Cardano for Impact Investors

[IMPACT] Please describe your proposed solution.

About

Tavis Digital, a young and innovative Swiss based digital asset management company, has developed institutional investor targeted investment products in the crypto space. Tavis Digital drives a strong sustainability agenda. The company has launched a CO2 compensated green Bitcoin tracker. Investment products are otherwise focusing on energy efficient P-o-S tokens. The most recent investment product was launched in August 2021 and represents a globally first-of-its-kind Blockchain Impact Investment fund, called Sphere (see web links above). We strongly believe in the potential of Blockchain technology to drive positive impact on society and the environment. Given our own roots in Impact Investing, we wanted to launch a first token based Impact Investment product as soon as feasible. Sphere is seeking investment opportunities in tokens of SDG relevant projects. Sphere is therefore leading the Blockchain Impact Investment space, contributing to development and credibility of this specific, non-speculative crypto investment sector. Sphere follows a buy-and-hold strategy, provides liquidity to token projects and stability through staking, voting and even validation eventually. Through Sphere’s own investor reporting and promotion activities, tokens and projects will benefit from visibility and investor’s trust.

This proposal

After seeking collaboration with other large Blockchains successfully, we intend to Collaborate with Cardano to further develop the Blockchain Impact Investment sector. A first collaboration was established with Algorand about one year ago, as a prototype, which led to a first token investment (https://www.planetwatch.io/) as well as close collaboration and formal advisory roles. Algorand was able to refer us to their SDG relevant projects and to make the introductions. In the meantime, Algorand has hired a “Head of Impact” which has become a permanent contact person and discussion partner of Tavis Digital. Nevertheless, Sphere invests Blockchain agnostic and wants to promote promising SDG relevant projects across chains.

Now, we propose to expand such collaboration to Cardano, to screen Cardano’s SDG relevant projects for eligibility, assess potential token investments, invest and report to investors, and thus contribute to the development of Cardano’s projects as well as Cardano’s own positioning as leader in the Blockchain industry with a clear sustainability DNA. First investments, as proposed here, would only represent a starting point. Further collaboration and investments may take place, with mutual benefits, over the coming years.

[IMPACT] Please describe how your proposed solution will address the Challenge that you have submitted it in.

Cardano’s “Cross-Chain Collaboration” challenge promotes cross-chain collaboration, co-innovation and adaptation of successful approaches from other Blockchains. Furthermore, Cardano has a strong interest in promoting its own impact/SDG relevant projects.

Our proposal meets the challenge criteria very well since it intends to expand a successful collaboration approach, that we have already applied with other leading Blockchains, to Cardano. By connecting with Cardano and the community directly, we can jointly develop and promote the Blockchain for Impact space and identify investible Cardano projects for Sphere. We offer Cardano a pioneer and co-innovator role. Along with Cardano and other leading Blockchains, we intend to formalize and develop the SDG relevant Blockchain space and increase its visibility and credibility towards traditional Impact and ESG minded investors, such as asset managers, family offices, wealthy individuals, and later banks and pension funds. We would be willing to share our research, the investment strategy and the impact narrative, that includes impact measurement and reporting to Sphere investors. We furthermore share our knowhow on token offering options and infrastructure, such as the choice of CEX that are accessible for formal institutional investors and investment products. We also propose to promote the Blockchain Impact sector together, by e.g. organizing conference presentations, etc.

[IMPACT] What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?

Risk of not finding Impact eligible tokens for investment within the Cardano Universe:

The ultimate goal is to invest in some of Cardano’s SDG relevant projects and typically their utility tokens. The targeted tokens need to fulfil certain investment and impact criteria credibly in order to be eligible for investment.

Mitigants: Eligibility and exclusion criteria of Sphere are well defined and included in the Investment Strategy. The definition of three levels of “impact quality” for Sphere also allows for investments in tokens of projects that are not 100% SDG focused. Furthermore, Sphere invests SDG and sector agnostically and broadly in various Blockchain based business solutions. All this together should grant sufficient flexibility to identify a number of relevant projects.

