We’ve recently started working with KICKICO which is a platform for cryptocurrency crowdfunding. KICKICO aims to solve current issues with fraud and inaccessibility, providing users with a convenient, up-to-date platform for Initial Coin Offerings and crowdfunding campaigns. KICKICO CEO & Founder, Anti Danilevski, wrote this Medium article about the launch.
Written by Anti A. Danilevski
With my involvement in crowdfunding since 2011, I witnessed its birth, boom, and evolution.
Over the last few years, I have worked with thousands of people to optimize their crowdfunding campaigns. I founded Russians on Kickstarter, the leading Russian community on crowdfunding and Kickstarter, where hundreds of authors had a place to ask questions and learn how to get the most out of their campaigns. My involvement in the crowdfunding industry led to amazing opportunities, such as speaking at conferences, and the creation of Crowdcult, a conference for crowdfunding experts and enthusiasts. It has been fascinating to follow crowdfunding from when it began as a foreign concept to now when Kickstarter has raised over $3 billion. Given my passion for crowdfunding, my upcoming project may be a bit unexpected…
Three years ago, on May 26, 2014, I predicted that the current crowdfunding model would be replaced by a more efficient platform. At the time I was sure that someone else would do it, and it would happen very soon. My team and I decided to take the mission of innovating crowdfunding into our own hands. I’m thrilled to announce a completely new crowdfunding paradigm that will solve the problems related to the risks of people who give their money in exchange for unsubstantiated promises. Below I am going to enumerate and describe this and a few other fundamental problems of the current version of crowdfunding. Over the past three years, not only did these problems remain unsolved, but they were aggravated due to the inertness and clumsiness of today’s platforms, as well as a result of their carelessness and devil-may-care attitude to their users.
In a typical scenario, a user (hereinafter referred to as backer) pays their $25–125 for a well-advertised and attractive campaign. The campaign collects $10 million and disappears, leaving their backers distraught and dumbfounded. In simpler terms, they are left with lost money, newly acquired disappointment and distrust not only in the authors, but in crowdfunding as a whole. Currently, crowdfunding platforms operate as ‘buyer beware’ — backers are not protected in any way, and campaigns are not required to fulfill any promises. A platform that once began as a creative way to raise funding has turned in a game of roulette for backers; in my experience, only 10–20% of projects fulfill the promises laid out in their campaign.
Authors from third world countries (including Russia) cannot launch anything at Kickstarter if they have no SSN or representative who is the citizen of a country that Kickstarter operates in. A launch on the Indiegogo platform does not guarantee that the PayPal account of a campaign will not be frozen. Its community is weak, and organic traffic is almost nonexistent there. Both platforms, however, have a lot of red tape and bureaucracy disguised as quality management. Once I happened to communicate with the customer support teams on both platforms, and it was miserable (only my recent request to the Central Bank of Russia on the status of cryptocurrencies in Russia was worse than that). In other two cases out of three, I received no answer at all. As a result, when they just want to try a launch, an author must spend their money on an intermediary and legal services, spend their time on red tape and checks, etc. Launching your campaign turns into quite an adventure.
Competing with top companies on current platforms is also the normal way of things now. Crowdfunding turned into a marketing tool. A large company launches its crowdfunding campaign when it already has a product and revenues from it, spams Facebook with ads, pumps a million or two dollars into fake backers, and then sends out press releases to everyone, claiming that they are successful and that their product is in high demand. Major publications are paid $20–30,000 (these are real figures) to write an article about them, not interested in any other newsworthy events. At the same time, campaigns of real authors, often quite remarkable, remain unnoticed. What is it if not a “the rich get richer” situation? It’s not crowdfunding at all, it’s crowd marketing or crowd-PR.
