Why the KIK ICO is the one to watch


NagarjunaSagarDamThe Filecoin ICO is chewing up a lot of bandwidth this week, but I think that KIK is the one to watch.

Starting with Filecoin, there is lots to like – great team, ambitious tech goal, key protocol for decentralised Internet, but I would not bet on it for these reasons:

  • lower cost digital storage is not high on most people’s worry list.
  • Jeff Bezos (AWS) is a fierce competitor who wins price wars and takes on Walmart and China. He coined the line – “your fat margin is my opportunity” – and he has not left any fat margin to exploit.
  • the Filecoin tech is unproven and the marketing challenge (needing to scale to billions to be meaningful) is horrible
  • there are other viable vendors in the beat AWS by going P2P game such as Storj.

I hope Filecoin make it but the odds look lousy.

KIK is interesting because it has nothing to do with blockchain or decentralisation. It is one of many viable companies that would like IPO as an alternative to trade sale, but that are dammed up in front of a wall that excludes all but the most massive companies. KIK did a Pre ICO round that looks a lot like a Pre IPO round in ye olden days. This is a sign of ICO transitioning to mainstream – real securities sold to real investors in a legal framework. Whether it is a good deal and a great business is another matter. The key is that ICO is replacing IPO as a viable exit and competing with M&A and PE. That is a mega trend shift. Traditional exchanges and all who work in that ecosystem are facing disruption.

Will be watching this one with keen interest.

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Bernard Lunn is a Fintech deal-maker, author, investor and thought-leader.

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    • It was not a typo, but I can see that it could have been misconstrued. Let me explain my thinking a bit more.

      I have no inside information. If I did it would be confidential and I would not be making it public. Daily Fintech is insight driven not news driven. We write from the perspective of experience about information that is already in the public domain.

      You can see from public records that KIK raised $170m and did some acquisitions. That puts pressure on an exit. In today’s market, IPO would probably have been ruled out quite early, leaving only trade sale. I never said “seriously” as I assume any competent adviser would have said “fuggeddaboutit” pretty quickly. I have rephrased that to make it more clear.”It is one of many viable companies that would like IPO as an alternative to trade sale”.

      Thanks Sergey for pointing that out to help improve what we write.

      Founders who have a passion for independently growing their business want another option. The ICO (the next iteration of which is toward legally compliant securities) is that other option. It is a tool in the toolbox along with M&A and IPO. My guess is the ICO option will bring down the IPO hurdle (i.e smaller companies will be able to exit) and that will be a good result for entrepreneurs and management.

      A new financing option alongside IPO and trade sale strikes me as significant.

      • Thanks for the clarification, Bernard. It is somewhat expected that early investors want to find liquidity for their investments. There have been many others before KIK: first thing that comes to my mind is reserving tokens for your angels and letting them sell the tokens right after your ICO.

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