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Real-World Example 2: Tokenizing a Venture Capital (VC) Cap Table
In the world of venture capital (VC), managing a capitalization table (cap table) is both critical and notoriously complex. A cap table serves as the backbone of a company’s equity structure, meticulously tracking the ownership of common shares, preferred shares, warrants, and employee stock options – down to the finest detail of who owns what and under what conditions.
Traditionally, this intricate process relies on third-party platforms like Carta, which provides centralized software solutions to manage equity. While platforms like Carta have become industry standards, they also come with significant limitations that can hinder scalability, transparency, and cost efficiency:
- Centralization Risk: The reliance on a single platform creates a single point of failure for critical company ownership data.
- Lack of Transparency: Stakeholders must trust the accuracy of records maintained within the platform’s closed system.
- High Costs: Subscription fees escalate as the number of stakeholders and transactions grow, making equity management increasingly expensive.
- Limited Liquidity: Shareholders often face rigid restrictions on transferring or selling their equity, stifling flexibility and growth opportunities.
Enter Ravencoin, a blockchain-native solution purpose-built for tokenization. By leveraging Ravencoin, VC firms can reimagine their cap tables with unparalleled transparency, efficiency, and flexibility. Ravencoin eliminates many of the pitfalls associated with centralized systems, offering:
- Immutability: Every tokenized share is recorded on an immutable ledger, ensuring the integrity and accuracy of ownership records.
- Transparency: Stakeholders can independently verify all equity transactions and ownership structures without reliance on intermediaries.
- Cost Efficiency: With Ravencoin’s low transaction fees, equity management remains cost-effective, even as a company scales.
- Liquidity: By tokenizing shares, warrants, and options, stakeholders could unlock secondary market trading opportunities, increasing liquidity.
In this example, we’ll explore how a VC firm could revolutionize its equity management by tokenizing its cap table on Ravencoin. We’ll break down the process step-by-step, including how to create common shares, preferred shares, options, and warrants, and how to manage critical functions like shareholder votes and board consents using Ravencoin’s native messaging and voting tokens.
- Structure of a VC Cap Table on Ravencoin
A typical VC cap table comprises several types of equity, each serving a specific purpose:
- Common Shares: Primarily owned by founders and early employees.
- Preferred Shares: Issued during funding rounds (e.g., Series A, B, C).
- Warrants: Granted to debt holders, offering rights to purchase shares in the future.
- Options: Reserved for employees as part of their compensation packages.
Each of these equity instruments can be uniquely tokenized on Ravencoin, with supporting metadata securely stored in IPFS.
- Tokenization Process on Ravencoin
Step 1: Create the Parent Asset for the Company
- Asset Name: $VCFIRM (Restricted asset)
- Quantity: 1 (represents the overarching ownership structure).
- Reissuable: Yes (to allow updates to metadata as needed).
- IPFS Document:
- Incorporation details.
- Shareholder agreements and governance rules.
- Legal terms and compliance information.
Step 2: Issue Common Shares
- Asset Name: $VCFIRM/COMMON
- Quantity: Total authorized shares (e.g., 1,000,000)
- Divisibility: 0 (ensures no fractional shares unless explicitly required).
- Reissuable: Yes (to allow for issuing additional shares if authorized).
- IPFS Document:
- Shareholder agreements.
- Voting rights and obligations.
- Transfer restrictions and legal terms.
- Advantages:
- Clear, immutable ownership records
- Transparent shareholder agreements
- Easy, on-chain transfer of shares
Step 3: Issue Preferred Shares (Funding Rounds)
Each funding round is tokenized as a distinct sub-asset.
Series A Preferred Shares:
- Asset Name: $VCFIRM/PREFERRED_SERIESA
- Quantity: Total shares for Series A (e.g., 200,000)
- Divisibility: 0
- Resissuable: No (round closed upon issuance)
- IPFS Document:
- Series A funding agreements
- Liquidation preferences
- Dividend rights
Series B Preferred Shares:
- Asset Name: $VCFIRM/PREFERRED_SERIESB
- Quantity: Total shares for Series B (e.g., 300,000)
- Divisibility: 0
- Reissuable: No (round closed upon issuance)
- IPFS Document:
- Updated funding terms
- Investor-specific rights and privileges
Advantages:
- Transparent tracking of each funding round.
- Immutable documentation of rights and preferences.
