Introduction
Aufort is an Austrian-Estonian fintech company with almost 10 years’ of experience in selling physical investment gold bullion. As the world is digitizing, in 2020 Aufort started to develop a digital gold account solution to modernize gold investments. Aufort is the first company in the world to combine investment gold with distributed ledger technology (DLT) and eCommerce. The aim was to design the product which would be usable to everybody, including the regular people. Aufort’s vision is to become the next generation gold bank.
Aufort has done two successful private crowdfunding rounds with a total investment of €500k. Aufort has been trusted by 165 angel investors, among others Estonian-Singapore cryptocurrency trading platform Change Invest, Estonian Government owned Science and Business Park Tehnopol, and Nordic Startup Ventures.
Articles
Yahoo Finance: www.finance.yahoo.com/news/aufort-launches-digital-gold-retail-160700027.html
Problem
During the last few years, more currency (dollar, euro, etc) has been printed globally than in all previous history together. The massive inflow of money leads to a (hyper) inflation, which will lead to significant increases in the prices of all products and services. Due to the massive money printing and inflation, the value of savings (purchasing power) has decreased significantly. There are hundreds of billions of people who hold their savings in bank accounts or in cash. In 2022, Europeans alone lost around 400 billion euros to inflation just because of that…
Lots of people have thought about investing, but have never reached it. Why? Because they lack confidence and knowledge, and as there are lots of different asset classes and platforms out there, it’s not easy for the regular people to take action. It usually takes 1-2 days from opening an account, going through KYC, making a deposit, and after it’s all done, it’s possible to make the investment. As it takes time and effort, it's easier for most people to leave money in the bank account.
Precious metals like gold, have historically been one of the easiest and safest ways to invest one's savings. However, buying and owning physical investment bullion (bars and coins) can be expensive and troublesome. As the world is digitizing, people prefer assets in digital form that is more convenient for them.
Solution
Aufort is the first company in the world to combine investment gold with distributed ledger technology (DLT) and eCommerce. This solution enables you to buy, sell, store, withdraw, and send gold easier, faster, and cheaper than any other similar solution on the market.
Product / Service description
Aufort offers a unique combination of physical investment gold, distributed ledger technology (DLT), and eCommerce - AufortGold. This is the easiest and fastest possible way to buy, sell, withdraw, and send gold.
Aufort is cooperating with London Bullion Market Association (LBMA) recognized and accredited refineries which meet the conditions of Good Delivery, for example Heraeus, Argor Heraeus, Austrian Mint, Perth Mint, and Valcambi. Good Delivery fine gold is with purity 999.9 (pure gold content 99.99%). AufortGold is 100% backed by physical investment Good Delivery gold bars that are stored in secure and audited vaults. Aufort always holds more gold in the vaults than there is on customers' wallets. Aufort is storing gold from 1 gram to 1 kilogram bars or coins in secure and audited vaults. All reports and third party audits are being uploaded to Aufort's website https://aufort.gold
To increase transparency and reliability of storing and transferring info and enabling gold sending transactions, Aufort is using a decentralized distributed ledger technology (DLT), specifically directed acyclic graph (DAG) by Obyte. This technology enables to tokenize gold by making it possible for anyone to own fractions of bigger gold bars stored in the vault. DLT solves the fundamental challenges of the gold market and democratizes access.
Aufort is using an eCommerce platform because it makes the gold buying, selling, withdrawing, and sending very easy and fast. This solution makes it affordable and easy to use for anybody, even to people with no previous experience in investing. Since Aufort's platform meets international European law and requirements, Ecommerce Europe has issued Aufort the Ecommerce Europe Trustmark in December 2022. The Ecommerce Europe Trustmark stimulates cross-border e-commerce through better protection for consumers and merchants by establishing one European set of rules and by ensuring clear communication of these rules.
New users can sign up on the Aufort platform within 1-2 minutes only. In Europe, no KYC is not required until the value of transactions exceeds EUR 15,000 in a calendar month. As Aufort is running on eCommerce, it does not require time-consuming depositing. Customers can just add a preferable amount of gold in the cart and choose a favorable payment method. Currently, it’s possible to pay with convenient bank link payment and cryptocurrency. Card payments will be added soon.
AufortGold has low fees and it is significantly more attractive compared to physical bars or coins. Buy and sell transaction service fee is 2% from the world market value of gold or minimum €2. The storage fee is 0.02% of the world market value of gold or min €2 worth of gold per month. Buy, sell, redeem or send transactions that occur on-chain (transferred via Obyte), there is no additional transaction (gas) fee - it is already included in the buy/sell and storage fees.
