Coinvest Token Sale Waterfall Analysis
Just as curious as many of you… we’ve been wondering why our current investment contribution numbers are significantly lower than what our data has suggested over the past couple of months. As a data driven company, we performed analytics and a waterfall chart to uncover more pieces to the overall story.
Before we begin, let’s provide some context:
- Since the middle of November, we received $191M in overall registered investment interest
There was a population of investors who registered with an investment size greater than 50 ETH. For whale protection, we instituted a 50 ETH max cap limit per investor in our smart contract. While we received approximately $191M in registrations, this amount was immediately reduced to $150M of potential investment after implementing this cap. One factor we overlooked was taking into account any price weakness in ETH (which then in turn reduces the price and buying power in max contribution). Although we didn’t have many people actually hit our max contribution in our token sale, it impacted the registration figures, which we were previously using $1,000 to calculate a max cap. This that actually equated to $130M with the last-minute drop,
Over the past two months, we’ve seen the capitalization of the cryptocurrency markets decrease 50%. As a result, the buying power of our investors was significantly reduced. The weighted average of the ETH price of all registrations was $1016 while the price of ETH when we started our token sale was ~$700. We saw a direct correlation between our registrations and the movement of crypto prices. There are also other psychological and investment factors involved in the investment decision process. For example, many investors that purchased ETH at $900 or above, had investments that were underwater and did not want to liquidate at a loss, to invest in another asset. After this we have about $90M of indicated interested.
There was a population of investors from the US who registered for our offering; however, did not get verified prior to our verification process closing. Additionally, many US investors did not meet the US accreditation requirements.
Private Whitelist Investors
Although we did have some repeat investors from our private whitelist offering, we couldn’t assume that the interest from our registrants in our private whitelist offering would remain or be applicable to our main token sale.
Average Contribution Amount
After announcing our max contribution cap in our smart contract, our average investment amount was just over $5,000 per registered investor. During our token sale we have seen an average contribution amount around $1,000 per investor. Many other factors have overlapped with this lower contribution amount including a lack of confidence, weakening market, and more.
We experienced a number of technology related issues the morning of our token sale due to a combination of DDOS attacks, high traffic, and our mail delivery service shutting down our service (due to high volume during a short period of time — Thanks Mailgun! 😡). It’s hard to quantify an accurate average contribution amount and estimated drop off as a result of tech issues.
As expected, not everyone that indicates interest will invest. We experienced a conversion rate of 40% during our private whitelist offering. However, a far less smaller conversion rate during our main token sale. (This statistic can be offset by those that invest but are not registered).
We are still gathering data on this point, as there were multiple scam attempts, imposter accounts, and fraudulent wallet addresses. It’s difficult to quantify the exact amount of people that have been impacted including the amount of missed investment due to scams. Investors with FOMO ignored our recommendations including our security tips video, token sale guide, and warnings on social media. From the fraudulent wallet addresses we are aware of, the impact is a minimum of $85,000. While a 1–2% scam rate is standard for most token sales, any amount higher than $0 is unacceptable.
Delaying our token sale to complete our legal agreements and SEC filing to include US investors slowed our momentum. Although not necessary, excluding the US would have gone against our mantra of bringing cryptocurrencies to the masses. We aspire to be a leader in compliance and regulation within the industry. Therefore, the decision to postpone our token sale was a no-brainer. However, this decision resulted in a longer wait cycle and a buzz-kill for investors.
Although we performed a deep data scrub and normalized data, inevitability there could have been more duplicate entries (particularly for our private whitelist registrations as investors thought that they would have higher chances at entry).
We hope that this data and our analysis, sheds more light into the current results of our token sale. We will continue to execute to increase our overall raise; however, please note a $5–10M raise is still enough runway to support our overall mission and roadmap. (Please keep in mind that in the VC world of Silicon Valley, a $5–10M raise is typically a Series A round)
A full raise of $30M would have allocated $15M into our reserves, allow the company to take business risks, and deploy a number of initiatives to broaden the Coinvest brand. A raise of only $5–10M increases our reserve size to $20–25M (as unsold tokens are moved to the reserves) and still accomplishes our goals; however, puts us in an environment in which we are focused on a core set of products, take little risks, and ensure full diligence in our operating expenses.
In our current environment, we still feel very confident with our roadmap, team, and ability to execute our mission. We ask for your support in continuing to believe in Coinvest for the same reasons that sparked your interest in our company from the beginning. We are fully committed in this journey together and won’t let you down.
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