Risk of not being able to invest in Cardano’s SDG project tokens operationally:

At the nascent stage of the Blockchain industry, and of the Blockchain Impact space specifically, token investing remains operationally challenging. Sphere’s token purchase has to be executed via service providers, such as token exchanges, brokers, custodians, so that the token can be held in our Sphere AMC investment product savely. In the past we have experienced limitations if it comes to new token investments. For example, DEX, or less developed CEX, can’t offer certain features important to formal investment structures/funds. We therefore can’t guarantee successful investment execution.

Mitigants: Capabilities of service providers, exchanges and custodians in particular, are improving fastly. Furthermore, we are happy to share our operational experience with Cardano and projects to direct them to infrastructure providers that are professional and eligible for institutional investors.

Unfavorable market conditions in Crypto and risk of slow down of development:

The current crypto market conditions are very challenging. We expect that this situation will slow down the general crypto market development, the development of its actors as well as Sphere’s own activities, including the fundraising process. Delivery of this project could therefore also be delayed.

Mitigants: We see Sphere and the Blockchain Impact space as long-term opportunities with huge potential. Sphere AMC has been set up as an open-ended investment product. It allows us to execute the strategy even at a lower pace, if needed. The general interest in Impact Investing and the SDGs will further increase.

[FEASIBILITY] Please provide a detailed plan, including timeline and key milestones for delivering your proposal.

• Sept/Oct 22:
• Screening of Cardano’s SDG relevant token projects based on guidance provided by Cardano. Eligibility testing. Contact making with relevant project team leaders
• Checking technical investment feasibility with CEX, custodian, and Sphere’s formal investment structure (Guernsey AMC)
• Identifying specific impact strategies and targeted SDGs
• Milestone: identification of 3-5 “in principle” eligible tokens
• Nov/Dec 22:
• Investment assessment of eligible tokens, write-up of formal investment proposal (token assessment of approx. 20-30 pages; similar to a financial analysis of an asset manager or bank)
• First Investment Committee Meetings held
• Milestone: 2-3 tokens are Investment Committee approved
• Jan/Mar 23:
• If relevant (still often the case) onboarding of specific CEX to be able to purchase the token and establish automated exchange price feed for Sphere’s daily valuation process. This process has taken 2-3 months in the past and triggered USD 3500 - 7000 external legal fees per onboarding
• Inclusion of new tokens into monthly and quarterly reporting to investors
• Milestone: 2-3 tokens are indeed investible and become part of Sphere’s portfolio, representing a starting point in this proposed collaboration project

Tavis Digital has the HR capacity to execute this proposal. Tavis Digital may provide other proposals for Fund 9 which are linked to the execution of our strategy. Therefore, even in the case all proposals receive funding, we can ensure sufficient capacity and proper delivery.

[FEASIBILITY] Please provide a detailed budget breakdown.

Tavis Digital operates an asset manager in the formal financial services industry. Tavis is therefore exposed to commercial market prices of the financial sector, with remuneration levels for staff as well as external advisors, service providers and law firms which may seem higher in comparison with a regular start-up environment. Tavis’ staff and direct advisors are however paid below market, when comparing with Swiss peers in the financial sector, to reflect the nascent stage of the company. The following budget numbers need to be seen in this context.

Research and screening related work:

• 5 days in total: USD 6,250 (applying an average day rate of USD 1250.-)

Investment assessments:

• 5 days per token investment proposal, incl. DD with project leadership team. 3 tokens. 15 days in total: USD 18,750
• 1 day in total for specific tech/IT related questions: specialist advisor USD 1,500
• Investment Committee preparation and meetings: 4 members, 2 days in total USD 2,500

Execution:

• Coordinating with various service providers: 3 days, USD 3,750
• External legal fees for investigation and onboarding of token and new service providers eventually: 3 tokens: USD 15,750 (assumption average of USD 5,250 per token)

Reporting preparation:

• 2 days in total: USD 2,500

-> Total budget: USD 51,000

[FEASIBILITY] Please provide details of the people who will work on the project.

