EBSI projects
OnePass: SME Financing
Enabling cross-border investment within Europe by creating a trust framework between startups, investors, and trusted operators of services to startups.
The vision
Creating the standard for the verification of startup investability in Europe.
Led by a range of partners from the private sector with experience in startup funding, acceleration, and digital identity infrastructure, the project aims to create an EU wide standard, through EBSI, to digitize trust and enable easier access to funding opportunities across borders within Europe for Business Incubation Centers, Accelerators, European Digital Innovation Hubs, and Operators of Funding Support to Startups.
Investor
Accelerator
IT Providers
The challenge
Aligning on a common framework that works cross-border within Europe.
Fundraising is a big unsolved challenge for both sides of the market. On the one hand, SMEs and particularly new Startup founders, have to face a high opportunity cost in discovering funding opportunities and dealing with a lot of red tape for demonstrating they are ready to be invested or to receive a public grant. On the other hand, investors and operators of innovation funding have to spend more than 10% of their available funds, in dealing with Know Your Customer (KYC) and Know Your Business tasks (KYB), representing a high opportunity cost for them.
Besides this, the cross-border gap for both sides of the market is even worse as the fundraising challenge requires start-ups from less connected ecosystems to move to more established hubs elsewhere in Europe to find investors. This is due to the fact that better-connected innovation ecosystems benefit from more local accelerators with greater funding opportunities and more qualified business support services compared to their counterparts elsewhere.
The opportunity
Web3 has the potential to revolutionise cross-border investment opportunities.
The OnePass project aims to create transparency of information and procedures for investing in early stage startups by leveraging Web3 technology to create a common trust network for universal verification of both startups and investors.
The benefit is easy access to investment opportunities within Europe with the knowledge that all parties are being evaluated and verified according to the same framework, thereby saving time in the overall process. This new standard would allow investors and startups to look for opportunities further than their usual regional network.
A Web3 presentation and verification framework for startups and investors is one way of solving this information mismatch. This opportunity brings together three main technologies to achieve this:
- Digital Wallets: used by startups and investors to receive, store, and send credentials on the move.
- Verifiable Credentials: for formatting, presenting, and exchanging credential data in a machine-friendly way, creating a trusted index for startup evaluation.
- Blockchain: for delivering a highly secure, resilient, and decentralised way of verifying the credential information presented by both startups and investors.
The project
Using EBSI to build a new trust framework to increase cross border investment within Europe.
The project leverages the power of the European Blockchain Services Infrastructure (EBSI) to build the foundations of a new digital trust framework to facilitate cross border investment opportunities within Europe.
EBSI allows this project to design, build, and operate the next generation of decentralised services for SME funding processes. The objective of his project is to develop and implement:- A platform for startups to request, store, share, and present credentials related to their legal existence and investability with potential investors and use this digital trust to gain platform access to new investment opportunities.
- A platform for investors to join a community of trusted entities by requesting and storing credentials related to their legal existence, resulting in a seamless verification process of startup investability, thereby gaining access to a greater pool of investment opportunities.
- A standard for accelerator funding providers and entities specializing in carrying out KYC and KYB activities as part of their business-as-usual activities of public funding distribution to streamline their business processes by reducing, reusing or sharing due diligence costs.
The scenario
Discover the scenarios.
1. Receiving verified badges (startup).
Sara is the CEO of an early-stage AI Tech startup in Spain. She is looking for investment to help the company grow and often spends a lot of time and effort searching and applying for public or private funding and often doesn't know what information investors are looking for, thereby wasting a lot of time looking in the wrong places or providing the same information over and over. She goes to the OnePass bridge platform to verify her startup's legal existence and investability status in order to be introduced to the most relevant investors for her startup.
- She starts the process by going to the OnePass bridge website and 1 requesting a KYC verifiable credential. By doing this, she is redirected to the IDnow website where she can complete the self-verification process by uploading her ID documents, taking a selfie, and completing the authentication process. She is then 2 issued the KYC credential by OnePass bridge which at the ease of scanning a QR code can be easily 3 stored in her digital wallet.
- Then, she starts the KYB process by going to the OnePass bridge website and 4 requesting a KYB verifiable credential. This involves her completing an online application form, where she can populate any required information that details the company’s legal existence status. Once the information has been authenticated by the OnePass bridge team against external registries, the KYB credential is 5 issued and is made available to Sara via an email link. Simply by scanning the QR code, she can 6 store the credential in her digital wallet.
The benefit is that the information presented for the company will only need to be collected once and will contain only information the investors are looking for.
2. Receive verified badges and view verified startups (investors).
AB Capital is an investor from Denmark focused on investing in early-stage startups in the AI sector. They would like easy access to a network of European-wide startups that hold verifiable startup credentials. However, for the investor to be trusted by the startups they are interested in, the investor must also go through the KYC and KYB processes via the OnePass bridge platform.
- AB Capital starts the process by going to the OnePass bridge website and 7 requesting a KYC verifiable credential. By doing this, one of their representatives is redirected to the IDnow website where they can complete the self-verification process. The credential is then 8 issued and made available to the representative via an email link. Simply by scanning the QR code, the credential is 9 stored on their digital wallet.
- Then, the AB Capital representative starts the KYB process, once again going through the OnePass bridge website and 10 requesting a KYB verifiable credential by completing the Online application form. Here, they populate any information required to authenticate the company’s legal existence status. Once the information has been authenticated by the OnePass bridge team against third-party registries, the representative is 11 issued the credential which they can claim via an email link. Simply by scanning the QR code, the credential is 12 stored in their digital wallet.
- Following the KYC and KYB authentication processes, the investor will now 13 gain access to view already authenticated startups, giving them the opportunity to request to view and 14 verify startup's KYC/KYB authentication against the EBSI ledger.
3. Issue investibility rating credentials to a startup.
A Spanish accelerator has just completed an acceleration programme for 10 high-potential early-stage startups, including Sara's startup. As part of the process, they have completed an assessment of their investability based on the standard startup investability criteria: how their technology has progressed over time, the product market fit, and their team skills and growth.
- Following an assessment of the startup, the Spanish accelerator can 15 issue an investability rating verifiable credential to the startup by going to their issuer's dashboard and creating the document containing their associated data. Sara can then claim this credential and 16 store it in their wallet to 17 present it to interested investors.
- Since it is an agreed framework of startup information sharing within Europe, the investor can 18 verify the investability rating verifiable credential against the EBSI ledger, saving themselves time and effort in doing their own due diligence and assessment.
The project plan
Current implementation stage and plan.
Next steps
Mobilisation of the ecosystem is key to driving adoption.
The next step is to complete the implementation phase in order to have the tools ready to onboard the holders (startups/investors) and issuers during the first pilot phase. The first phase will involve issuing the legal existence credentials to these actors in order to test the process and gain feedback from the first users. In the second implemenation and pilot phase, the startups can request the investability credential which can be presented to potential investors. In addition, the aim is to onboard other potential issuers of both the legal existence credential and investability credentials, hoping to discover other challenges which could be solved for the startups by re-using these already issued credentials.
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