Drugi jezik na kojem je dostupan ovaj članak: Bosnian
The idea of the platform for cryptofund management ICONOMI has attracted nearly 3,500 investors from around the world, who have together invested $10.5 million, which is the 11th largest crowdfunding project in the world.
Tim Mitja Žagar, co-founder of ICONOMI, will participate in the Golden Drum Festival on the Web 3.0: The Next Creativity Starts Now panel, which will be led by Zenel Batagelj, partner at Valicon.
We talked with Tim about the new form of raising capital for new ideas.
At the Golden Drum panel, you and two other participants (Max Kordek and Alexander Vasylchenko), will talk about the future of decentralized economy on a global network. What does this new economy bring? Why is it better and what does it enable? Some say that the new economy will eat the old one. Why?
First thing is that the new economy gets rid of most of the “ballast” which has accumulated over time on virtually all counts of the business process. One of its characteristics is that it resolves the existing difficulties at least 10 times better than the current services on the market. Overture into this happened already with companies like Airbnb and Uber, although the real introduction will only occur on the back of the new economy represented by blockchan technology, or platform such as Ethereum (or Lisk).
We can be even more drastic. The new economy eliminates most, if not all of the problems that currently burden the economy. The main technological innovation allowing all of this is the blockchain – an open, publicly available list of all transactions, protected by strong cryptographic mechanisms. In the new economy, good ideas have equal opportunities to succeed – no matter where they come from. You don’t need to have ties and connections to the one percent of the richest. Lobbying, backstage plays and interference of politics – all this is a thing of the past. The new economy is already operating globally. It’s range is everywhere the internet can reach. It is a quantum leap, a revolution in thinking that necessitated a series of evolutionary developments in supporting technologies.
If we had to point out only one advantage of the new economy, it would be the drastic acceleration of processes in all areas – from funding, over project development to communication and collecting of consumer feedback.
This new way of raising initial funds is interesting. What is actually new? Why haven’t you tackled it in the old startup way?
Whit this kind of raising funds the geographic location is really irrelevant, which becomes even more pronounced if you are not from SF.
There’s only a fistful of serious investors in the EU, and at that, of course, they have to be from your industry (note: every serious investor has two or three industries in which they invest, for example: Fintech, VR, SAS) and thus, in the end, we see that in the EU, for example, there are ten people from 3h VC firms whom you have to convince. So you have three strikes, if you manage to get “dates” with all of them. In doing so, you disagree with one of them on the human/philosophical side, so you are left with only two, and so on. In the new, crowdfound way, you pitch your idea before twenty thousand people, of which 3,500 will invest. In this way, the VC service first becomes less relevant, and second, you give access to startups to investors who have only 100 euros, for example.
The main innovation is accelerating time. Startup entrepreneurs until recently had to visit various conferences, business competitions, presentations, roadshows and individually meet with investors, business angels and convince them, answer questions, adapt to sometimes irrational demands … During their lifetime, startup companies had to repeat the process several times (multiple investment cycles). In the meantime, there was little time for actual product development. The cruel reality is that the founders had little time to deal with that because it was more important to provide funding in order for the company to survive until it reaches the next milestone. When, after about five years, a startup company finally develops its own product and starts to generate revenue, VC’s were slowly leaving, and the company would get listed in the stock exchange and thus do the IPO…
The whole thing seems too simple – an entrepreneur presents an idea and proposes their solution, the global public “votes” with their money whether they trust them, or whether they see potential in their solution. All the proceeds collected this way represent ownership shares, but in digital form of crypto units (app tokens). The process of raising capital lasts from several days to several months. Whether it is successful is seen after only a few days. An entrepreneur can quickly begin to deal only with their product, which will therefore be better, and it will reach the market much more quickly than usual. The process of issuing the crypto units is called ICO (initial coin offering), the first real ICO took place this summer (TheDAO). This method of raising funds is becoming increasingly popular due to record-breaking speed.
The old way of raising capital has no more sense, because ICO is in many ways superior.
Your company is actually a platform for fund management. You have collected $10.5 million. How did you convince the investors to trust you?