Christian Speckhardt, Partner at Tavis Digital and Cardano proposal project lead

https://www.linkedin.com/in/christian-speckhardt/ 

Christian supports strategy, business development and investment product projects at Tavis Digital. Christian has a strong background in institutional asset management, banking and finance, ESG and impact investing. He was previously the CIO and deputy CEO of responsAbility Investments - a CHF 3.5bn AuM asset manager focused on impact investments. Today, he is engaged in the development of blockchain-based digital asset management company Tavis Digital and innovative fintech solutions. Christian also contributes to the development of the impact investment industry and SDG/ESG relevant business initiatives. He is supporting relevant businesses, funds and private and public sector actors in board, investment committee and advisory roles. Christian’s current engagements include impact asset management, sustainable agriculture and food systems, fintech, as well as blockchain, token and digital asset management. He is also involved in initiatives in the climate and energy finance space. Christian advises the Swiss government on the design and launch of an impact finance platform and serves as a member of the Swiss National UN FAO Committee. Christian holds a degree in Economics and an MBA from the University of Zurich, Switzerland. He’s a guest lecturer at the University of St. Gallen (HSG) and the University of Lucerne (IFZ).

Bernhard Vögeli, Managing Partner at Tavis Digital

https://www.linkedin.com/in/bernhard-v%C3%B6geli-251b173/ 

Bernhard is the co-founder of Tavis Digital and its sister company Tavis Capital AG. As Managing Partner, he oversees the operation, strategy and product development of Tavis Digital. Bernhard has a strong academic background and worked as a physicist in Switzerland, Japan and the USA for many years, including in private equity-financed start-up companies. In 2007, after completing his MBA, Bernhard joined the investment management team of a private equity company in Zurich. There he was responsible for the cash flow planning and portfolio management of mandates and fund of funds products, as well as the analysis and due diligence of funds, secondary transactions and direct co-investments in portfolio companies. Bernhard holds a PhD in Physics from ETH Zurich and an MBA from William E. Simon School, University of Rochester. He is a CAIA Charterholder.

Sandro Bruehlmann, Portfolio Management at Tavis Digital

https://www.linkedin.com/in/sandro-br%C3%BChlmann-058653119/ 

Sandro started his career as an intern in the mergers & acquisitions department of an IT-consulting firm. He joined Tavis Capital in 2017 as a part-time employee besides his master’s studies at the University of Zurich in Banking & Finance. Sandro started investing in cryptos a long time ago and ever since then he has gained a lot of experience in the crypto market and digital securities. After the spin-off of Tavis Digital, he joined the newly formed company as a portfolio manager for digital assets. Sandro is responsible for the development and portfolio management of the investment products. Sandro holds a Master of Arts in Banking & Finance with a focus on Corporate Finance and a Bachelor of Arts in Banking & Finance from the University of Zurich. He wrote his master’s thesis about investments in tokenized assets and the opportunities and implications for professional investors.

Rupal Majmudar, Tech/IT Advisor to Tavis Digital

https://www.linkedin.com/in/rupal-majmudar/ 

Rupal has more than two decades of IT experience in Banking, Telecom and Sport sectors, in roles ranging from Developer and Project Manager to Architect and CTO. Rupal completed his Masters in Electronics & Communication Engineering at IIT Bombay, and his Executive MBA at the University of Bern-Rochester. He is passionate about Blockchain technology, studying and practising it since 2018 from a technical as well as business perspective. Rupal started his Consulting role with Tavis Digital in May 2021, supporting and advising the team on the technical aspects of Blockchain, Token Assessment, Staking and Validator Node management.

