Agile Fundraising. The ICO roller coaster. Luca Merolla

Transcription

1 Agile Fundraising The ICO roller coaster Luca Merolla 1

2 About Me CEO and co-founder of GURUVEST AG ICO Advisor, Business Angel Computer Science and MBA Dip. Managerial Economics Dip. Management of Technological Innovation Dip. Management of Information Systems Silicon Valley Technology Venture Launch Program PG Certificate in Private Equity & Venture Capital PG Certificate in International Business EPFL Innovation Startup Board Member Academy EPFL Innovation Exit Strategy For 2

3 1. Raising funds

4 Financing Life 4

5 Which financing options do you have? Reason 1 Reason 2 Reason 3 Valuation Prototype Friends, Family & Fools You You You No No Business Angels Domain You - No Better Venture Capitalists Traction Exit Time Yes Must Strategic Investors Channels Products Technology Likely Must Cool - - No No 5

6 2. ICOs vs typical startups

7 Whitepaper Business Plan 7

8 Smart Contract Convertible note, Term Sheet 8

9 Secondary Market IPO 9

10 Monetization Typical startup Advertising Selling products and services Typical ICO company Token Model 10

11 Capital injection differences Typical ICO Typical startup fundraise Crowdsale Initial fundraise 11

12 Valuation of Blockchain Startups Liquidity 1.6x Premium Dilution 2x Premium Investor Rights and Protections.9x Discount Regulatory Risk.87x Discount Security / Custodian Risk.9x Discount Total 12

13 3. GURUVEST Story: planning an ICO

14 STEP1: #wehaveaplan

15 Trip to Silicon Valley

16 Testing hypothesis: Silicon Valley, July 2017 I would like to raise money through an ICO! If you want to go to jail, that s the way to go!!! US Attorney #notimpressed 16

17 Everyone has a plan 'till they get punched in the mouth Mike Tyson 17

18 Back to the Crypto Valley

19 Testing hypothesis: Back to Switzerland I would like to open a bank account for an ICO! You might want to look for another bank??!? 19

20 Evolution of the costs to launch an ICO July 2017 January 2018 July 2018 ICO Costs USD 40k - 150k USD 300k - 1M? Listed on Exchange BTC 3-5 USD 50k - 20

21 Utility or Security? Even if your token is designed as a Utility token, it might be still qualified as Security depending The jurisdiction How it is sold To whom it is sold When it is sold 21

22 Planning is a tool that works only in the presence of long and stable operating history That s the reason why we have agility! 22

23 4. Can Agility help?

24 Exploring Lean/Agile practices Product oriented methodologies Project oriented methodologies Value Creation oriented frameworks Decision-making 24

25 Assessing value creation ICO Agile/Lean Product Value creation (for customers) Product? Value? Who are the customers? 25

26 Stakeholders

27 Few customers but everywhere...

28 Understand the stakeholders Mostly targeting investors, not users Attracts tech savvy users 28

29 Decision Making

30 The Cynefin Framework COMPLEX EMERGENT PRACTICE C E COMPLICATED GOOD PRACTICE C > E Best practices in ICOs are short-lived Helps make better decisions by assessing the situation you find yourself in As our knowledge increases, we can move through different domains NOVEL PRACTICE C E BEST PRACTICE C=E OBVIOUS 30

31 5. Analyzing ICOs

32 Crowdsource approach Automate data Rating spreadsheets Telegram channels Amazon Mechanical Turk Freelancer websites Github hooks 32

33 ICO Focus Canvas Community Development Custody Usage of funds etc Customers Investors Early adopters Underwriters etc Team Advisors Partners Expertise Field Business Partners ICO Partners etc... Prototype Token Economics Hypothesis Working Testnet etc... Hard & Soft Caps Supply Vesting Sold vs Held etc... Legal & Regulatory Fund Management Custody Usage of funds etc How is qualified and under which jurisdiction 33

34 Initial assumptions 4 domains chaotic 1. Business Model 4. Regulatory 2. Technology 3. Marketing 34

35 STEP1 - The Business (Token) Model

36 Analyze the Sector Experienced Team Reputable Advisors Market fit Incentives Monetary policy 36

37 Token Sale Phases Public only Private + Public Private only They might differentiate in term Discount offered to investors Number of rounds KYC procedure Network effect 37

38 The Holmium model It s a variation of the Freemium model adapted for the token model. The goal is retain the value within the ecosystem Reducing the velocity Reducing the liquidity FREE (attract new users) HOLD / LOCK (value within the ecosystem) PREMIUM (generate revenues) 38

39 STEP2 - Technology

40 Analyze the Open Source - Be Careful! Smart Contracts Website Working Prototype Lockups 40

41 STEP3 - Analyze the Marketing effort

42 ICO Marketing Challenges Understand Limited number of Potential Customers Large number of people who has never purchased a token before Engagement is very high on some subjects / channels Ads on Social media are not effective 42

43 STEP4 - Analyze the Legal and Regulatory aspects

44 Regulatory: highly unstable ecosystem Everything is a Security! FINMA Token Qualification! SEC Investor Bulletin - July 25, 2017 FINMA ICO guidelines - 16 February 2018 AML for payments Next? FINMA guidance - 29 September 44

45 The Legal Framework The nature of ICOs is global, although it might be too expensive to focus on multiple countries Define your core building block (jurisdiction) and validate it

46 46

47 6. Discovering patterns 47

48 ICO Analysis Results Negative or No Correlation Positive Correlation Whitepaper Jurisdiction Team, Advisors, Market fit Technology Open Source, Website Prototype Marketing Social Media, Ads Storytelling, Community Token Economics Discount, Type of token, Fair Token Distribution Token Supply, 48

49 Customer focus Advisors and Market fit have strong influence from VC and institutional players If a VC invest, it s because there is a Market Fit Partnership is a good indicator of verified hypothesis Tokens are designed to be appealing for investors 49

50 The Importance of Storytelling Explainer video of 1 minute is much more valuable than a Whitepaper Different styles of communication have different meanings Invest in our ICO Buy our Token (security) 50

51 No need to educate people

52 ICO Marketing Consequences Emergence of alternative ways to promote Investment in bribing ICO reviewers Fake Twitter, Telegram, Facebook followers Telegram bots to have a fake enthusiastic active group Contact list of crypto exchange users 52

53 ICO Practices using the Cynefin framework Few Best Practices Often in Complicated and Complex Requires experts and rapid response Multiple good solutions The outcome might not repeat over time Best Practice Technology, Team, Storytelling Good Practice Community, Crowdsale Emergence Practice Token Model, Legal Novel Practice Marketing 53

54 thanks! QUESTIONS? You can find me 54