Venture capitalist (VC) firms have traditionally provided funding for new or growing businesses who want to expand but cannot, or do not want to, raise investment through the equities markets.
In committing to the projects, VCs hope that at least a percentage of the firms they support will become successful and provide them with high rates of return on their investment.
Reported failure rates of new companies varies between 20-30% but it is widely assumed that, due to under-reporting, at least half of all start-ups close shop in their first year.
The traditional VC model was briefly challenged by new crowdfunding initiatives such as Kickstarter. But it is in the age of the ICO that we are now seeing a groundswell in the number of projects coming to market – and it is becoming particularly difficult for the retail investor to distinguish between a genuinely ground-breaking project and one which is based on little more than a white-paper and a prayer.
The sheer numbers involved means that both sides of the equation – both committed investors and genuine projects seeking capital – are faced with difficulties in terms of tracking each other down.
The Iconiq proposition is about creating an accelerator programme for companies who wish to run an initial coin offering or token sale. Iconiq will fund the start-up, develop the business, outline the token mechanics and execute on the token generation event.
Any company can apply for the programme but Iconiq will only partner with those identified as amongst the most promising post due diligence.
Once the potential of a project has been established, holders of the Iconiq token (ICNQ) will be able to invest at the private-sale stage – as individual, ‘mini’ venture capitalists – reaping the usual discounts and bonuses this round of funding brings, whilst having confidence in the pre-vetted overall value of the project.
Iconiq have produced a standard 28 page white-paper and a similar sized colour-paper. The latter, as the name suggests, is a more diagrammatic presentation of the project but also focuses mainly on the use of the ICNQ token’s utility.
Whilst they are sufficient to get a feel for the project, there are a couple of gaps in the presentation that account for its relatively thin content – there is no roadmap, for instance.
Under the umbrella organisation – Iconiq Holding – there will initially be two main subsidiaries, namely Iconiq Lab and Iconiq Fund, creating a digital asset management system powered by the native token, ICNQ.
An additional arm, Iconiq Media, will publish weekly podcasts – going by the name “Unbloqed” – and run other promotions.
Iconiq Lab has been in existence since 2017 and is the world’s first decentralised VC investor club and ICO accelerator.
In this symbiotic relationship, the investor gains access to some of blockchain’s most promising ventures that graduate from Iconiq’s accelerator programme whilst the start-up receives access to funding, tools and guidance which increase their chances of success.
The white-paper lays out the 5 stages of the Iconiq Lab acceleration process:
1) Sourcing and due diligence.
2) Acceleration and ICO service package
3) Exclusive pre-sales opportunities to ICNQ Club Members
4) Programme graduate public ICO launches
5) Post-ICO financial and milestone reporting. Professional, VC-caliber due diligence, expert company and ICO building and Post-ICO support.
In May this year, Unibright became the first company to complete its ICO under the Iconiq Lab accelerator program, achieving its targeted hard cap of $14 million and selling out the UBT token sale in 10 days.
To date, the Iconiq Lab has received over 500 applications from companies wishing to join the accelerator. An in-house investment committee sifts through all proposals and they currently have eight start-ups on their books.
While the full details of each company involved in the accelerator programme is not possible to include here, a brief outline of each is useful to get a feel for the calibre of ICOs involved.
Vreo: blockchain-based, real-time, in-game video game advertising platform which decentralises video game ads, creating a new way to present, measure and monetise advertisements.
Vlux: combines deep learning AI with blockchain to improve access to affordable, low carbon energy by enabling peers to trade energy between one another.
Solidified: Solidity cybersecurity experts who incorporate all stages of technical due diligence into a single platform to protect smart contracts.
Topl: emerging market financing that helps to establish relationships in developing nations to promote infrastructure for governments and private companies.
Braincities: blockchain-based data storage made available to data scientists with programmed AI to interpret and monetise personal data from users and governments.
Wunder: Art-as-a-Service and Art-as-an-Asset infrastructure at the intersection of digital art, patronage and fractional ownership.
Based Global: a blockchain-based engine to decentralise live events and ticketing through a unified sales framework to protect fans and artists from scalpers and counterfeits.
Trade Finance Market: providing liquidity for global trade, particularly to Small and Medium sized Enterprises (SMEs).
Going forward, although dependent upon the quality of projects available at any given time, the team aim to add 2-3 new ICOs to the platform each month.
Additional revenue for Iconiq Lab is expected to be derived from corporate consulting services which will advise small-to-medium-size-enterprises (SMEs) and fortune-500 companies, to provide guidance on a blockchain issues and token sales.
As with many within the industry, the Iconiq Lab team feel securities tokens will play an increasingly significant role. The team is already in the process of applying for relevant licenses in both Europe and the US. The objective is to offer compliant security tokens for projects on the accelerator programme as well as external tokens through its consulting service.
The Iconiq Fund will issue and manage a series of digital asset index funds featuring the top cryptocurrencies as well as an Asset Manager as a Service (AMaaS) platform.
These structured financial vehicles will include Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs) that track an index, a commodity or a basket of digital assets.
A Professional Investment Fund (PIF) is scheduled to be the company’s first fund to launch in November this year. The application to do so has already been filed with the Malta Financial Services Authority.
The white-paper suggests ETFs and ETNs will be rolled out in 2019.
The AMaaS will offer trade execution, custody, auditing and compliance tools for participants in the Fund. It will be licensed out to external digital asset managers, allowing them to launch their own digital funds at a lower cost.