First, we must admit that we, as a financial institution with a banking license for the processing of payments, have already been present in this market, so we didn’t start as newbies without history. In our previous work we showed that we, as a team, are worthy of trust which, in combination with a good idea and the right moment to enter the market, managed to stir interest among nearly 3,500 individuals who thus became part of our pioneering story.
We persuaded investors with a great idea, a professional team and first class and, above all, transparent communication. Although the world of cryptocurrency existed for some time, entry into it is technically very demanding. Most people still don’t understand what it all really means. They know, or have heard that this is an economy that in the past five years increased by several hundred percent. When you see the red numbers in financial journals, and negative interest rates in banks, it doesn’t take them long to add up 1+1. They want to be a part of the new economy, and ICONOMI is the bridge that allows investment in this world to everyone, without any previous knowledge. If you know how to invest in funds that were recommended by your financial adviser, or even a clerk behind the bank counter, you can invest through ICONOMI in the world of cryptocurrency.
Part of the story is a fund which will invest in business ideas similar to ICO. What kind of investment opportunities are you looking for? Where do these projects come from? Do you already have some concrete project as an example?
One of the funds will be called ICONOMI.PERFORMANCE. It will be an actively managed fund that will invest in start-ups in the field of decentralized economy. It will invest in the most promising projects, and a significant role will be played by due diligence. In addition to capital investments, it will also offer counseling and opening of doors to companies in which it entrers, similar to how VCs are doing today. The team of ICONOMI is present at all major events from the world of cryptocurrency, where they personally meet with everyone who mean something in this field. Therefore, the identification of good stories is possible months before they venture into search of money. We have already reviewed many potential projects, and we daily evaluate new ones. It is interesting that most of these projects don’t come from the United States, but are geographically very decentralized.
New economy – new creativity? Where do you see the space for creativity?
Its all about creativity. Besides, integration of blockchain into all aspects of the current economy is enabled by entirely new services that previously could not exist. Already it allows completely new concepts, such as prediction market, internet services that do not have owners but only managers. In the future, this could lead to things being their own owner, from binoculars on a vantage point, power stations for electric cars, or even a car could be its own owner. When the first industry/vertical (ie. insurance) falls in line, it will cause a flood of new services. Imagine you could easily interconnect services in APIs such as health insurance and purchase of plane tickets. Web 3.0 / payable and connected internet is also the basis for AI.
If the entrepreneur doesn’t need to follow the well-established trends and rules, it opens the door to completely new ideas. Ideas that until recently “the gate keepers of old economy”, English investors and VC funds, eternally hungry for money and megalomaniac earnings, shut down already at the very beginning! First of all there is sometimes a quantum leap from ideas that only make money (which used to be a must have), to ideas that bring benefits that are difficult to evaluate through ROI and anticipated income for the next year. Such ideas are necessary and good for all of us and our descendants. Yes, I do support the direction of large-scale solutions for what we perceive as global unsolvable problems which everyone is talking about, but on which nobody wants to do anything. Global warming for example. When you reset the old rules, you open the door to the world that no one today can even imagine.
Your role is to give a chance to investors who wish to achieve high profits. What kind of profit can this be? What about transparency and security?
From the very beginning ICONOMI has been completely transparent to all participants. We will continue this by publishing periodic reports. These reports will show all the costs and revenues of enterprises. ICONOMI is a long-term job and although we all have blood under our skin, we want to see quick profit, the main opportunity for the bizarre growth of cryptocurrency and the decentralized market is in mass adoption. But if we look at recent years, roughly ten percent annual growth is nothing strange in the crypto world.
How will you achieve the set goals? What will be the next step?
After this year’s launch of funds, next year we have to complete the platform that will enable the interested managers to manage their fund on it. Our promise is that from the managers (it can be anyone), we expect crypto-knowledge, and we will take care of everything else. Investment funds, or the category of asset management for fees, is a huge category in the financial world, worth over 73 trillion USD. And the financial world is the area that in many ways is still working as it did a few decades ago. Evolution has not yet happened and ICONOMI promises to bring it to the stock market. It will be a good thing first and foremost for the consumers, because we will bring transparency in this world, in cost management, as well as in the recording of success, on the basis of which it will be easier to decide whom to entrust your money.