Step 4: Issue Warrants for Debt Holders
- Asset Name: $VCFIRM/WARRANTS
- Quantity: Total warrants issued (e.g., 50,000)
- Divisibility: 0
- Reissuable: Optional, based on warrant agreements
- IPFS Document:
- Warrant agreements
- Conversion and expiration terms
- Advantages:
- Prevents disputes with immutable terms.
- Tracks warrant-to-share conversions transparently.
Step 5: Issue Employee Stock Options
- Asset Name: $VCFIRM/OPTIONS
- Quantity: Authorized options (e.g., 150,000)
- Divisibility: 0
- Reissuable: No (separate assets can be issued for different strike prices)
- IPFS Document:
- Vesting schedules.
- Exercise terms and restrictions.
- Strike price and expiration terms.
- Advantages:
- Track vesting schedules in real-time
- Immutable records for exercising options
- Transparent equity allocation for employees
- Metadata on IPFS: What Should be Stored?
For each asset type, the IPFS metadata provides transparency and clarity. Essential components include:
- Legal Agreements: Shareholder agreements, funding terms, and vesting schedules.
- Ownership Rights: Details of privileges and obligations tied to each equity type.
- Transfer Rules: Conditions for share transfers and compliance requirements.
- Historical Records: Immutable documentation of any equity structure changes
- Shareholder Voting with Ravencoin
Ravencoin’s voting tokens and messaging features simplify secure shareholder voting.
Steps for Conducting a Sharehold Vote:
Step 1: Create Voting Tokens:
- Asset Name: $VCFIRM/VOTE2025 (or relevant identifier).
- Quantity: Equal to the total eligible votes (based on equity holdings).
- Divisibility: 0
- Reissuable: No
Step 2: Distribute Voting Tokens
- Allocate voting tokens proportionally to shareholders equity holdings.
Step 3: Send Voting Details via Messaging:
- Use Ravencoin’s messaging feature to distribute:
- Proposal details and rationale.
- Voting options (e.g., “Approve,” “Reject,” or “Abstain”).
- Submission deadlines.
Step 4: Vote Submission
- Shareholders send tokens to designated addresses for each voting option.
Step 5: Tally Votes
- Count tokens sent to each address to determine the outcome.
Step 6: Record Results
- Publish voting results via a memo attached to the VCFIRM parent asset
Benefits
- Full transparency with on-chain records
- No reliance on third-party voting platforms
- Board Consents with Ravencoin
Ravencoin enables efficient decision-making for board-level actions using consent tokens.
- Issue Board Tokens
- Asset Name: $VCFIRM/BOARD
- Quantity: Equal to the number of board members (e.g., 10)
- Divisibility: 0
- Reissuable: Yes (to accommodate changes in board composition).
- IPFS Document: Board member roles, rights and responsibilities
- Create Consent Tokens
- Asset Name: $VCFIRM/CONSENT2025 (or decision identifier)
- Quantity: One per board member
- Divisibility: 0
- Send Consent Details via Messaging:
- Use Ravencoin messaging to communicate the resolution or proposal, including:
- The nature of the consent.
- Supporting documents or rationale (linked via IPFS)
- Voting options and deadlines
- Vote Submission:
- Board members send tokens to predefined addresses to indicate approval or rejection.
- Publish Results:
- Record and publish decisions on-chain for transparency.
Benefits:
- Immutable record of board decisions
- Seamless communication through Ravencoin’s messaging
- Why Ravencoin is Superior to Carta for Cap Tables
| Feature | Carta | Ravencoin |
| Ownership Records | Centralized database | Immutable blockchain |
| Transparency | Limited visibility | Fully transparent |
| Costs | Subscription fees | Minimal fees |
| Liquidity | Limited transfers | Native transfers |
| Flexibility | Fixed structure | Customizable |
| Security | Centralized risk | Decentralized security |
Key Takeaway: Ravencoin decentralizes and simplifies cap table management while reducing costs and improving transparency.
Conclusion: Tokenizing a VC cap table on Ravencoin transforms the complex process of equity management into a transparent, efficient, and cost-effective system. By leveraging Ravencoin’s native asset capabilities, IPFS metadata, and built-in compliance tools, VC firms can build trust with investors, streamline shareholder interactions, and embrace blockchain’s future-ready potential.