As AufortGold operates on the decentralized DAG network, tokens are instantly transferable globally. It is also possible to send gold to those who do not yet have the digital wallet or an account on the Aufort platform. The allocated ownership moves instantly with the token transfer, which makes trading of allocated gold easier and faster than ever. Learn more about sending gold here.
AufortGold is redeemable already from 1 gram that is the lowest minimum possible - smaller gold bars are not produced by LBMA accredited refineries. It is possible to redeem 1 g, 2 g, 5 g, 10 g, 20 g, 1 oz, 50 g, and 100 g Good Delivery gold bars. Learn more about withdrawals here.
According to the Terms of Use, customers' assets are kept separately from the company’s assets. All gold bars represented by AufortGold tokens are custodied by Aufort for AufortGold holders and do not become a part of the company’s estate in the event of the company’s insolvency.
In addition to current services, Aufort also plans to expand the ecosystem by giving gold many additional real use cases: pay with gold, stake gold by earning additional interest on it, etc.
Business model
Aufort is an online B2C (business to customer) eCommerce platform. Aufort also cooperates with online companies, influencers and bloggers via the B2B2C (business to business to customer) model. This enables Aufort to reach more potential users through trusted companies and people.
Aufort plans to start cooperation with various digital asset trading platforms (for example cryptocurrency) and classic financial institutions (for example banks) to reach even more potential users.
The main income stream is 2% from the world market value of gold or minimum €2 for every buy, sell, and withdrawal transaction. There’s also a monthly storage fee of 0.02% of the world market value of gold or min €2 worth of gold.
Timing
At the end of 2019, Deutsche Bank Research published an interesting report report for the next decade (Konzept, Imagine 2030), which read as follows:
"...if current trends continue, there could be 200 million blockchain wallet users in 2030."
"...demand for alternative currencies, from gold to crypto, could soar."
Recently, there has been a great deal of uncertainty about the future of the world economy. Over the last few years, countries have printed and issued more currency than has been the case in all of previous history. In addition, the recent global outbreak of COVID-19 is contributing to the situation. Historically, uncertain times have brought people back to gold, which has been a secure financial instrument for centuries.
Demand for gold, and in particular for digital gold, is increasing significantly. In 2003, the overall demand for investment gold was 470 tonnes, of which 400 tonnes was for physical bar and coins and 70 tonnes for digital gold (ETF). In 2010, the general demand for investment gold was 1,700 tonnes, of which the demand for physical bars and coins was 1,300 tones and for digital gold 400 tonnes. In 2020, the overall demand for investment gold was 1,800 tonnes, of which 900 tonnes was for physical bars and coins and 900 tonnes for digital gold. 2022 was the strongest year for gold demand in over a decade. Colossal central bank purchases, aided by vigorous retail investor buying and slower ETF outflows, lifted annual demand to an 11-year high. Annual gold demand (excluding OTC) jumped 18%. You can find more info here.
Market
The global market cap of gold is around 10 trillion euros, of which investment gold is around 5 trillion euros. AufortGold is a globally scalable product. Currently, Aufort primarily plans to focus on the Member States of the European Union, for example The Netherlands, Poland, and Germany. There’s also huge potential in Africa and the Middle East, India, and USA, that Aufort is eyeing.
Competition
There are several digital gold service providers on the market, but none of them offers it through an easy-to-use e-store platform. Should a customer wish to redeem their gold as a physical bar, in most cases this option is either not available or the minimus or fees are very high for the average person and the retail investor.
Currently, two of the largest digital (tokenized) gold service providers built on a distributed ledger technology (blockchain) are Tether Gold (USA) and PAX Gold (USA). The largest two gold companies who also offer digital solution, built on the so-called old-school excel-based database, are Goldmoney (USA) and BullionVault (USA).
