VenCap 16 Feeder SCSp (the Feeder Fund) invests in VenCap 16 LP (the Master Fund) which may invest in underlying venture capital funds, which in turn invest in portfolio companies which are involved directly or indirectly in virtual assets. The Master Fund’s exposure to virtual assets will focus on investments into blockchain technologies with long-term value appreciation and there will be no short-term trading of cryptocurrencies or tokens. This being said, it is acknowledged that the Master Fund may, indirectly invest, on an ancillary basis, in initial coin offerings or crypto exchanges or providing other services relating to cryptocurrencies.
Virtual assets
Virtual assets present specificities such as their volatility, liquidity and technological risks, which could significantly affect the risk profile of the Feeder Fund.
It should be noted that the investment characteristics of virtual assets generally differ from those of traditional assets, commodities or securities. Virtual assets are evolving, relatively new products and technology. The methods whereby each virtual asset is created, secured, accessed and used may differ from one another. The growth and use of virtual assets generally is subject to a high degree of uncertainty.
Several factors may affect the price of virtual assets, including, but not limited to, supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory measures (if any) that restrict the trading of virtual assets or the use of virtual assets as a form of payment. There is no assurance that virtual assets will maintain their long-term value in terms of purchasing power in the future, or that acceptance of virtual asset payments by mainstream retail merchants and commercial businesses will grow.
There is currently no uniform definition of virtual assets, either at national or European level. In addition, virtual assets are not regulated or are lightly regulated in most countries. Consequently, virtual assets may be more exposed to theft, fraud and failure than established regulated exchanges for other products.
Cryptocurrencies
The investment characteristics of cryptocurrencies generally differ from those of traditional currencies, commodities or securities.
Importantly, cryptocurrencies are often not backed by a central bank or a national, supra-national or quasi-national organization, any hard assets, human capital, or other form of credit. Rather, cryptocurrencies are often market-based: their value is determined by (and fluctuates often, according to) supply and demand factors, the number of merchants that accept it, and the value that various market participants place on it through their mutual agreement, barter or transactions. A principal risk in cryptocurrency investing is the rapid fluctuation of their market price.
As a result, prospective investors are informed that the Feeder Fund is addressed only to professional clients within the meaning of MiFID II.
Furthermore, prospective investors should consult their own legal advisors about risks associated with investments in the Feeder Fund.