Initial coin offerings (ICOs) might be taking off in Singapore with two recent announcements relating to the new funding format.
Blockchain #startup TenX has raised close to US$80 million from a token sale held last week, while Cross Coin – a special purpose vehicle linked to eastern Europe-focused, US-based Starta Accelerator – is looking to raise up to US$5 million from its upcoming ICO.
In a nutshell, so-called ICOs – perhaps better referred to as initial token offerings, depending on who you ask – are a new method of crowdfunding facilitated through blockchain and cryptocurrency technology.
What makes ICOs different from existing crowdfunding formats is that, instead of receiving equity or rewards, backers are issued with digital tokens in return for their money (which is invested in the form of a cryptocurrency, such as Bitcoin or Ether). The idea is that these tokens – themselves a form of cryptocurrency specific to the company or one of its projects – can later be traded on secondary markets, generating returns for their owners should the company be successful.
On Monday, TenX – which has built a protocol enabling quick and secure transactions across different blockchains – announced details of its token sale which closed recently.
According to a company blog post, TenX raised the equivalent of 245,832 Ether (abbreviated as ETH – a cryptocurrency associated with the Etherium blockchain) with a value of around US$80 million. These were exchanged for the company’s own PAY tokens, at a rate of 350 PAY to 1 ETH.
Around 4,000 people directly participated in the token sale – which lasted for less than seven minutes
These PAY tokens provide access to part of the revenue that TenX generates from its payments service, in addition to serving as a loyalty scheme to its users.
Around 4,000 people directly participated in the token sale – which lasted for less than seven minutes – on an individual basis, while an unknown number pooled their funds to buy tokens as groups. PAY tokens will be tradeable on global cryptocurrency exchanges from next month, at which time the close to 40,000 participants who were unsuccessful in obtaining tokens in the capped initial sale will get another chance to do so.
In other Singapore ICO news announced this week, local company Cross Coin said it will release up to 5 million tokens in a sale to raise funds for a pool of startups participating in the Starta Accelerator. Starta set up Cross Coin solely for the purpose of raising capital.
With each token worth US$1, Cross Coin hopes its proposed ICO can generate between US$1.5 million and US$5 million in investment. The first US$1.5 million to be raised is earmarked for the 21 startups that have passed Starta’s 2016-2017 accelerator program. Any additional funds raised will go toward the accelerator’s future cohorts.
In exchange for buying Cross Coin tokens and then reselling them on the secondary market, investors will receive a proportion of any profits secured from future exits of Starta’s 2016-2017 tranche of startups.
The Starta ICO will take place on July 4.
Converted from Ether. Rate US$1 = ETH 320.52.