Achievements
- Almost 10 years of experience in selling physical investment gold bullion
- Precious metals trading license in Europe
- The Ecommerce Europe Trustmark
- Best Precious Metal-Focused Cryptocurrency 2022 award
- Contracts with leading precious metal wholesalers and refineries
- Trusted by 165 angel investors and raised in total €500k
- GMV in 2022 €2M
Team
Bert-Ken Raudberg is founder and CEO of Aufort. He has been an entrepreneur for 12 years and has founded two companies. Bert-Ken has been in the investing sector and in the precious metal industry already for 10 years. He has been involved in blockchain and crypto since 2018. In addition to practicing, Bert-Ken has also studied blockchain technology and decentralized digital currencies at Nicosia University. LinkedIn
Julia Mozberg is a co-founder and CTO of Aufort. She has more than 15 years of experience in IT development and its management. Julia is also a Head of Business Line at Helmes which is an international world-class software development company. We are outsourcing high level development team from Helmes. LinkedIn
Rene Sildvee is a CMO of Aufort. He has more than 15 years of experience in the sales and marketing industry. Rene owns an S&M agency Fontakt, with more than 20 people in the team. He has superb skills in communicating with people and producing outstanding marketing ideas and content. LinkedIn
Antti Tarakkamäki is a CFO of Aufort. He has almost 20 years of experience in the financial sector. Antti has also founded many companies, for example fintech Bankify. LinkedIn
Karl Nurme is a Head of Operations. He has completed an internship at Aufort and recently graduated from the university with a degree in economics. Karl has previously worked in the field of administration and sales. He has a keen interest in the financial sector, technology and gold. LinkedIn
Meelika Burket is a chief accountant of Aufort. She has more than 20 years of experience in the financial sector. Meelika has been working at NATO, Ernst & Young, Estonian Tax and Customs Board, etc. LinkedIn
Kristiina Raudberg is a digital marketer of Aufort. She is a creative person who is supporting Aufort with great ideas and visualization. LinkedIn
Advisors
Asse Sauga, Entrepreneur & crypto enthusiast, LinkedIn
Kadri Tammai, Head of Tehnopol Startup Incubator, LinkedIn
Toomas Seppel, Attorney-at-law, LinkedIn
Pasi Pohjala, CEO of Nordic Startup Ventures, LinkedIn
Aufort has already been trusted by 165 angel investors, among others:
Tehnopol: www.tehnopol.ee/en
ESTBAN: www.estban.ee
Change Invest: www.changeinvest.com
Nordic Startup Ventures: www.nordicstartupventures.com
The use of money and timeline
The aim of the current funding round is to raise up to 193,200 € which will be directed mainly to the sales and marketing activities, team expansion, product development, and preparation for the next (post-seed) funding round.
Sales and marketing: 50%
Team: 40%
Product development: 10%
Estimated turnover in 2023 is ca 5 million euros and in 2024 ca 50 million euros.
Goals, profit, and exit
Aufort’s vision is to become the next generation gold bank. This ambitious plan requires both capital and a strong team to develop the platform and product further. Therefore, Aufort plans to make new funding rounds in the upcoming years as well. We do not plan to distribute profits over the next few years - all revenue will be reinvested in active expansion and growth which will increase the value of the company significantly.
As a great benefit, on the IGNIUM platform it’s possible to trade with Aufort bonds on the secondary aftermarket - this gives liquidity to the early investors. Trading is possible only if there is no ongoing funding round on IGNIUM.
The (pre-money) valuation of the company in the current seed funding round is 5 million euros. Planned post-seed funding round valuation is 20-25 million euros.
A longer-term exit plan might be to sell Aufort to a larger financial institution that could develop the company even further.
Investment conditions
Current funding round is a 2nd funding round. In total, 10% of the company for €500k is on offer from the holding company SMI Group OÜ.
Investment is made through SPV (special purpose vehicle), Aufort Invest II OÜ which acquires an ownership in the holding company SMI Group OÜ. The SPV is a special legal entity set up for a specific activity, which aggregates investment through converted bonds into share capital. The investor acquires the bonds issued by the SPV, which can be converted into share capital at any time by the decision of the majority of investors. The sole purpose of the SPV is to acquire a stake in the holding company involving the investment SMI Group OÜ, the SPV has no other business activities or objectives. The contract is put together by the well-known and trusted Estonian law firm RASK.
The minimum investment per investor is €1,000 which means that only up to 500 investors can participate. If someone invests more than €1,000, the number of investors decreases even more. It is possible to invest until the maximum target of €500.000 is reached or if Aufort decides to close the round earlier for any reason.
Current funding round is mainly for first round investors and for selected potential angel investors who have expressed their interest to invest in Aufort.
Lead investors
Gerd Kanter. Olympic gold medal winner, certified leadership coach, motivation trainer and coach. Gerd has been 18 years as a top athlete that has brought him 11 medals, including both the 2008 Olympic gold medal and the 2007 world champion title. After retiring from being a professional athlete, Gerd has been the coach of the Polish national team. Gerd has also made some successful investments in the field of real estate.
Reimo Metsküll. Reimo has long-term experience in residential and commercial real estate development since 1999. He is the head and one of the founders of the real estate development group Retori Estate. Reimo has been accompanied by a sport throughout his life - he has become the champion of the "Tallinn Leader" team in the Estonian Volleyball Championship. Reimo also participated as one of the biggest investors in the first funding round.
