Is SA startup Nona Creative really first to conclude equity transaction in Bitcoin?

Cape Town digital consultancy and product development firm Nona Creative has conducted an equity deal entirely in Bitcoin. But is it really the first such deal, as a press release by the company suggests?

The startup, which was founded in 2012, announced today that it had bought out a significant shareholder.

Nona Creative CEO and co-founder Mike Scott would not name the amount of the deal and the shareholder that the startup bought out, citing “privacy* concerns”. He was however able to say that the shareholder the company bought out was one of the co-founders of the startup. Scott added that the company had five co-founders.

In earlier press release the company claimed the deal was one of the first equity transactions in the country to be conducted using Bitcoin.

However it has long been preceded by the Augmentors deal concluded last year on television programme Shark Tank, in which investor and South African entrepreneur Vinny Lingham (of Newtown Capital) invested about R500 000 worth of Bitcoin in the games startup company (see this story on Coindesk).

The initial Augmentors deal was followed by an initial coin offering (ICO) in February in which Newtown Capital raised $1-million.

This was confirmed by today Newtown Partners managing partner Llew Claasen.

When Ventureburn pointed out to Scott that the Augmentors deal was the country’s first equity transaction conducted in Bitcoin, Scott however pointed out that the deal is quite different as the former was for a capital raise, while the Nona Creative deal involved buying out an existing shareholder.

He added that the Nona Creative deal might in fact be the first equity transaction using Bitcoin in South Africa that involved an existing shareholder deal.**

Nona Creative CEO Mike Scott however pointed out that the deal is quite different as it involved buying out an existing shareholder

Claasen, who is also the executive director of the Bitcoin Foundation, added that it’s “not an usual thing” to do an equity deal using Bitcoin. “Sometimes it’s just convenient and you have the currency (Bitcoin) on hand,” he said.

In an earlier press release the startup said it had consulted law firm SchoemanLaw Inc for guidance in terms of the compliance and legalities of the transaction.

Nona Creative also consulted Afzal Khan, the Tax Partner at RAFT – an association of African National Accountants, Auditors and other specialists – for insights into the tax considerations associated with the transaction.

Scott said conducting an equity deal in Bitcoin is much the same as conducting one using ordinary currency such as Rand of Dollar and investors won’t be exempt from Capital Gains Tax.  “It’s on you to make sure it’s done appropriately,” he said.

Nona Creative presently consults and builds blockchain solutions and next year the company plans to host a two-day course on demystifying the Blockchain. “It’s not for beginners, but for people that want to properly understand business-use cases,” said Scott, adding that a date for the course had not been finalised as yet.

Ventureburn editor Stephen Timm also contributed to this article.

*Editor’s note (05/12/2017): Ventureburn has amended this piece to reflect that Nona Creative CEO Mike Scott concerns for not revealing the details of the deal were over privacy. In addition Scott commented subsequent to the publication of this article that while the Augementors deal was the country’s first equity transaction conducted in Bitcoin — the deal is quite different as the former was for a capital raise, while his involved buying out an existing shareholder.