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The Crypto Development Fund (CDF) enables secure investments in startups that are operating in developing countries leveraging the benefits of the blockchain technology.

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Why is it relevant?

Exclusion

2.5 billion people worldwide are excluded from financial services. Specifically, in developing countries, financial exclusion is one of the major development obstacles, where up to 80% of the population do not have access to financial services.

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Funding Obstacles

Due to the broken financial system, it is extremely difficult for start-ups to raise money from investors and for investors to find suitable investment opportunities.

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Challenges Investors and Startups face

Startups

LEGAL FRAMEWORK

Without a developed legal system, start-ups often have to accept the investors’ conditions without understanding it and without the opportunity to seek legal counsel. This may result in unequal agreement which favours the investors.

DEPENDENCE ON INVESTOR

In the absence of multiple funding opportunities, investors can leverage their position over local start-ups resulting in abnormal equity shares or collateral collection. Furthermore, start-ups depend on additional capital injections from the investors which can result in the abuse of power from investors.

FUNDRAISING

Due to an underdeveloped financial system, local entrepreneurs fail to receive funding for their start-ups. Even if they manage to find an investor, they often fail to subsequently attract additional capital.

Investors

Transparency

Current investment vehicles offer a lack of transparency for investors, especially concerning the usage of funds.

EXIT OPPORTUNITIES

Due to a lack of profitable and sustainable exit opportunities investors refrain from investing in developing countries.

INVESTMENT OPPORTUNITIES

30 % of the investors surveyed by the Financial Times cannot find suitable impact investments that fit their portfolio.

Our investment vehicle

Using blockchain technology, we are providing a platform for investors from developed countries to come together with start-ups from developing countries:

Startup Platform

Smart Contracts

Proof of Intention

Escrow Mechanism

Tokenization

Payments

Funding criteria

The CDF provides a way to finance start-ups that bring impact to their respective area.
We are specifically interested in FinTech, Mobility, Energy and Healthcare.
These applications offer strong growth potential in developing countries and will be essential to reaching sustainable development goals as proposed by the UN.

Read more about blockchain in developing countries

Impact on developing countries

Job Creation

So-called “high-growth” entrepreneurship contributes around 50% of newly created jobs in developing countries. Our concept is to support these transformational entrepreneurs to fund their businesses and consequently make a positive economic impact in their region.

Coping Capacity

We focus on companies which build their business based on the blockchain technology to fill the gap of weak regimes. Most of the countries fail to realize their potential because they do not have a functioning infrastructure and legal system to encourage entrepreneurship and growth. We specifically target those companies which aim to fill that gap and provide alternative infrastructure on which other companies can build. Therefore, we are creating a self-reinforcing process which foster development and entrepreneurship.

Knowledge Transfer

Due to the creation of milestones and the interaction between the investors and the start-ups, entrepreneurs can widen their horizon and discuss business focus with a wide range of people.

Team

Crypto-Development-Fund-CDF-Kai-Schmidt

Kai Schmidt

Co-Founder

Kai graduated from the Frankfurt School of Finance and Management in Business Administration. He wrote his final year thesis in cooperation with the Frankfurt School Blockchain Center about the potential of Blockchain-based applications in developing countries. Kai worked in a Rocket Internet-funded start-up in Bangladesh where he experienced the challenges of developing countries and learnt how to build start-ups in an unfavourable environment.

Crypto-Development-Fund-CDF-Philiipp-Lesche

Philipp Lesche

Co-Founder

Philipp graduated from TU Munich School of Management studying Management and Technology. He is currently working on different topics around the Blockchain technology and its various applications. In addition, he is supporting promising projects as ICO advisor. During his exchange semester in Milan he became interested in Social Entrepreneurship & Social Innovation and joined Kai with the idea of a crypto fund for developing countries.

Crypto-Development-Fund-CDF-Simon-Scholz

Simon Scholz

Co-Founder

Simon graduated from TU Munich with a Master’s degree in Automotive Engineering and started working as a simulation expert at Audi. With his affinity for user-centred design as well as software development, combined with a mindset of learning, he acquired the skill set to launch his first company on a part-time basis. He has a strong interest in Blockchain-based applications and the benefits they can provide, especially in terms of Social Impact.

Mohammed Al-Salafi is our representative in Nigeria

Mohammed Al-Salafi

Expert Nigeria

Mohammed holds a Master’s degree from Frankfurt School of Finance & Management in International Business with a focus on African Business Development. He wrote his Master’s thesis on the role decentralized systems can play in fostering development in fragile countries with Yemen as a case study. Momentarily, he serves as a business analyst and country manager based in Nigeria for a German-based consulting firm supporting international companies with their entry strategy to sub-Saharan Africa.

McIntosh Kuhlengisa Blockchain Research Accelerator

McIntosh Kuhlengisa

Business Development

Mc obtained his MBA from the Gordon Institute of Business Science, South Africa, where he wrote his thesis on funding social enterprises in emerging economies. He is currently pursuing doctoral studies on the effect of blockchain based platforms on financial inclusion on SMEs. He has worked for central banks in southern Africa with a focus on regulation and supervision frameworks for financial services providers, and has provided capital raising advisory services to SME’s in Southern Africa across agriculture, energy and fintech.