Alexandra Wang, Senior Analyst Tavis Digital

https://www.linkedin.com/in/alexandraruofanwang/ 

Alexandra stepped into the digital asset sector in 2019 when she started an internship at a security token exchange in London. After completing her bachelor’s degree, she gained work experience from a blockchain-focused PR agency and a Chinese fintech company, where she contributed to the marketing and business development activities for the company’s crypto exchange and payment product. Alexandra holds a Bachelor of Arts (Hons) in War Studies & Philosophy from King’s College, London, where she is also completing a Master of Science in China & Globalization. Alexandra is fluent in Mandarin and English.

Stefan Rust and Alyssa Aaron, Sphere Investment Committee members from Sonic Capital (JV partner)

https://www.linkedin.com/in/stefanrust/ 

https://www.linkedin.com/in/alyssa-aaron-cfa/ 

[FEASIBILITY] If you are funded, will you return to Catalyst in a later round for further funding? Please explain why / why not.

The proposed solution does not need any further follow-on funding to be executed and completed.

Since we are pioneering and building a long-term investment activity in Blockchain Impact Investments and therefore contribute to the development of the Blockchain Impact space, other proposals may evolve.

[FEASIBILITY] Are you or any member of your team working on any other proposals in this Fund9?

[FEASIBILITY] Are you or your team working on any other proposals from previous Funds?

[AUDITABILITY] Please describe what you will measure to track your project's progress, and how will you measure these?

As per the delivery plan and timeline above, including the identified milestones, clear and measurable progress as follows:

• Sept/Oct 22: Tavis Digital to review Cardano’s SDG/Impact relevant projects. Longlist of presumably eligible tokens.

-> End of October 22: Identification of 3-5 “in principle” eligible and shortlisted tokens. Deliverable: Shortlist

• Nov/Dec. 22: Formal token assessments and operational checks

-> End of December 22: 2-3 tokens are Investment Committee (IC) approved. Deliverable: Confirmation of IC decisions

• Jan/Mar 23: If relevant (still often the case) onboarding of specific CEX to be able to purchase the token and establish automated exchange price feed for Sphere’s daily valuation process. This process has taken 2-3 months in the past.

-> End of March 23: 2-3 token investments executed. Deliverable: Confirmation of investment execution.

Tavis Digital intends to report on project progress and goals. Any potential deviation or delay will be communicated to the community transparently.

[AUDITABILITY] What does success for this project look like?

1. Cross-chain collaboration: A collaboration approach already applied successfully with another leading Blockchain will be adapted and established between Cardano and Tavis Digital.
2. Potential investment in Cardano projects: Over the course of approx. 6 months, “Sphere-Blockchain Impact Investments AMC”, the investment fund, is investing in 2-3 promising SDG relevant Cardano projects, resp. in their tokens, through token exchanges or OTC. This represents the start of a long term relationship between the parties, specifically in the Blockchain Impact space.
3. Co-innovation and promotion: These Cardano projects will gain visibility and credibility through Tavis Digital’s activities as formal digital asset management company, investor reportings and communication, incl. conference participations. Tavis and Sphere will promote Cardano with its impact/SDG relevant projects as a leading actor in Blockchain for Impact.
4. If applicable, Tavis Digital, through Sphere, will contribute to network stability through staking/validation and participation in decentralized governance.

[AUDITABILITY] Please provide information on whether this proposal is a continuation of a previously funded project in Catalyst or an entirely new one.

Entirely new proposal.

Sustainable Development Goals (SDG) Rating

Tavis Digital’s Impact Investment offering Sphere is investing in impact/SDG relevant blockchain projects and their tokens. As per the traditional Impact Investment sector, the SDGs are used as a guiding framework for investment eligibility. Sphere does not focus on any specific SDG in its investment strategy but clearly identifies the relevant SDGs for each token, resp. project. Furthermore, as part of the investor reporting, for each token, the relevant impact strategy, and where applicable, impact KPIs are defined, thus impact is measured and reported. For reputational risk reasons, it is highly important for us not to participate in “green washing”. Thus, if we can’t identify relevant SDGs and an impact strategy, investments are not eligible for Sphere.