CoinPayments have just finished a crowdfunding campaign by selling out 4% of company’s shares for €252,023. It’s neither their first step in raising funds nor the last one. The company has used multiple instruments to attract investment. CoinPayments’ Chief Marketing Officer Ward Stirrat told CoinTelegraph about their experience in working with different instruments for fundraising.
He told that such instruments can help build a bridge between the Bitcoin community and traditional sector. Traditional brick and mortar companies just need to “learn the language” of Bitcoin community in order to attract investments from them.
CT: What are the main instruments for raising funds in crypto space? How do they work?
Ward Stirrat: If we talk about crypto space, we should mention debt offering when people are just offering the percentage of the company. But the actual share allocation is not preset so they just ask people for money with a promise to pay them back in shares later. The problem is that the price of the shares is not determined at the time of investments. Nevertheless, companies use the method quite often.
I think it’ll suite if you are a very young company with little business traction, customers and history. And in that case it’s a good strategy. We did it as well. We sold out 4% of our company’s shares via the Bank to the Future platform.
However, companies often come out to ask for money very early. They adopt selling a lot of their company in order to get money from investors where it’s very speculative. In our case we’ve chosen to prove that there really was a market demand; that company could make some money and be self-sustaining before we went out.
There are more options for fundraising as well – tokens and coins. We’ve helped a lot of people raise money using tokens and coins as means of fundraising. Companies from crypto space can create their own coin or token to attract investors. There were such cases with Ethereum, Maidsafe, Ripple and other blockchain related and decentralized businesses. They used their own currency to ask the world to support their efforts. So I think it is a very interesting and growing trend in the industry.
Besides, it appears to be quite fruitful. Ethereum managed to raise 62 millions of dollars with its Ether. Ripple raised 38 million dollars. And those are quite significant amounts of value in crypto space.
Another good example is StartCOIN – a coin used specifically for crowdfunding. We worked with Bank to the Future platform helping them fundraise with their StartCOIN. We’re still the only payment processor to accept StartCOIN. And they raised about 1 million dollars just having people invest in StartCOIN.
There are other ideas we’re working on as well. We do a lot of exploring trying to develop some hybridized ideas. For example, we have some apps and a mobile POS coming soon. And we’ll share them with the community when we’re ready.
CT: Do you plan to use some other kinds of instruments for fundraising in the future?
WS: Yes. Tokens and coins themselves represent a large opportunity in this space to raise funds. We did a presentation of it with Helix for National Crowdfunding Association of Canada here in Vancouver. And I guess I have made a comparison between now that we have 185 geographical currencies that are fiat and the possibility to do the same with crypto coins.
We have the early beginnings of what I call mine share currencies. The idea is that people could help the businesses they like to become successful. And each of those businesses can have its own coin or token turning into coin. It’s a great way to raise funds. For example, Maidsafe could raise about 8 millions of dollars just for the token sale in the course of 48 hours. And Ethereum had a much more significant success with their Ether.
These kinds of opportunities are really worthy. I see the big growth, specifically in our area. I believe it will become the fundraising method of choice. Mine share currencies are currencies like Ether and Ripple. If you like the company’s efforts and you would like to help it build its business; you can simply do that just by buying their coins or tokens. There are lots of new ideas that can gain their start with coins. That is one of the reasons CoinPayments is to be looked at. We’re open to have the largest coin wallet in the world. We added Ethereum immediately when it became available so people could pay for things using Ether. That basically allows for growth of the new currency that comes.
CT: And what about companies that are not from Bitcoin and Blockchain industry, brick and mortar companies? Is it possible for them to use the fundraising methods that you use?
WS: I think it’s a new paradigm that is evolving now. One of the great things about Ethereum is the invention of smart contracts. They allow a whole bunch of new enterprise to be funded or pre-funded with selling future agreements. I think in that case there is a really interesting opportunity to involve more companies to participate in that. It could be not only enterprises from brick and mortar but also companies from other industries – entertainment, for example.
CT: The main problem is that brick and mortar companies seem to be unable to attract audience from Bitcoin sector to invest in their tokens. Bitcoin community representatives simply don’t pay attention to such projects. Is there any way to solve this problem?
WS: I think we are doing it now with our hybridized apps. We are helping build the bridge between the two communities. That’s simple enough. You don’t necessarily need to force one party to learn the language of another. You just build the bridge between them. And over time they’ll understand what’s going on. And that’s what we do in CoinPayments moving forward with our new initiative. We’re building an easy bridge for people to move between traditional payments and crypto payments.
CT: Can you give some advice to brick and mortar companies that want to attract Bitcoin investments?
WS: They have to speak the language of crypto community in order to play this game. They have to explain their projects in a way that makes sense particularly for Bitcoin community. I don’t think that crypto community is going to move towards understanding what the specific business is at all. They’re just going to understand how this business opportunity can be applied on the Blockchain ledger and cryptocurrency tokens or otherwise models.
“Brick and mortar companies need to find someone from the crypto community and to articulate their business objectives, pointing out the way that intermediary company could help them create a token or a message and frame everything up. Crypto community should understand clearly what the investment opportunity is.”
The ability to make an independent token or coin is very important in that. It is very important that both communities start interacting because it is a huge opportunity. So the brick and mortar businesses need to understand how to translate their goals in the language that the crypto community speaks. I think once that’s done, crypto community will embrace their ideas.
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