The Comissão de Valores Mobiliários (CVM) is evaluating changes to the rules for equity investment funds (FIPs) and one of the objectives is to encourage the investment of resources in small startups, such as those in the seed phase.
According to Daniel Maeda Bernardo, superintendent of supervision of institutional investors at the municipality, the FIPs are being used less than they could be. Per table, this change can benefit startups involved in crypto and blockchain.
The Normative Instruction that governs the FIPs, number 578, includes, for example, minimum governance rules for the companies that receive funding. For example, it indicates that the investor has a seat on the board of directors. However, very few startups have such advice and one of the reasons is because they are not big enough to do so.
As it stands today, FIPs alienate investors looking for more security in the rules. And it ends up leaving this segment unguarded in certain aspects. Therefore, this is one of the points that is under review. “There may be specific waivers (waivers of requirements),” said the CVM representative on the panel on Venture Capital during the BlockchaIn Rio Festival 2022, last Friday (2), accompanied by the partner website Blocknews.
For Dan Yamamura, co-founder of Fuse Capital, there are short-term resources for startups. But in Brazil, there is a lack of longer-term capital, in the style of private equity, which considers returns – and exit from investments – between 5 and 10 years. By the way, this is one of the focuses of the company, which has just launched a fund that targets companies in Web3. In fact, there is talk of investment thesis 2.5, for the time being, which means a startup operating in an existing and even regulated market, but which uses Web3 technologies that generate innovations.
An example of Fuse’s investment is Arthur Mining. The startup’s project is to mine bitcoin using the gas that is lost or idle in the oil exploration process. Thus, it seeks to reduce the cost of mining and reduce the carbon footprint. Rudá Pellini, president of the company, said that probably, three years ago, it would not have been able to raise funds due to the novelty of the proposal.
When talking about investments such as those in the crypto and blockchain area, investor knowledge remains an issue, said the Fuse partner. In the United States, the investor knows more about the subject. In Brazil, an education process is needed, explaining what it is about and its potential.
Maeda also said that the revision of IN 578 is in line with the release of a normative opinion to guide the crypto market that is connected to securities, which the president of the CVM, João Pedro Nascimento, said will be released soon. The idea is that it serves as a guide for the market until regulation arrives.
Text originally published in Blocknews.