Liquifi builds the “Carta du web3” for companies issuing tokens on the blockchain – TechCrunch

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Web3 startup cap tables can be very different from traditional tables. In addition to issuing stock as a form of employee incentive alignment, as a typical startup would, crypto companies often also issue tokens that represent ownership. Tokens are an entirely separate asset class with their own complexities, rules and regulations.

Cap table management software company Carta requested a $7.4 billion valuation last August for its suite of tools that help companies manage stock issuance, compensation and related challenges . While Carta has been around for nearly a decade, a newcomer is looking to replicate its model for the burgeoning cohort of web3 startups, with a focus on token management – LiquiFi.

Due to the relative newness of token-based compensation as a widespread practice, many web3 companies maintain their cap tables manually, using custom internal systems and spreadsheets, Robin Ji said, CEO and co-founder of LiquiFi at TechCrunch.

LiquiFi, part of Y Combinator’s Winter 2022 bundle, helps startups automate their token acquisition, manage their token cap table, and issue token grants in accordance with regulations, Ji said. Ji and LiquiFi co-founder and CTO Oliver Tang recognized the challenges associated with token-based compensation after working at fellow crypto companies Eco and Set Labs, respectively.

Since its inception last year, the company has gone live on Ethereum and Polygon, and is “expanding to other chains rapidly,” Ji said. While he didn’t share the number of clients the company works with today, he said LiquiFi’s client list includes both large DeFi protocols and smaller startups that have just launched a token for the first time.

“We certainly have a long list of customers who are about to launch a token, but haven’t onboarded it yet,” Ji added.

Managing tokens differs from managing stocks due to some fundamental differences between the two asset classes, Ji said. Tokens are more dynamic than equity — you can vote with them, stake them, lend them, and provide liquidity, he continued.

Another key difference is that when traditional equity is transferred, legal documents and agreements are used to track ownership. In contrast, when tokens are transferred, assets move on a blockchain and a transfer of custody takes place, Ji explained. The technology needed to transfer tokens can be complex, sometimes requiring companies to write custom code.

“In a traditional setting [platform like] Carta, you basically click buttons, work with lawyers to draft agreements, and send them off to sign, and that’s basically the transfer of assets,” Ji said. “But with the tokens, there’s that, plus the actual asset that’s being transferred, so the technology element is one thing… The second element with the tokens is the general compliance and process know-how. “

LiquiFi helps businesses on both counts. Its product is aimed today at companies that already have their own tokens or are about to launch them. Eventually, however, Ji hopes to add features that can serve customers long before they launch a token by helping them determine allocation and distribution strategies that can deliver optimal returns to all parties involved in a token. issuance process.

The base product includes a dashboard where customers can view their smart contracts and tokens in circulation, as well as tax compliance features. LiquiFi is also working on a product that would allow people with locked or vested tokens to earn additional yield on those tokens while they are held — an entirely new capability that no other company had developed before, Ji said.

The startup announced today that it has raised $5 million in seed funding led by Dragonfly Capital Partners. Nascent, Alliance DAO, 6th Man Ventures, Robot Ventures, Y Combinator, and Orange DAO also participated in the round, along with prominent angel investors in the crypto space including Balaji Srinivasan, Katie Haun, Packy McCormick, Anthony “Pomp ” Pompliano and Antoine Sassano.

LiquiFi plans to use the funding to invest in product development, design, marketing and sales, Ji said. The company also hopes to hire an in-house attorney and build a recruiting team, he added. In terms of adding compatibility with other blockchains, he said the company plans to start with EVM-enabled chains in the short term and eventually expand to other chains such as Solana and Terra.

The company’s fundraising process has evolved rapidly, Ji said. He hopes the company can continue to grow rapidly.

“The biggest risk for us is just to make sure we move as fast as the [crypto] the market is moving because if we don’t we’re going to be left behind,” he said.

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