Estonian Company Is Building a Marketplace Secured By Bitcoin’s Blockchain

Since its founding in 2013, Funderbeam has operated an Angel List-like service allowing investors to find and fund European startups. The company recently announced that they are adding a new intelligence service, giving investors greater access to data about startups, the market at large, and a marketplace for equity.

“Every syndicate is paired with a microfund that owns actual stakes in startups. So when syndicate members want to trade all or parts of their holdings, they’ll trade digital stakes in that microfund. These rights are represented by digital tokens (colored coins) on the bitcoin blockchain.”
— – Kaidi Ruusalepp, Funderbeam CEO

The emerging need from investors to buy and sell equity is becoming more and more apparent. An increasing amount of venture capital is delaying companies from publicly listing on stock exchanges, which has meant that earlier investors have to wait longer to profit from their stake in a company. The need for a secondary market for startup equity has already been leveraged by startups including Second Market, which operates in the US.

Jann Tallinn, co-founder of Skype and an investor in Funderbeam said in a statement that this is one of the key things missing from the current investing environment. “We’ve landed a probe on a comet billions of kilometers away. It’s ridiculous that we can’t properly invest and trade in startups online, Funderbeam is well-positioned to deliver just that."

In a post on the company’s site Kaidi Ruusalepp, Funderbeam CEO, described how the marketplace would work. “Whether a syndicate on Funderbeam invests in one startup or many, we’ll use the blockchain to verify each transaction and then enforce it. The same happens when an investor sells their digital stakes/rights. Every investment, every ownership change will have a secure, distributed audit trail.”

Ruusalepp has a long history of entrepreneurship and financial services. She served as CEO of NASDAQ OMX Tallinn for two years, and then on its management board for an additional four years. She has also co-founded and lead businesses in the areas of telecommunications and drug development.

The properties of bitcoin’s blockchain as an immutable ledger has been a driving force behind the technologies acceptance, and many startups have been founded to leverage its features.

Guardtime CEO, Mike Gault, is heading a startup developing blockchain products for identity and record keeping. In an interview with Recode Gault stated that “eventually, every dataset and every digital transaction could leave a ‘fingerprint’ [in the blockchain] , creating an audit trail for any digital event throughout history, without compromising anyone’s personal privacy."

"It could introduce a level of democracy and objective ‘truth’ to the digital world that even the physical world can’t match. Its promise involves a future in which no one has absolute power online, and no one can lie about past or current events.”
— – Mike Gault, Guardtime CEO

By bringing together an intelligence service, investing and a secondary market, Funderbeam would be the first one-stop shop for startup investing.