Walimai, a startup company from China is poised to launch an ICO in a bid to generate $11.5 million in one of the most interesting recent announcement made this week at Singapore. The enterprise aims to expand its business that would identify counterfeit goods and help companies reward loyalty.
In its announcement, the business said that it would launch a platform with which customers could determine how genuine the products they have bought or intend to buy is by scanning labels on such products with their smartphones.
The anti-counterfeit software would work well for consumer goods such as food which is the focus of the company. “Ensuring that consumers purchase safe food has always been the concern of Walima” Mr Zenon a financial adviser with a Singaporean agency said.
Walimai, highlighting the uniqueness of the offering reiterated that the software would integrate a QR code to their labels on products with customer phones enabling them to detect if any product in question is authentic. The system integration would be tamper-proof implying that if the labels were removed or replaced, they stop working and wouldn’t pass the authenticity test.
ICO is now the favored trend among startups to raise needed funds to execute their programs or launch new products or services. Investors purchase companies’ token with digital currencies such a Bitcoin or Ethereum and are theoretically assumed to have bought equity in the business.
The Chinese regulators handed down a ban on ICO in September after their hammer fell on Bitcoin and Ethereum, two of the most popular digital currencies. This caused a downward pressure on the prices of the coins. However, observers are of the opinion that the Chinese digital currency community recovered quickly after the Chinese government compelled companies behind the ICOs to return investors’ money.
Apparently, the ban has not deterred investors, as there has been a steady flow of digital assets to Singapore, Hong Kong and other nearby countries. The Bitcoin price correction and continuous bullishness after the September fall in price is obviously as a result of the fact that Chinese investors were able to get back in by investing in ICO friendly countries.
Walimai, following the flow of funds, established WaBi Project, a subsidiary in Singapore from where it has launched its ICO. They are issuing $46 million WaBi coins for $0.25 per token. Interestingly, the company is excluding Chinese from its ICO. It hopes to accomplish this by demanding full documentation and blocking Chinese IP addresses from its ICO website. Apparently, this is to avoid breaking government regulations back home in China.
The company is issuing 100 million WaBi tokens and has made it possible for holders of the token to purchase products bearing WaBi labels with coins. Another incentive is that investors would be able to ‘mine’ tokens as they scan the company’s labels with their phones.
Walimai spokesperson said although the company presently focuses on food products especially baby food, there are plans to expand services to other products such as cosmetics. The concern about baby food is that there have been incidents in which there has been infantile mortality due to contaminated baby food in China. There have been safety concerns among young families about infant milk formula.
Yaroslav Belinskiy, Walimai co-founder said that anti-counterfeit companies in China have always focused on the fashion industry. Walimai is of the view that safe infant formula is an issue that should be addressed since the consequence of buying substandard milk formula could be grave.
Alexander Busarov, co-founder and company CEO said that the project was inspired by an experience he had once when he tried purchasing Whiskey from a supermarket but had no way of determining if it was the real thing or fake.
Though the Chinese government has relaxed its one family, one child policy, parents still see their children as their most important possession, so food safety is a priority to Chinese parents, as much as education is.
ICO and token sale has come under fire in recent months as it has been seen that there are a lot of companies without a legitimate product that has raised millions of dollars with nothing to show for it. The crackdown by Chinese and South Korean regulators was as a result of this scenario that has repeatedly played out. The fact that some ICO were even fraudulent and ended up scamming investors makes crowdsale dangerous, especially in China which has zero tolerance for financial crimes.
Echoing this belief albeit marginally, Julian Hosp, co-founder and president of TenX, a Singapore based startup whose company raised $80 million from a token said that what’s poisoning the ICO ecosystem is lack of regulatory measures. According to him, regulators are barely able to catch up with the number of ICO being launched. Aside from that, established companies have failed to lead by example by showing how ICO should be conducted. He also said that investor greed has created fertile ground for ‘scam companies’ to thrive.
$3 billion has been raised by companies this year. However, a good fraction of that fund went to companies who simply ‘disappeared’ with investor funds because many people do not care to find out about the companies whose ICO they invest in. The trend has been to purchase tokens, wait for its market value to appreciate and quickly sell them off to make the profit. This has made most ICO and token sale worthless just a few months or weeks of launching.
Despite the controversies around ICO, it is obvious that the days are gone when entrepreneurs were compelled to give up equity shares of their businesses for venture capital. With ICO, businesses with good ideas can raise millions in seconds to fund their startups.