Asse Sauga. Asse is Estonia's leading blockchain expert, entrepreneur, author, trainer and consultant. Asse has more than 15 years of experience in IT, blockchain technology and psychology. In addition to several other exciting challenges, Asse has been the head of IT development at the Estonian Ministry of Finance, a blockchain banking expert at LHV Bank and the founder of the Estonian Cryptocurrency Association. Asse was also the lead investor in the first funding round.
Risk and their mitigation
1. Risks arising from regulation and law: Aufort, legally named the SMI Group OU, is a company registered in Estonia and based on Estonian capital, which is subject to local and European legislation. In March 2020, a new directive on the EU Virtual Currency Services Act was adopted, which made it significantly more specific and clearer and more specitic for the service provider. The members of Autorts Management Board are aware of the applicable legislation and are responsible for the correct implementation of the law. When expanding into new markets outside the European Union, where there is a need or obligation to register a local company, the laws and regulations there may restrict the supply of some of the planned products/services. Consequently, local legislation must be thoroughly clarified and, if necessary, opportunities must be found to offer the product/service in a more suitable form.
2. Risk of price fluctuations due to the world market price of gold: when selling physical investment gold bars, a certain amount of gold must be kept in stock at all times. As the price of gold on the world market is constantly changing, and should it fall, Aufort may incur losses on some transactions. To mitigate this risk, Aufort plans to start cooperating abroad with larger local precious metal companies, through which it will issue physical products to customers (including the physical conversion of a digital product). In this way, Aufort does not have to keep physical products in its warehouse and must deal with the assembly, shipping, etc. of the products. In the case of a digital product, Aufort fixes the price of gold with the refinery several times a day, which also minimizes the risk of price fluctuations.
3. Competition risk: Competitors are developing a solution with similar functionality that could jeopardise Aufort's growth and success. Aufort aims to be the most flexible, transparent and innovative company that allows its product to be used by as many people as possible (both ordinary citizens and investors) and in different regions (both poorer and wealthier) around the world. This approach makes it more difficult for other companies to compete, as they usually focus on only one customer segment.
4. IT and technological risk: The development of a digital investment gold product uses secure and fast web development platform hosted by a secure cloud hosting providers. The information system software is regularly updated, backed up systematically and monitored on an ongoing basis. For the transparency purposes, the decentralized database by Obye (distributed ledger technology) is used as the database. Obyte is a fast growing Austrian foundation.
5. Supplier risk: Aufort has a cooperation agreement with the LBMA-certified gold refineries and wholesalers. In order not to be dependent on just one partner, we are cooperating at least with two suppliers. As digital gold is stored with our suppliers, there is a risk that something may happen to the supplier and that the gold cannot be obtained - this risk is mitigated in two ways: multiple suppliers and insurance.
6. Risk of a loss of electricity: The probability that electricity will be lost permanently or for a long time all over the world is low. In the case of shorter regional power outages, it is important to use technologies that are not related to only one specific location (e.g. Estonia) or equipment. That's why Aufort uses decentralized blockchain technology, which is located (synchronously) around the world in devices from different regions.
Please read the general risk warning below
The purpose of the risk warning is to draw attention to the potential risks associated with investing. We recommend that a novice investor seek the advice of an investment advisor or a specialist.
It is advisable to hedge the risks associated with investing by investing only a part of your available funds and balancing it with safer and more liquid investments.
Liquidity means how easily shares of a company can be sold after purchase. It may not be easy to sell parts of a start-up or active business. In addition, it is not known whether or when the company's shares are listed on a regulated market (primary or secondary market), such as Funderbeam or the Tallinn Stock Exchange. It is not possible to earn a regular return on investment (dividends) by investing in an unlisted private limited company (i.e. with a capital investment).
Dividends are payments that a company makes to its shareholders to distribute the company's profits. Companies are not obliged to pay dividends to their shareholders, as this is decided at the shareholders' meeting and a majority of shareholders is required to make such a decision. Start-ups or young companies rarely pay dividends to their investors in the early years, as most of the capital is reinvested in expansion.
The materials published as part of the campaian mau not be comprehensive and mau not reflect all the risks associated with the companu's operations. If desired, it is also possible to read the company's documents in more detail before investing.
Manu start-ups or small businesses are not successful or do not develop as planned and therefore investing in these companies can involve significant risks. The possibility of losing part or, in extreme cases, your entire investment, must be taken into account.