Irish VC firm Cosimo to introduce security token investment funds

Cosimo Ventures, led by two Irish entrepreneurs, is planning to launch a new start-up fund in the coming months.

The venture-capital firm plans to roll out one of the first evergreen security token investment funds. These tokens act as an asset class used in initial coin offerings for cryptocurrencies. Such tokens are backed by external, tradable assets, making them safer than utility tokens.

Under so-called evergreen funding, investors supply the capital in incremental payments throughout the development phase of the company or product. Thus the company receives money from its investors as the need for funds arises.

The venture-capital firm, which has an office in Dublin, is an active investor in so-called “deeptech” companies working in areas such as blockchain, cryptocurrencies, artificial intelligence, the Internet of Things, big data, and virtual and augmented reality.

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The firm seeks to partner with promising early-stage Irish and UK technology start-ups to help them accelerate and grow into the US market. It has recently backed a number of Irish companies including Gecko Governance and Nova Leah.

The firm, which has offices in Boston and New York, is co-led by Connor Cantwell, the chairman of An Post's GeoDirectory. Mr Cantwell previously founded 20-20 Insights, a company acquired by Swiss Post in 2013. He was also formerly European marketing director and country manager for Ireland for the research firm Nielsen.

The other Irish partner is Ciarán Hynes, founder and managing director of Ovation, the events group that was acquired by MCI in 2003.

Liquidity

Speaking to The Irish Times, Mr Hynes said the new fund "would bring venture capital into the digital currency age" enabling investors to get liquidity much earlier in the process than they usually would.

“We have fantastic track records as entrepreneurs and in investing our own money but not as fund managers. We believe this tokenised fund offers the opportunity for people who recognise our expertise,” said Mr Hynes.

“What it does is open up venture capital to people who wouldn’t have been able to participate in investments previously,” added Mr Cantwell.

Mr Hynes said that up until now, it has done deals via special-purpose vehicles.

“Our current model has worked well. We put $5 million to work last year and I’d expect it to be a higher figure this year given that the new fund will shortly be up and running. Our initial aim is to get at least $25 million to $40 million and put that to work,” he said.

Mr Hynes added that among its backers are Jeff Parker, who successfully sold two businesses to Thomson Reuters, and Steven Segal, who founded the Boston-based private-equity firm JW Child.

In addition to Mr Hynes and Mr Cantwell, Cosimo has two other lead partners, Robert Frasca, formerly a US combat pilot who has previously built three venture-backed start-ups with successful exits, and Ken Lang, who formerly served as chief technology officer with the early web search engine Lycos, and at Vringo, which won a major intellectual property case against Google in the US district court.

Cosimo is particularly focused on companies working with blockchain, the technology behind popular cryptocurrencies such as bitcoin. It is currently assessing up to 50 companies for possible investment that have some blockchain element to them. These include 10 to 15 Irish start-ups.

Mr Hynes said the company was keen on Irish-led companies, not just because Cosimo itself is partly Irish in origin but also because they tend to be “scrappy.”

Cosimo also confirmed that Oneiro, a start-up in which it recently agreed to invest €3 million, is to introduce its own cryptocurrency shortly.

Mr Hynes said Oneiro will be issuing its own cryptocurrency “in a matter of months”.