Crypto-Development-Fund-Blockchain-Developer-Farhan-Shahid-Nawaz

Farhan Shahid Nawaz

Blockchain Developer

Farhan is completing his Master’s degree in Informatics from TU Munich. He has been involved in programming various blockchain based solutions including one for simplifying the rental process. He also maintains a deep understanding of the technical underpinnings of the crypto space. Hailing from a developing country himself, Farhan is excited to be involved in helping realize the Social Impact potential of blockchains.

Advisors

Prof. Dr. Philipp Sandner, Frankfurt School Blockchain Center

Prof. Dr. Philipp Sandner

Prof. Dr. Philipp Sandner is the Head of the Frankfurt School Blockchain Center at the Frankfurt School of Finance & Management. The centre was launched in February 2017 and analyses implications of blockchain technology on companies and business models. It provides a platform for decision makers, start-ups, technology experts and industry professionals to exchange their knowledge and share their visions. Prof. Sandner is a member of the FinTechRat of the Federal Ministry of Finance.

Benedikt Pollmeier, Luvent Consulting

Benedikt Pollmeier

Benedikt is the Managing Director and co-founder of Luvent Consulting GmbH. He has extensive experience in managing, implementing and evaluating international development projects. He worked for numerous donors including ADB, AfDB, EBRD, EIB, EuropeAid, GIZ, KFW, and the World Bank. He obtained global experience advising private and public sector clients as Senior Economist with a focus on private sector development and digitalisation.

Crypto-Development-Fund-Nico-Konrad

Nico Konrad

Nico is Managing Director of DLT Capital GmbH – an international blockchain and ICO consultancy. With more than 12 years’ experience in midcap M&A and in corporate finance consulting for over 50 companies, Nico advices everything around your financials from identifying possible investors (VCs, PEs, strategic investors, crowdinvesting, etc.) up to company valuation. He is a distributed ledger technology enthusiast for several years.

cdf-christina-moehrle

Christina Moehrle

Christina is a specialist in impact finance and works with several pioneers in the field on educational content, communications and impact investing strategies. At Roots of Impact, she focuses on creating online and onsite education programs that enable social entrepreneurs, impact investors and philanthropic players to commonly create impact a scale. In addition, she is communication manager for the Financing Agency for Social Entrepreneurship (FASE) and advises Ananda Impact Ventures on investor communications.

Ambassadors

crypto-development-fund-lucas-zaehringer

Lucas Zaehringer

Lucas Zaehringer is leading the development in Germany of Avertim a fast-growing European management consulting company helping large companies align their Strategy and Operations. He is also founder of PositiveBlockchain.io, the open-source database and community exploring the potential of Blockchain for social and environmental impact. Lucas believes everyone can make a positive contribution in today’s world, especially through entrepreneurship. He is actively involved as Member, Community Developer or Business Advisor in (social) entrepreneurship initiatives and networks such as MakeSense, Enactus, Startup Weekend. He was Mentor for the Consensys decentralized Hackathon’ last edition in 2018.

Partner

Frankfurt-School-Blockchain-Center-Crypto-Development-Fund
Luvent-Consulting-Crypto-Development-Fund
cdf-dlt-capital
cdf-africon
Positive-Blockchain-Crypto-Development-Fund
cdf-passionincubator

In particular, weak institutions and corruption hinder the evolution of a stable financial sector and favour power disparities among the population. The blockchain technology is one of the key technologies to fill the gap of failed states in developing countries. The blockchain empowers people to set up their own rules and to collaborate on the blockchain without a central controlling authority. In the following decades, the blockchain technology will be the key technology for developing countries to revolutionize their financial and legal sector and to jump out of poverty.

It is almost impossible for investors from developed countries to find good investment scopes in developing countries. The biggest obstacles for investing in developing countries have been trust and information asymmetries. In order to bypass fraudulent acts, investors have to set up complicated measures including identity proof, collateral collection and legal documentation. Not only are those measures expensive and time-consuming, but also make an investment less attractive. Moreover, many entrepreneurs in developing countries cannot provide it. In addition, the absence of a legal framework often prevents investors and start-ups to reach an agreement. Even if the agreement is successful, it often reflects the investors’ interests leaving the start-ups in a state of dependence.
As a result, investments are less likely. Current investment vehicles aim to solve these problems but often result in high costs and inefficiencies.

On our platform, we offer an overview of pre-screened blockchain start-ups and the opportunity to invest in them. If needed, investors can contact the start-ups directly before making an investment decision.

We maintain a legal framework through our smart contract, in which the investors and start-ups can operate. Moreover, we ensure that both parties abide by the contract thereby decrease the risk of costly legal disputes.

Before a start-up can receive funding, it needs to achieve pre-defined milestones in order to proof their intention and eligibility. In addition, we will verify the entrepreneurs’ identity. We continuously monitor the start-up’s progress using our CDF-Scoringboard.

With our escrow mechanism, we secure that new payments will automatically be freed if the start-up achieves new milestones, protecting it from funding uncertainties. In this way, we eliminate the need to manually manage the investments.

In order to provide a legal investment vehicle for the investors and start-ups, we tokenize the company and distribute the shares accordingly. As a result, we do not rely on legal systems in developing countries, which may be corrupted.

Using cryptocurrencies, we are able to send money at low rates to all countries of the world. This results in cheaper and faster payments, reduces currency risks and allows more adaptability towards changes.