Medicalchain — Building a Community.

Following the successful launch of Medicalchain, I thought it would be prudent to discuss the concept of ICOs and the rationale behind choosing this funding methodology.

There is no doubt that ICOs have become a fascinating new way of raising capital for projects — the traditional VC route was overtaken some time ago - at least in the blockchain world, with $3.7 billion raised in 2017’s 235 ICOs. Numbers vary but roughly 75% of blockchain projects are ICO funded according to a report on blockchain investment trends (www.cbinsights.com).

The question is why ICO? What are the pros and cons? How does a blockchain startup make that decision?

In order to secure investment from a seasoned VC, there are certain hurdles through which the startup entrepreneur needs to jump. In basic terms these are:

• Customer value proposition and market opportunity
• A sustainable competitive advantage
• Robust business model with sensible projections
• Proof of interest/an MVP or prototype
• A well thought out roadmap
• A top notch team

VC due diligence processes are strict for a reason. A large amount of risk is being taken by an individual or a small group of investors. In exchange for this, they typically demand 20–30% of equity in return and occasionally want a controlling hand in how the company is managed.

ICO funding does not relinquish equity but rather offers effectively futures on the success of what is often just an idea backed by a white paper. This risk is managed by potentially thousands of investors — some of whom are without any experience in evaluating a company’s potential success. It is for this reason that VC funded ventures often appear to have more credibility and confidence.

Part of the due diligence required by a VC includes proof of market opportunity and interested buyers in the proposition. There are many ICOs that have not managed to get to ICO stage because they have failed to achieve this. Thus, although not presented in the same way, this does in part represent evidence of the necessary research required to achieve funding. The crowd is the arbiter as always — the VC rubber stamp is not required.

A recent publication I stumbled across suggested that ICO’s have a 13.2X return on average for investors (and that includes the failed ICOs!). So for many I presume there is/was an element of jumping on the proverbial bandwagon. Go where the money is. And there is no doubt even the word ‘blockchain’ or ICO has the ability to generate feverish enthusiasm from even the simplest of investors.

But if we look a little deeper, crowdfunding as a concept has merit beyond the hype and promise of riches. I might be wrong, but I think there is a bigger philosophical movement in action.

The financial crisis of 2008 and so called Arab Spring coincide with what seems like a global dissatisfaction with the financial, political and social status quo. And as such, crowds across the world are voting by taking back control — of their finances (with Bitcoin), their identities (Civic, uPort), their rights to land (as seen in Ukraine, Ghana, Sweden and recently the USA) and of course their health records. Blockchain offers the promise of borderless, censorship resistant and irrefutable transaction confidence. And ICO’s offer a vehicle.

I am not entirely delusional in believing that blockchain and the success of ICOs is simply a representation of mass rebellion. But I do believe that crowdfunding as a concept (particularly combined with the financial inclusiveness delivered by cryptocurrencies) has liberated some of the global untapped surplus wealth looking for a worthy home.

ICOs are more than just as a place to grow your money. They offer the opportunity to help build the future of your choice. It is fairly easy to invest in the incumbents (like Amazon and Apple) and returns (though smaller) are fairly secure. In spite of that, an enormous amount of crowdsourced money has gone into startups looking to change the world.

Perhaps there is a difference between the sectors. Much of the ICO landscape is dominated by infrastructural (35%) and trading/finance/payments companies (30%). Drugs and Healthcare have captured a mere 5.5% of the investment in 2017. It might well be that investor motivations differ depending on industry.

My experience with Medicalchain certainly supports this notion. The level of engagement in our telegram group (now over 51,000 members!) has been incredible — with many of the questions asked being about the product rather than the investment opportunity. It is truly humbling to see so many individuals showing interest in just how we plan to build a secure, private yet universally accessible accurate version of their health records.

Our pre-sale (and subsequently pre-ICO) support is equally revealing. With over 5000 investors to date (10–15% being medical professionals), we have direct evidence that our product is addressing a real world pain point and has widespread interest.

There is much therefore to celebrate. Our ICO represents much more than just a financial return opportunity. It is evidence that people across the world are in need of a solution to a very real issue, and that they believe enough in the Medicalchain vision to invest their hard earned money.

But even for those who are just looking for a way to grow their money there is much to rejoice. We have passed the due diligence tests. We have a top notch team. We have a community of patients and doctors who are buying into the roadmap — literally. And we have access to advocates who will ensure that the next phase of this journey will be a success. As we start our clinical trials, we already have thousands of willing participants who are invested in the future of healthcare — the future of Medicalchain.

So to answer the question of why an ICO — here is your answer: We are building a solution for patients and doctors. Not only for investors wanting a return. We are building a community and an ecosystem that supports a better healthcare system- across the globe. And an ICO is a fantastic way to do that.

Have a great week!

Dr Stewart Southey

Stewart@medicalchain.com

Follow the development of the project in social networks — Facebook,Twitter, and join the community on Telegram.