The Metaverse Podcast - Token Sales, with Graham Jenkin of CoinList
Primer: CoinList is a platform where investors can have early access to tokens. They have significantly changed over the past couple of years. Graham Jenkin, their CEO, speaks with Jamie Burke, outlining the journey that they have took.
Their Recent Raise
Raised $100 million at $1.5 billion valuation
Realized that they were meant to be a bridge to a decentralized future and that their cap table should reflect that
Started to broaden the base of industries they talked to and the regions where they are from (e.g. Middle East, Eastern Europe, and Asia)
Ended up with an awesome group of investors that could help them to think through strategy with respect to growth in those regions
His Insights On The Market
Changes In The Market
Markets have changed a lot
In 2017, their focus was on accredited investors. A lot of people still think that the CoinList platform is for accredited investors in the US
The market has shifted to audiences that’s outside the US
In 2017, teams would raise larger amounts from a smaller number of investors. By the time they get listed on CoinList, teams would have already completed their VC rounds
Teams are coming to CoinList because they want to have a large community of engaged token holders
Quality Of Teams
In the 2018/2019 winter, very little capital was coming in. There were only a few projects coming through
With additional capital coming in now, the number of high quality teams have increased
Have seen a massive evolution in the types of projects that are coming through. A few years ago, every project that came through was an Ethereum killer/smart contract layer 1 platform
Now, they are seeing projects coming from almost every vertical (e.g. DeFi, gaming, etc.)
Mainstream View Of Cryptocurrencies
Mainstream people, and even people within the industry, are just focused on the value of tokens and the financialization side of the industry
They are missing out on this revolution in software development
“Every piece of software that was built over the course of the Internet age is potentially under threat, at least in terms of having some decentralized competitor.”
- Graham Jenkin
From AngelList To CoinList
AngelList started around the time when the Bitcoin whitepaper was written
There was a global financial crisis at that time and not a lot of capital was getting put into startups
Babak Nivi began writing a blog called Venture Hacks, educating entrepreneurs on how to negotiate a term sheet
It eventually grew into AngelList
Graham left Google and joined AngelList in 2011. Got to know Naval by trying to pitch to him
AngelList played a role in getting crowdfunding into the US
In 2017, they saw what was going on in the crypto space with ICOs. Viewed it as a purer form of crowdfunding
“I gave him [Naval] a bit of a high level on some of my startup ideas, then, and he's like, what your ideas are stupid, don't do any of this stuff, just come and work for me. And I'll teach you everything I could teach you about how to pitch investors, how to raise capital, what kind of patterns investors are looking for.”
- Graham Jenkin
There were plenty of scams that came out. The US wanted to shut down the crypto sector’s acces to US capital. They came up with a framework to help legitimate teams in the space to raise capital
AngelList and Protocol Labs formed a joint venture to create CoinList, which became the first compliant token sale platform in the US
The Simple Agreement for Future Tokens (SAFT) was used as a standardized investment contract for these deals
AngelList spun out CoinList in late 2017
Rationale For Spinning Out CoinList
Nivi and Naval’s philosophy is to create independent entities and to give independence to people within their circle
Crypto is unique enough in its own way that necessitated its own focus
Change In Public’s Perception Of CoinList
Was one of the first platforms that received a broker-dealer license to run private placements for digital assets. They got the license so that they can specifically focus on the US market
Over time, the projects that they work with became less confident in the US regulatory climate and requested for CoinList to block US participation. This trend has continued till today
If US regulators consider an asset to be a security, it becomes very difficult for that asset to be listed on a crypto exchange in the US
CoinList has the tools needed to target US residents, but they do not do so at the request of the teams
Working with regulators to help build laws that support crypto
“Crypto mom” Hester Peirce, SEC Commissioner, came up with a proposal for a 3-year token safe harbour for token issuers and token developers so that they can raise capital. Within 3 years of event, they have to demonstrate that their network is sufficiently decentralized
Politicization Of Crypto
Democrats are generally against cryptos
Trying to find people who are willing to understand the industry and support innovation and job creation
Will be working on engaging the US market from both angles
Their Metrics
At the end of last year, their user base consisted of 150k users with 28 day actives
Currently, they are at 4-4.5 million users with 28 day actives
Had 20-25 people on their team at the start of the year. Grew to 80-85 members now
Their Approach
Other platforms start out as a piece of technology (e.g. wallet or an exchange) and try to acquire users and monetize them
CoinList’s approach is to find the best teams in the space and help them to be successful
They run the CoinList seed every quarter. It has been very successful as many great projects have gone through it
When projects launch, teams have to distribute tokens to investors who have participated in the sales. This is a logistical challenge for them and CoinList handles distribution and custody for them
Realized that users wanted to do something with their tokens. Hence, they created their own spot exchange CoinList Pro
Have a mobile app
Ended up building their staking services and partnering with different staking service providers
Recently built a governance service. Early tests showed 60% participation and the CoinList team is happy that their product is able to drive high quality, engaged token holders into these communities
CoinList Karma
Created a loyalty program called CoinList Karma where users get rewarded for their activity:
Participating in governance
Participating in validator programs
Participating in their hackathons
Karma points gives users access to the priority queue for tokens offered on their platform
Thoughts On Governance
A lot of power goes to individuals with a lot of coins
A better model would be to empower individuals who are contributing to projects in other ways:
For developers, a bunch of commits on Github
Validators contribute to the success of the protocol and should have additional reward/weightage in terms of governance votes
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