In view of the above-mentioned points, the price of an effective launch becomes insanely expensive. At least two hundred authors addressed us for consulting, but only a few of them could afford to pay the current price of a launch. Providing a legal person and a local resident that a campaign must be registered to is too expensive for many small teams. An intermediary does not work for free, either, and takes prepayment and percentage fee. An author, if they want to be noticed, needs to seek assistance from PR specialists. Nowadays, if you don’t invest into Facebook ads and have your own strong community and/or a celebrity in your team, it’s practically impossible to collect even a small amount. Then you need to pay 5% to the platform, 3–5% to the payment system that accepts payments, 5–10% to the intermediary, and a certain amount to PR specialists if you agreed on deferred payment… In the end, it turns out that, after all writing pads, T-shirts, posters, and art books are printed, the author not only failed to raise funds for creating their project, but lost their own money and is now in debt to everyone. Thus, both the author and their backers are in the red, while only the platforms themselves and the providers of services to the author are in the black. This is how today’s crowdfunding works for small companies and indie teams, especially for those who are not on the list of “prosperous countries.” But large companies are not bothered by this situation. Quite the contrary: the fewer competitors that distract attention from their campaigns, the better. Crowdfunding devours itself, becoming something accessible only to the elite, if we are talking the main categories, such as games or technologies. There are, of course, certain exceptions, and very small projects that do not need intermediaries or PR and are still able to raise necessary funds. But their number decreases, just as does the total number of launched campaigns.
Today I am announcing KICKICO, a platform for the next-generation — Crowdfunding 2.0. I started working on this project two years ago. Many wondered how I would do it, but no one was anywhere near the answer. I must admit, even I myself did not know that my vision would be implemented like this, but I am happy to announce our recent launch. Over time, the platform underwent a lot of changes — initially, it was a hybrid of network marketing with crowdfunding, where authors could create their campaigns only after they supported others. Technologies, however, progress at an incredible rate, which result in the appearance of things that drastically change everything, such as blockchains and smart contracts. Thanks to new technologies, especially Ethereum, now we can do something radically different, readily accessible, and truly democratic. KICKICO is a crowdfunding platform based on the blockchain, where every campaign is a smart contract to be executed only after its conditions are met. Here’s how it works:
Campaigns are based on smart contracts that, in their turn, are based on Ethereum (ETH ERC-20, which is already a standard in its own way). This means that authors are not required to be US citizens. Physically, they can be and receive their money anywhere, as long as the raised funds are converted into the ETH cryptocurrency, and it is exactly what they receive. Later they will be able to exchange ETH for any currency they need anywhere in the world.
As a result, we eliminate not only any bureaucratic red tape but also payment platform fees and the need for intermediaries. Authors themselves decide where and how to pay their taxes — in some jurisdictions, they will be exempt from taxes altogether and pay only 2.5% of what is raised in the ICO and 2.5% of their tokens. For crowdfunding campaigns, KICKICO takes only 4% of the raised amount.Compare this 5% fee to at least a 5–10% fee of other platforms, a 3–8% fee of payment systems (especially those with VAT included), and at least the same amount for taxes. 5% against 20–30% or, in some cases, even more. I know of a project that lost 38% of the raised funds after paying all fees, taxes, and service charges, and a significant amount of rewards promised to their backers. How can you build a product when you lose half of the raised funds?
Smart contracts provide an amazing protection mechanism and guarantee that money will be transferred immediately after fundraising is over. Thanks to the blockchain, collected funds are not transferred to us or stored on our platform. KICKICO, as well as the author, will have 5% on their account only after the campaign is finished, and if the terms of the smart contract are not met, all funds are returned to the backers’ wallets. As for converted fiat money, backers can choose to be refunded or use the money to support another campaign.
The second fundamental problem of the previous generation of crowdfunding was the absence of guarantees that the backers would not lose their money. In order to solve this problem, we created our own cryptocurrency, KickCoins, and introduced the concept of “KICKONOMY.”
It works like this: when they support a campaign, backers receive not only the promise of a future reward from the author, but also KickCoins from the KICKICO platform itself. They receive a real currency that will not only be sold at stock exchanges and markets, but will be later accepted for payment by all companies that take part in the KICKONOMY ecosystem. For example, there is a game launched on the platform that claims to be a member of KICKONOMY. This means that after the game is launched, it will accept funding not only in “normal” money but KickCoins, too. Within this system, a backer receives not just the promise of a future reward, but our special currency that they will be able to spend in KICKONOMY. They will also be able to spend KickCoins in the games already launched by that time. If not in the game, then for a service, a product, a benefit, a ticket to a festival, or a dinner in a restaurant that raised funds on the platform.
