Considering the Telegram ICO? Proceed with Caution.

CRV
CRV
Mar 27, 2018 · 11 min read
As of 3/8, App Annie data for Telegram’s top 10 countries by overall rank.

Pros

· Significant adoption. Telegram is one of the most popular encrypted messaging platforms, with 200M MAUs. This is significantly below WhatsApp and Facebook Messenger (both at ~1.3B MAUs), but sizable for a standalone messaging platform launched in 2013. The platform has become critical for many communities in the crypto space — according to ICO Whitelists, 99% of ICOs use Telegram to communicate with prospective investors.

Via Telegram’s leaked whitepaper — as of October 2017, Telegram was by far the most popular official discussion platform for current and upcoming ICOs, with 75%+ of these projects utilizing it.

Cons

· Size of fundraise. Telegram will reportedly raise $2.6B through token sales — a significant amount of funding to raise in an extremely short period of time. As The New York Times mentioned, this is incredibly fast compared to some of the fastest growing consumer companies — it took Facebook and Uber seven and five years, respectively, to raise $1B. Even in the crypto space, Telegram dwarfs the second and third largest ICOs, Filecoin (which raised $257M) and Tezos (which raised $232M). Critics have questioned whether the size of this raise is necessary.

Leaked Telegram data shows the company’s historical MAUs and budget (through 2017) as well as projections for 2018–2021.

Comparables

In the last year, we’ve seen other social and messaging platforms announce the launch of their own crypto coins. Here are two ICOs we’ve seen from more established companies, and how they compare to Telegram:

In their whitepaper, the Kik team suggested a variety of implementations for Kin — including joining VIP groups, tipping friends, placing orders via bot, and getting rewarded by brands for posting about their products.
In their whitepaper, the Rize team suggested a variety of implementations for PROPS — including live auctions, social games, singing contests, and viewing parties for big events.

Conclusion

Our conclusion? We aren’t convinced that Telegram will deliver significant upside beyond the ICO valuation.


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CRV has been a leading investor in high-growth technology companies for nearly half a century, focusing on enterprise, consumer and deep insight bioengineering.

CRV Insights

News, insights and theses from the team at CRV