Now, after the first two examples, I can already guess what you’re thinking: Who is going to do this? Companies aren’t going to move their ownership structures or cap tables to the blockchain. Nobody understands this technology well enough to do so.
That, my friends, is where you’re underestimating the momentum of innovation. Think of the saying, you don’t skate to where the puck is, you skate to where the puck is going.
I completely agree that existing businesses and corporations will be hesitant to move away from their legacy centralized processes. Centralized systems have been the backbone of traditional markets for decades, creating a comfort zone that is difficult to disrupt. But history has shown us that the systems of today often crumble under the weight of inefficiencies once a better solution emerges.
Two key factors are driving this shift – and they are already in motion.
(1) Regulatory Change is Inevitable
The administration coming to power in 2025 has already signaled its intent to the make the U.S. a global leader in blockchain technology. With this regulatory tailwind, businesses will have clarity and confidence to explore blockchain-backed systems without fear of government or regulatory pushback. In fact, regulatory change will likely incentivize businesses to adopt blockchain, as compliance-friendly platforms like Ravencoin simplify adherence to legal frameworks while delivering unparalleled transparency.
(2) The World is Becoming More Digital – and Younger
We are living through the greatest wealth transfer of all time. As the older generations, entrenched in the fiat world, see their wealth eroded by currency debasement, the younger, Bitcoin-native generation is rising to prominence. This younger generation grew up immersed in digital environments. They value decentralization, transparency, and efficiency – qualities sorely lacking in legacy systems.
For them, embracing blockchain technology will be second nature. They won’t just demand these innovations – they’ll build businesses and institutions directly on these platforms. As wealth moves into their hands, and as they enter leadership positions in private equity and publicly traded companies, the case for tokenizing shares on decentralized platforms will become not only logical but inevitable.
Why Public Companies Will Turn to Blockchain
The shift won’t happen overnight, but the limitations of legacy systems will force public companies to look for better solutions. Let’s break down some of the key advantages blockchain tokenization provides that are simply unattainable with current systems:
24/7 Trading and Low-Cost Operations
Imagine a world where shares of a company are traded not during the limited hours of the NYSE, but 24/7, with transactions settling instantly. By tokenizing shares on a platform like Ravencoin, companies can eliminate the inefficiencies of batch trading and T+2 settlement times. They’ll also bypass costly intermediaries, driving down expenses for both the company and its shareholders.
Fractional Ownership and Broader Participation
Blockchain makes fractional ownership straightforward. Instead of requiring investors to buy whole shares, tokenization allows shares to be divided into fractions, opening the door to retail investors who might otherwise be priced out. This increases liquidity and broadens access to investment opportunities, democratizing wealth creation.
Eliminate Nake Short Selling
The transparency of blockchain eliminates one of the most egregious flaws of traditional markets: naked short selling. As highlighted in the GameStop saga, this practice enables hedge funds to sell shares they don’t even own, creating artificial downward pressure on a stock. With blockchain, every tokenized share is tracked immutably, ensuring that each short sale is backed by a real asset. This prevents manipulation and restores trust in the market.
Transparency and Real-Time Reporting
Blockchain provides unparalleled transparency for shareholders, regulators, and company management. Every transaction is recorded immutably, giving stakeholders real-time insights into ownership structures and trading activity. Companies that tokenize their shares on Ravencoin will foster a level of trust that is impossible under the opaque systems of today.
The Timeline for Change
I’m not suggesting this transformation will happen in 2025. As detailed in The Bitcoin Blueprint, the timeline for blockchain adoption begins with Bitcoin leading the charge. By 2025, institutions will have fully embraced Bitcoin as a store of value, setting the stage for blockchain adoption in other areas, including asset tokenization.
By 2030, as the world becomes more digital and blockchain adoption accelerates, tokenizing businesses – both private and public – will shift from being an edge case to becoming the standard. At that point, relying on legacy exchanges like the NYSE will feel as antiquated as using a flip phone in a smartphone era.
Why Ravencoin Will Be the Blockchain of Choice
The examples in this chapter aren’t just theoretical; they represent the future of business ownership. Ravencoin offers the ideal platform for this transformation because it’s purpose-built for asset tokenization. It’s scalable, decentralized, and uniquely capable of solving the issues that plague traditional markets. And as new businesses emerge and legacy companies look for blockchain solutions, Ravencoin’s robust feature set – coupled with its low fees – will make it the natural choice.
*Not financial advice. Educational purposes only.