Introducing the Milestone Coin Offering (MCO)
Behind the alluring shimmer of the world of entrepreneurship is a sobering reality: nine out of ten startups will fail. They will fail for all number of reasons (here’s the top 20 reasons), but their demise always takes the form of the money drying up. Startups are businesses too, and money is the lifeblood they need for survival, but which startups should receive it?
Here’s the typical procedure: an experienced team of investors and professionals with industry expertise find promising projects to invest in, taking a slice of the pie which reflects a rational valuation and adequately compensates for risk. This method has a track record of success, and out of it has emerged a standardized procedure called Series A, B, C Funding, a system used to produce many of the most recognizable companies in the marketplace. This approach, through carefully controlled cash infusions, enables startups to hit certain milestones, such as the creation of a prototype, or a proof of concept for an idea. Projects hit targets and accelerate, acquiring more funding to continue their project having executed their last objectives successfully.
In the world of blockchain, ICOs (Initial Coin Offerings) upended this model. Since 2017, ICOs have delivered 3.5X more capital to startups than traditional VC fundraising.
With a whitepaper and a dream, a team can raise millions from retail investors, accessing a world of capital that the VC system cannot tap into. However, startups who raised through ICOs have proven to be unaccountable to token holders and lack incentives to build great products.
In such an irresponsible market, the number of unsuccessful projects have increased dramatically, with unscrupulous individuals and lackluster ideas crowding legitimate projects out. As a result, the blockchain market is stagnating.
The Milestone Coin Offering
Bizkey is pioneering a new model that we are calling the “Milestone Coin Offering”. Instead of offering the entire supply of tokens at once to hit all our funding targets, offerings are strictly tied to milestones, reflecting what a traditional VC structure would demand for investment.
Just as with seed funding, an MCO starts off with support from expert investors who believe in the vision of the team and their ability to execute on it, raising funds through a private token sale. Considered a high risk investment, the private sale is restricted to seasoned investors who may be accredited and have the risk tolerance that retail investors don’t. The amount raised through private sales should be just enough for a team to comfortably hit their first targets, and set themselves up for the Series A round, or the first public Milestone Coin Offering.
Only after having hit each milestone does the subsequent offering begin.
In the traditional Venture Capital fundraising framework, investors rightfully wonder how much money is required to finish the project as each future fundraising rounds will dilute their share of the pie. However, they are happy so long as the value of their share increases between rounds.
Similarly, token investors may have concerns about token dilution, as each round of the MCO increases the pool of unlocked tokens. Our MCO addresses investor concerns of token dilution by calibrating the amount of tokens sold to be less than the anticipated share of tokens needed by new users, preventing newly sold tokens from flooding the market and causing dilution of value.
Venture Capitalists are willing to take a smaller share of a larger pie as long as their overall value keeps increasing. As results are demonstrated by a project through the successful completion additional milestones, early token holders are compensated for their investment and are free to hold position or cash out.
By taking a leaf from the traditional VC seed->Series A-> Series B model, we aim to achieve three objectives:
Demonstrate our results and build community engagement
Manage risk for our investors
Hold ourselves accountable and incentivize disciplined use of funds raised
We hope that by altering the ICO model, the blockchain space can find a more accountable fundraising model and move out of the bear market, unlocking capital from retail investors for promising entrepreneurs while keeping the upsides of the traditional VC funding system.
Bizkey’s first milestone
We have completed our seed round, or private token sale, with over 16 funds involved, raising over 3.5 mil and have results to share. Token listing can be an expensive and difficult hurdle to clear, and we are proud to say that the BZKY token is currently listed on DigiFinex (see link), one of the top 10 exchanges on Coinmarketcap as of September 11th, ensuring that our low hardcap does not deter investors worried about token liquidity. We have launched our Biz-POS terminal and DAPP (read article here), and have formed strategic partnerships with the following 3rd party acquirers and big brands for deployment:
- Mr Koalac
China: 400,000 merchants
China: 20,000 houses and 700,000 users (see here)
- Surehigh International Group
Taiwan: largest ticket and travel booking platform (see here)
Indonesia: largest retail loyalty platform (see here)
- and more (see here)
Currently we are gearing up for an important proof-of-concept, demonstrating successful offline crypto payment with our Biz-POS device and DAPPs at more than 30 merchants in Singapore during Token Day, a 12-day event in collaboration with successful post ICO projects.(article link)
Our MCO details are as follows:
Next Milestone Targets:
- Serving 10,000 merchants on board
- Monthly transaction value of over USD 10 million
- Additional value-added services besides payment (such as digital advertising and business intelligence tools) to be provided to merchants through open API.
With a successful track record of milestones, we will aim to create steady profits for token holders and raise funds in piecemeal to propel our project forward, building engagement, excitement, and trust.
Bizkey aims to use blockchain technology to break the monopoly of payment solutions and level the playing field in data industry, to build a new ecosystem to return the benefits of transaction data back to the users and elevate the awareness of the value of data.
Bizkey’s Blockchain-based Intelligent POS system will enable the value transaction data would be distributed fairly to merchants and customers through BZKY tokens in return for their contribution to the ecosystem.
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