Centred around a safe-custodian wallet, called the Icon vault, the AMaaS utilises hot and cold storage as well as multisig wallets to provide protection against theft or human error that could lead to the loss of assets.
As previously mentioned, Iconiq believe security tokenisation is likely to grow and in their white-paper suggest “…cryptocurrencies may be supplemented by digital financial instruments such as fortune-500 companies’ debt and equity issuances.”
The team are confident that by leveraging the technical infrastructure of Iconiq Funds’, the platform will be well placed to exploit the opportunities if digital assets become the largest asset class.
The ICNQ Token
The token gives privileged rights to holders and can be used as a voucher for in-ecosystem transactions and services. Holders will also receive access to exclusive Iconiq Lab graduate pre-sales and Iconiq Funds with reduced management fees.
ICNQ will be used by users of the Iconiq Fund to pay management fees and 10% of all redeemed tokens will be burned every quarter to help balance supply.
A two-tier loyalty reward programme will operate within the platform designed to incentivise participants to hold the token – which will in effect, provide membership to the Iconiq Club.
Holders of one or more ICNQ tokens will have exclusive access to the public pre-sales of the projects that graduate from the Iconiq Lab accelerator and qualify for the highest bonuses and discounts on offer based on their pro-rata holding of the ICNQ token.
For larger investors – holders of €100,000 or more of the ICNQ tokens – will be granted premium access to Iconiq Lab’s accelerator graduates to negotiate the size of the investment they wish to make into the pre-sale. They will also enjoy discount on fees when participating in the Iconiq ETFs or ETNs.
All holders can obtain discounts to Iconiq Media events by redeeming ICNQ but large holders will be given free entry.
In addition long term holders will be rewarded with distributions of ICNQ.
Heading up the Iconiq team are managing partners Patrick Lowry and Maximilian Lautenschläger who both have active and well-connected LinkedIn profiles.
Although well qualified and with relevant business experience, their relatively young age means the depth of that experience could be open to question. On the other hand, Iconiq’s relatively strong showing to date may counter that view.
The accelerator element of the business has already demonstrated strong results. Current partnerships with Bundesblock and the German Blockchain Association may show they are ready to lead – and not simply participate – in the new digital economy.
With these early successes in the bag, the founders have been active in securing a tailored support team to help the business reach its wider goals.
The Ethereum ERC-20 compatible ICNQ token is the indigenous token on the Iconiq platform.
The project has created 20 million ICNQ, 7 million of which were allocated to early institutional investors in a private round of funding arranged through Token-as-a-Service (TaaS), the closed-end fund dedicated to cryptocurrency assets. A total of 4.1 million were sold raising €2.5M with the remaining 2.9 million tokens being burned.
The tokens from the early round are currently being traded on the IDEX exchange but the volume is too low to accurately gauge pricing in the secondary market at this stage.
As yet, there has been no indication of bonuses or discounts applied to the private or pre-sales.
The team and advisors will hold 3 million tokens, with a 12 month lock up, which leaves the remaining 10 million to be distributed in the remaining sales.
It is worth noting that while 8 million of these are available to institutional and US accredited private sales, only 500,000 have been slated for public sale via the Gibraltar Blockchain Exchange (GBX) in late October with the remainder going towards a bounty programme or held as reserve.
Although not actually stated in the white-paper or colour-paper, Iconiq’s official Telegram group is quoting a target price of €2.00 per token once it goes live on GBX.
KYC and AML procedures will apply to all sales.
(Unofficial – compiled from white-paper and token-paper data)
Iconiq Lab launched
€2.5 million in ICNQ token sales (of which there are 20+ premium club members and over 5,000 retail holders)
FinLab AG, a publicly-traded German FinTech company builder and investor, made a strategic investment into Iconiq Lab
Iconiq Fund launched
Open offices in London and New York
Early funding sale of ICNQ tokens
Unibright becomes the first company to complete its ICO in the Iconiq Lab accelerator program, raised its targeted hard cap of $14M, selling out the UBT token sale in 10 days.
Private Sale of ICNQ.
Iconiq Lab collaborates with FinLab AG on management of €100 million EOS venture fund backed by block.one, the publisher of EOS. Iconiq Lab assists in due diligence for fund investments and helps develop the fund’s companies, leading their EOS ICO campaigns.
Create Asia team based in Singapore
Public Sale Listing ICNQ token on the Gibraltar Blockchain Exchange (GBX)
Launch of Professional Investment Fund (PIF)
Iconiq Fund roll out of ETFs and ETNs
Iconiq Funds’ AMaaS to go live
There is much to like about Iconiq, not least because it has already proved itself to be effective in its handling of the successful Unibright ICO.
The sifting procedure for new additions to the programme is clearly defined and progress with the latest batch is well underway.
A young, hungry team are well connected to strategic partners and, although it would have been reassuring to see a little more experience in certain areas, this may in part be compensated by its team of advisors. The Iconiq Lab aspect – which sees ICNQ token acting as a direct conduit to participation in VC activity – is the project’s strongest attraction.
The Iconiq Fund is harder to evaluate at this stage because much still relies on external forces formulating the regulations that will govern the industry, specifically in relation to ETNs and ETFs. An early indication of how much of this may will unfold could be gained from the launching of project’s first fund, the Maltese Professional Investment Fund (PIF), in Q4 of 2018.
Overall, an intriguing, multifaceted project that looks to have sharpened the focus on decentralised venture capital.