest, the funds will be kept at a low risk security
Disclaimer: This is not an investment advice and just a mere piece of information. This shall not be taken as quote from the organization discussed above, for investment related decision, it is highly recommended to read whitepaper and other related material. Do consult your financial and legal advisor before investing.