Gok!llo: Kickstarter & Indiegogo ‘No Longer Suitable for Modern Crowdfunding’
Kickstarter and Indiegogo aren’t suitable for modern crowdfunding according to Ram Budime, the Business Development Manager of Gok!llo, a new bitcoin-powered crowfunding platform.
Kickstarter and Indiegogo aren’t suitable for modern crowdfunding according to Ram Budime, the Business Development Manager of Gok!llo, a new bitcoin-powered crowdfunding platform. Cointelegraph spoke with Budime on their innovative approach to crowdfunding, why volatility isn’t a concern, and why traditional platforms are set to be disrupted.
Gok!llo is a crowdfunding platform that uses bitcoin as a cheaper alternative to traditional payment methods increasing security and reducing costs for project originators. It is incorporated on the Isle of Man and will file for its equity crowdfunding license soon. The platform is expected to go live on September 14.
Cointelegraph Why did you decide to launch Gok!llo and what problem does it solve?
Ram Budime: Gok!llo's mission is to provide the Internet community with an effective, reliable, intelligent web platform that lets people or organizations publish their projects and get funded by other people who are willing to support them
Gok!llo uses bitcoin as a cheap alternative to traditional payment methods to increase security and reduce fees charged to project originators – collected funds are immune to bitcoin's volatility since they are converted to the currency of the project and held in a bank account until the fundraising period is over, when funds are then converted back to bitcoin and sent to target recipients.
“Traditional funding models like AoN (All or Nothing) or KiA (Keep it All) used by most of the platforms are no longer suitable for modern crowdfunding.”
Since pledges are cashed-in immediately and funds held in a bank account, there is no risk of insolvency on the part of the backers and thus Gok!llo can guarantee pledges will be paid when a project reaches its funding target – this would not be possible if pledges were collected by credit card because credit cards were charged only when the fundraising period was over and nobody can guarantee a credit card is still solvent after 30 or more days
Traditional funding models like AoN (All or Nothing) or KiA (Keep it All) used by most of the platforms are no longer suitable for modern crowdfunding. AoN means money is only granted if a project reaches at least its funding target, but this model might prevent great projects with huge potential from being financed just because they did not reach 100% of their funding target.
The opposite of AoN is KiA, where money is granted regardless of whether or not a project reaches its funding target, but this other model leads to waste of funds especially when the amount reached is much lower than the funding target. Gok!llo is neither AoN nor KiA and relies on a sophisticated probability score to decide whether or not to fund a project, ensuring community funds are managed well.
CT: How did you come up with the name?
RB: Gok!llo is a fantasy name that means "Go and be successful with our killer application!" According to Wikipedia, a killer application is any computer program that is so necessary or desirable that it proves the core value of some larger technology or concept (i.e. bitcoin and Crowdfunding in our case).
CT: How was the team assembled?
RB: The projected started in summer 2013 in a pizza restaurant when 3 friends namely: Guiseppe (co-founder), Max (co-founder), and Daniele (co-founder). They were discussing crowdfunding and its enormous potential in contemporary markets. After learning all about it, they decided to create a reference crowdfunding platform targeting any kind of individual regardless of his or her age, culture, and education level. We knew there are hundreds of crowdfunding platforms on the market so ours had to be different. That's why I started looking at bitcoin alongside a completely different funding model.
CT: What exchange service does GoKillo use?
RB: The exchange service behind Gok!llo is Loyalbit, a United Kingdom-based Bitcoin exchange that takes deposits in both fiat money and bitcoin. Loyalbit offers a very secure means for trading bitcoins and thus Gok!llo entered into a strategic agreement with them to use their web services to convert funds from bitcoin to fiat and vice-versa. Furthermore, Loyalbit will also hold collected funds in escrow for Gok!llo.
“[The] Isle of Man is very forward-thinking in its laws and regulations for new tech businesses, i.e. blockchain based business and equity crowdfunding.”
CT: Why did you decide to incorporate on the Isle of Man?
RB: The Isle of Man was looking for innovative businesses and Gok!llo was looking for a modern, forward-looking country and also a friendly government and regulations. So we just decided to move the headquarters to the Isle of Man and keep R&D in Berlin. In addition, Isle of Man is very forward-thinking in its laws and regulations for new tech businesses, i.e. blockchain based business and equity crowdfunding.
CT: Do you work with all banks? What jurisdictions can you operate in? Are you planning to expand?
RB: We don't work with bank directly. We accept payments in bitcoin and we fund projects in bitcoin. Incoming bitcoins are converted to fiat and held in a bank account owned by Loyalbit.
CT: Can you explain your probability score: why it’s used instead of traditional models (AoN & KiA)? Can users choose any of these methods?
RB: No, like our competitors, we don't allow to choose the funding model (e.g. Kickstarter users must accept the AoN model and Indigogo users must accept the KiA model). We are convinced our funding model based on a probability score is far superior to any other. Gok!llo's learning machine algorithm is based on a logistic regression model like this:
Each sigmoid curve shows the growth of the spread between target and required amount to get funded, in terms of funding target and associated fundraising duration. The bottom of the curve represents small projects that must reach 100% of their funding target, while the exponential upswing is supposed to represent the most recurring scenarios where average sized projects just need to reach part of their funding target according to the curve trend. Finally, the curve levels off since spread should never exceed the threshold defined for the associated fundraising duration.
We'll teach the learning machine with some projection data we have prepared to ensure it behaves as we expect - but Gok!llo will continue to learn as the volume of statistics generated by the business grows.
CT: What kind of rewards can users expect? Does it depend on the originator?
RB: This is up to the originator. Gok!llo does not support projects related to pornography, terrorism, weapons, or any other initiatives considered violent or illegal, and to ensure this, Gok!llo implements a sophisticated workflow where projects are audited carefully before they are published.
“Other platforms usually rely on payment service providers like Amazon or PayPal that charge an additional 3-5% depending on the size of the transaction.”
CT: What percentage does GoKillo take from the raised funds? Do you only collect if the target is met?
RB: Originators will publish their projects for free. If a project reaches its funding target or at least an amount Gok!llo considers adequate to be eligible for funding, then the raised amount is granted minus a fee of 7.5% withheld by Gok!llo. In case a project reaches neither its funding target nor an amount adequate to be eligible for funding, collected funds are returned to respective backers and no fee is charged.
Gok!llo might appear more expensive than some other competitors like Kickstarter or Indiegogo, which apply a commission of 5% and 4%, respectively. The real truth is that the 7.5% applied by Gok!llo includes everything and there is no additional fees, while other platforms usually rely on payment service providers like Amazon or PayPal that charge an additional 3-5% depending on the size of the transaction.
CT: Where do you see GoKillo in 3-5 years? What kind of impact can this have on established players like Kickstarter and society as a whole?
RB: In 3-5 years we see Gok!llo as the leader in Asia, Oceania, and Australia. We have also amazing development product in our pipeline but for the moment they are secret.
Presently, we are looking for an angel investment to support our marketing and Business Development activities. Just for you information we have been investing our own money from idea stage of the project to bring live to the market. This shows how serious and confident we are about our new innovative platform.