British firm pitches capital-raising method for NFT projects

Outlier Ventures, a British venture firm, proposed a mechanism for raising funds using non-fungible tokens (NFTs), akin to an initial coin offering (ICO).

As a basis, the company’s specialists drew on the SAFT concept, introduced in 2017 and since used by many ICO projects, including Telegram’s TON.

SAFT allows pre-selling tokens to investors who put money in exchange for the promise to receive the assets at a later date. It is expected that the financing will enable the project to develop, and the token’s price will rise.

However, one of SAFT’s drawbacks in Outlier Ventures’ view is that in most jurisdictions such agreements are considered securities.

The firm’s specialists believe that their NFTSPA (Nifty Spa) solution will be to the NFT space what SAFT is to ICO projects, but “without drawbacks”.

According to the description, NFTSPA is an agreement between the project and one or more buyers, whereby the latter pre-purchase a limited-edition NFT, provisionally called NFT Access.

Investors will also receive preferential access to future NFT issuances or the opportunity to purchase them at a discount. The price of the NFTSPA asset purchased will be determined by two components: the expected value of the NFT Access itself and the future valuation of the entire franchise. This is intended to underpin secondary-market trading.

Voting rights or equity in the project are not granted by the agreement, so Outlier Ventures are confident that properly structured NFTSPA and NFT Access should not be classified as securities.

According to the firm’s specialists, NFTSPA could also provide the legal clarity and transparency around NFT purchases and sales necessary for ecosystem development.

Outlier Ventures said it would test the new capital-raising mechanism with several industry projects in the coming months.

At ForkLog’s online conference “NFT Fever: Tokenisation of Art”, the SEC will likely regard such tokens as securities in the event investors profit.