Ink Protocol ICO Needs to Answer These 5 Questions
Ink Protocol completed a successful ICO last week, but some questions remain unanswered.
Here comes yet another ‘’decentralized reputational and payment solution for P2P marketplaces’’. Last week it was Beetokens. Next week it will be another one. Just how many startups are all running for the same patch of grass?
- Why does a marketplace that’s seven years old and has 10 million customers plus 11 million in VC funding need an ICO?
This immediately rings alarm bells. Why? Because $11 million in funding and seven years of age suggest this startup has already gone through three different stages of funding (Angel, Seed, Series A).
A quick check of its profile on Crunchbase shows that Listia got $9 million in Series A funding back in 2013 from General Catalyst. Now the typical time between a Series A and a Series B round is 15 months, so Listia is already three years overdue for a Series B investment.
Why hasn’t Listia been able to secure Series B funding in the last three years if their business is going so well? Why don’t its existing investors want to fund Listia so that it can modernize its tech to the blockchain given that VCs are tripping over themselves these days to support anything blockchain-related?
Reading between the lines, we get the impression that its existing backers and VCs it’s been dragging its pitch deck to (for Series B) aren’t convinced either by the team or its ability to compete in an already overcrowded marketplace (pardon the pun).
So, unable to get Series B funding, Listia has no option left but to take the ICO route.
It might be that Listia is so diluted from three rounds of funding that it doesn’t have enough equity to tempt Series B investors. But looking at their user figures (10 million users), I think it’s a scaling issue that is putting VCs off doing a Series B round with the company.
Collecting 10 million users is a Series A-level achievement. For Series B, Listia would have to show it has scaled to 100 million users in the top 10 P2P marketplaces globally. Before we set out to do this ICO review for Listia, we’d never heard of it.
- Why can’t you afford to tokenize with the funding you’ve already had?
Last time we checked, tokenizing isn’t THAT expensive. Listia already has the marketplace platform built. Implementing tokens and smart contracts could be as easy as a blockchain contract hire for it. Revamping the user interface will require work, but it will be tweaking the UI, not building things from the ground up. Listia should already have in place a team of designers, product managers, and developers to do that work. So, why does it need $15 million and what did it do with the $11 million it got before?
- Isn’t going off and building a new B2B startup simply turning your existing venture into roadkill?
To be clear, this isn’t a pivot. A pivot is taking an existing business and steering it into a new sector with new users and a new business model.
Listia is proposing to build a brand new B2B SaaS business while continuing to run its existing marketplace. If it has only managed to grow its user base to 10 million in seven years with $11 million in funding, how is it viable that it will have the focus to keep scaling as the sector gets more crowded, not to mention build up a brand new type of business by entering the payment provider space?
Business-wise, it would have made more sense if Listia had first implemented its decentralized reputation and payment solution on its marketplace. It should have piloted it, tested it, and ironed out any issues BEFORE proposing to build a new company that steps forward with a new B2B solution for its entire industry.
- Why do these decentralized reputation and payment ICOs assume that more established players want them?
We raised this point last week when we reviewed Beetokens, which was projecting that the likes of Amazon might integrate with them. This week it’s Ink Protocol prophesizing that Craigslist and - wait for it! - Facebook Marketplace might like to utilize them.
If Facebook likes the idea of a tradable crypto coin inside its marketplace, it’s more than capable of creating its own. Plus, why would a social platform with two billion users feel the need to utilize the reputational system of a barely known company with 10 million users?
The point we are making is that yes, some sites might go for one of these decentralized reputation and payment solutions, but the assumption that major players in the space need this is not based on any factual evidence or market studies. Show us the research which says Facebook or Amazon sellers are losing sales to the extent that it’s impacting Facebook’s revenues.
- Listia Credits versus INK. Potato, Potahto?
If the Listia Credits virtual coin has been as successful for Listia Marketplace users as the company claims, then why feel the need to create INK? Surely where a virtual coin sits, blockchain or no blockchain, is just semantics?
The issuance of INK seems more about building a wealth vehicle for the Listia team than creating a portable currency for users.
While the Ink Protocol token sale completed successfully last week, I still think the project needs to answer these questions so investors know where they stand.