👥Investment Committee

Investment Committee principles:

The third phase of Colony's Early-Stage program is the Investment Committee, during which parameters such as vesting and deal conditions (final fundraising amount through Colony) are reviewed, set, and agreed upon by both Colony and the concerned project prior to validating the fundraising. During this phase, arbitration occurs between the amount raised in the NEST and the project’s need, which is Colony’s initial "raise target".

For a project to progress to the Investment Committee phase and for the arbitration process to commence defining users’ allocations, specific requirements must be met:

  • The project should accumulate enough USDC commitments through its dedicated NEST in the Analysis phase.

  • The project should undergo evaluation by the community and attain an average score above 2/5.

During the Investment Committee, two major phases, known as Arbitration Phase 1 and Arbitration Phase 2, are conducted. These phases are crucial as they determine the final fundraising amount, any excess USDC eligible for redemption, and establish confirmed USDC allocations for Colony's users, along with the amount of tokens they will receive.

During these arbitration phases, Colony's team engages in discussions with the project. Users are not required to take any action during the arbitration process. The details provided below regarding Arbitration Phase 1 and Phase 2 are for informational purposes only. If you're interested in learning about the interactions you, as a user, can have with the NEST in the Investment Committee, please proceed directly to the section: NEST Interactions.

Arbitration Phase 1

The initial phase of Arbitration establishes the final fundraising amount, confirming the final ticket size/allocation Colony's users will receive in the Seed/Private sale of the project.

The process of Arbitration Phase 1 is straightforward, as the project must either confirm or adjust the initial fundraising target. The project has four possible choices to determine Colony's final ticket size, subject to confirmation by Colony:

  1. Increase the initial fundraising target: This option is available if the NEST has been oversubscribed and there is still capacity in the current fundraising round of the project.

  2. Maintain the same fundraising target: This choice is possible if the NEST has been subscribed to or exceeded the fundraising target.

  3. Decrease the initial fundraising target: This option is possible if the project decreases Colony's participation in the fundraising round. A low NEST subscription may also prompt this action, making it unfeasible for the project to achieve the initial fundraising target set on Colony's platform.

  4. Cancel the fundraising: The project's fundraising may be canceled for various reasons, such as significant changes to the project's concept or funding terms (tokenomics, vesting, etc.). Another scenario is when the project decides not to include the capital committed by Colony's users in the NEST if a project fundraising round concludes before Colony's Early-Stage process is finalized.

Based on the outcome of the first arbitration phase, Colony's users will either have the ability to withdraw some or all of their committed USDC from the NEST or await the second arbitration phase.

Arbitration Phase 2

The second arbitration phase occurs when the project is ready to send its tokens to Colony. For the Early-Stage Program and all its innovative features to function optimally, especially the Liquid Vesting mechanism, Colony needs to receive 100% of the project tokens without any vesting. Colony sets the vesting parameters on its own smart contracts based on the project's vesting schedule from the seed/private round in which the Colony community participated.

Once the project reviews the vesting parameters and sends its tokens, the NEST will deliver the USDC it contains directly to the project in the same transaction. This final step of Arbitration Phase 2 marks the conclusion of Colony's fundraising process.

Upon receiving the project tokens in Colony's vesting contract and the USDC sent to the project, Colony automatically generates the associated ceTokens, representing all the project's tokens in the vesting contract. Following Arbitration Phase 2, the project transitions instantly to Colony's Portfolio section.

NEST interactions:

During the Investment Committee, the NEST allows users to potentially redeem any excess USDC or ANT tokens (in any), depending on their interactions with the application and the outcome of the arbitration mentioned above.

ANT tokens redemption during the Investment Committee phase only applies to users who did not commit their entire Max USDC contribution in the NEST during the Analysis phase to match their ANT tokens used to register investment interest. These users will be able to redeem their ANT tokens, albeit with the penalty fee applied, as explained in the Analysis section.

Redeeming USDC tokens in the NEST during the Investment Committee is limited to the following scenarios:

  • Redeeming USDC excess: If the capital raised in the NEST exceeds the project's final ticket size, users can redeem their excess USDC directly from the NEST if the project decides not to increase its initial funding target during Arbitration Phase 1. In this case, the remaining USDC representing the confirmed allocation will remain locked.

  • Redeeming their entire USDC amount: If the project's fundraising is canceled, users can redeem their entire committed USDC amount. Cancellation may occur due to various reasons, such as significant changes to the project's concept or fundraising terms (tokenomics, vesting, etc.).

ℹ️ If none of the above scenarios occur and the funding target is met or lower than expected, users will only be able to view their confirmed allocation, and no USDC redemption action will be possible.

If you require assistance with the Investment Committee phase, you can refer to the step-by-step tutorial on the Investment Committee stage by clicking on the link below:

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