Kik Becomes Latest Startup To Use Initial Coin OfferingAugust 30, 2017 5:00 am
Kik is a Canadian messaging app operator currently worth around $1 billion, but it’s making a new plan to raise $125 million through an initial coin offering on September 12, according to Business Insider.
Kik was founded by a group of college students in 2009 but is now used by 15 million people per month and reaches 40% of American teenagers, according to the company.
ICOs have become one of the most popular methods of raising money using the technology similar to Bitcoin, raising more than $1.8 billion this year-to-date, according to financial technology analytics provider Autonomous NEXT.
The new methods allow some companies to avoid the traditional fundraising methods, such as venture capital and via the capital markets, and also allows fundraisers to gather millions of dollars in a matter of seconds.
Many in the financial services market have warned that the ICO market is in a bubble though, with some firms using the method as a way to raise large amounts of money without a product.
In order to raise money through an ICO, a company creates and issues a new digital currency that can either be spent within its ecosystem or used to power part of the business.
Kik’s ICO will create a cryptocurrency called Kin which can be used inside of the app for transactions.
Tanner Philip, a product manager with the firm, the company hopes Kik’s 300 million registered users will help drive the adoption of the new digital currency across digital platforms.
Kik CEO Ted Livingston said that Kin had been developing since 2014 and is the successor of an earlier idea called Kik Points, a non-blockchain digital currency.
“We’ve been thinking about getting involved in cryptocurrencies since 2011,” Livingston told Business Insider.
The firm has already raised $50 million in a presale of the cryptocurrency but hopes to complete their goal of $125m.
Only 10% of the Kin supply will be sold during their ICO while the ‘Kin Foundation’ will hold on to the additional 60% and will release a rewards system to folks who use Kin transactions.
“If I am a game developer, for example, and I can create an environment in which users are transacting Kin between each other, then I would be rewarded,” Philip said.
Kik’s ICO will be one of the few open to US investors after the Securities and Exchange Commission said in July that some ICOs can be considered securities, but are subject to strict laws and regulations which have had many ICOs avoiding U.S. regulations.
–WN.com, Maureen Foody