Harbor Raises $28M to Reengineer Private Securities for Blockchains
Founders Fund, Andreessen Horowitz and Pantera Capital join Series-A investors Craft Ventures, Vy Capital, and Valor Equity Partners in strategic round
Apr 17, 2018, 07:00 ET
SAN FRANCISCO, April 17, 2018 /PRNewswire/ -- Harbor today announced $28 million in new funding to reengineer private securities with blockchain technology and help usher in a new wave of tokenized securities backed by real-world assets, such as real estate, company equity, investment funds, and fine art. Leveraging its Regulated Token (R-Token) standard, Harbor will deliver the first platform for issuers of securities and licensed broker-dealers to bring fully compliant tokenized securities to market, beginning this Summer.
The strategic funding round was led by Founders Fund with participation from new investors Andreessen Horowitz and Pantera Capital, as well as existing investors Craft Ventures, Vy Capital and Valor Equity Partners. Other new investors in the round included Future Perfect Ventures, 1confirmation, Abstract Ventures, and Signia Venture Partners. Individual investors in the round included Nicolas Berggruen of Berggruen Holdings, Napoleon Ta of Founders Fund, and Kyle Samani and Tushar Jain of Multicoin Capital. Including seed investments, Harbor has raised over $40M to date.
"Capital formation is the killer app of blockchains, but a lot of investors and institutions are waiting on the sidelines for asset-backed securities like real estate, private investment funds and fine art to be tokenized before jumping in," said Napoleon Ta, partner at Founders Fund. "It's only a matter of time, and we think Harbor has the right approach to solving the compliance challenges that will catalyze this monumental shift to the tokenization of traditional assets."
Blockchain provides transformative technology that will unlock liquidity for traditionally illiquid assets. By reducing trade frictions and making it far easier for buyers and sellers to find each other, tokenization can help erase the estimated 20-30 percent illiquidity discount common to many traditional private securities1. For example, real estate assets including real estate funds, private REITs, land, and building ownership will have improved efficiency, transparency, liquidity and fractional ownership possibilities. The complex legal, tax and contractual requirements inherent in this process will be addressed by Harbor's compliance protocol and platform.
"Tokenizing private securities allows issuers to lock up capital, without locking up investors," said Joshua Stein, CEO of Harbor. "The prospect of greatly increased liquidity for private securities will enhance capital formation, create new investment opportunities and support economic growth. Harbor is the enabling technology platform for securities issuers and broker-dealers to compliantly tokenize private securities."
Harbor's Regulated Token (R-Token) Standard
The Regulated Token (R-Token) standard is Harbor's open source compliance framework and a core component of its compliance protocol. The R-Token checks every trade and only permits transactions to occur if they meet applicable rules for that specific offering, such as limiting the number of total investors, only allowing specific types of investors (e.g. accredited investors), implementing a holding period, or other domestic or international requirements.
Issuers, broker-dealers, underwriters, and/or regulatory bodies can implement the R-Token standard for specific exemptions and to meet jurisdictional securities regulations, know your customer (KYC) policies, anti-money laundering (AML) requirements, tax considerations, and more. The R-Token is a system of ERC-20 smart contracts built on the Ethereum blockchain and compatible with the ERC-20 ecosystem of exchanges, wallets, qualified custodians, and other services.
"Harbor is addressing a major friction point in crypto-asset issuance and trading," said Jalak Jobanputra, founding partner, Future\Perfect Ventures. "We've seen regulatory actions increasing, and Harbor is at the forefront of providing a compliance-based solution to help the sector flourish and innovate, even as regulations evolve. We're thrilled to partner with their impressive team, and add Harbor to our portfolio of companies innovating in the blockchain sector."
About Harbor
Harbor is reengineering private securities with blockchain technology to help usher in a new wave of tokenized securities backed by real-world assets, such as real estate, company equity, investment funds, and fine art. The Harbor platform, powered by its compliance protocol, is the first to ensure tokenized securities comply with existing securities laws on every trade, everywhere across the globe. Harbor has raised more than $40 million and is backed by leading investors, including Founders Fund, Andreessen Horowitz, Craft Ventures, Vy Capital, Fifth Wall, Valor Equity Partners, and Pantera Capital. For more information, go to www.harbor.com
1 - Source: The Cost of Illiquidity, Aswath Damodaran, Stern School of Business, NYU
SOURCE Harbor