But even this is not the most important thing. We believe that as the KICKICO platform develops and the KICKONOMY ecosystem expands, KickCoins will grow in value at exchanges. Why? Because the demand for them will grow with every project that accepts them for payment, i.e. with every project that takes part in KICKONOMY. You never know, maybe KickCoins will grow as high as Bitcoin, and backers will then be able to sell KickCoins for a nice profit!
But the question remains: Why should companies participate in KICKONOMY? There are many reasons for this. First, it will increase the loyalty of backers to companies, and their desire to support them. Second, it will be easier for such companies to get featured on the platform and receive our own PR support (see below). Third, when the number of participants increase, we will open the KICKONOMY section with a catalog of all such companies that successfully work, which will give them an extra paying audience, as well as traffic, completely free of charge.
Owing to KICKONOMY, the market value of KickCoins will inevitably increase, in my opinion. The increase happened to Bitcoin, it’s currently happening to Ethereum, and will happen to any other cryptocurrency that has some use. The expansion of the ecosystem through projects that take part in KICKONOMY will be like a snowball, with each new participant contributing to the increased demand for KickCoins. At the same time, backers will get one more guarantee: even if a project they supported disappears, they always have an additional way to use KickCoins. Naturally, in this case, a backer does not receive KickCoins for supporting a campaign but can get something else: a cryptocurrency, a share in some company, a unique product, and so on. Thanks to our strategy, the support of campaigns turns from the acquisition of a pie in the sky into an almost full-fledged investment. Besides, when KickCoins reach a certain value on the market, the KICKICO platform will start to accept them for payment, which, in its turn, will increase their price, maybe a hundred times. And it is not something unique: the value of cryptocurrencies in successful projects can grow 10–50 times in just a few months. For example, the Poloneix platform allows you to see the main tradable cryptocurrencies, and here are some figures for ICO companies: Stratis — The initial value is 0.00012321 Bitcoins, the peak value is 0.0028 Bitcoins, which shows an increase of 2,172.54% for 7 months. Golem increased from 0.0000449 to 0.000202, showing a growth rate of 349.89% in 5 months, and GameCredits, the cryptocurrency of the MobileGo platform, incredibly rose from 0.000007 to 0.0016, which is 23,707.14% in just 6 months! Those were just a few first available examples. Of course, there are a lot more of them, and there are unsuccessful companies as well. But if you have not invested in Bitcoin or Ethereum when the time was right, then pretty soon you will have an opportunity to correct this mistake and, at the same time, support us. To support our vision of what a real, democratic crowdfunding, accessible to any inhabitant of this planet, should be like. Who knows, maybe it will be your last chance to catch this blockchain train, because a huge number of cryptocurrencies will appear in the near future, and with every new ICO the demand for them will become more blurred.
The blockchain solution allows us to implement three fundraising models on a single platform. While the concept of crowdfunding is clear, many people aren’t familiar with ICOs. Briefly, ICO, Initial Coin Offering, is similar to IPO (Initial Public Offering), the first time that the stock of a company is offered to the public. But the process of IPOs are an extremely complex and expensive process, while ICO in the world of blockchain is available to everyone. Rather than offering investors stocks and shares, ICOs offer their own cryptocurrencies that, just as KickCoins, can grow in price together with the value of the company that created it.
Authors of ICO campaigns on our platform can either automatically create their tokens in a few simple steps, or integrate their own if they have been implemented earlier. Then, just as they would on Kickstarter, authors create their rewards where they indicate the number of tokens, the price, the discount, and anything else they see fit. For example, it can be a ticket to a private party, a 10% share in the capital, a T-shirt, or a gold bar. As a result, if they take part in an ICO on our platform, buyers receive two currencies at once: campaign tokens, and KickCoins provided by our platform as a bonus. They pay only once, but get two cryptocurrencies, both of which can grow in value many times over.
Crowdinvesting implies that backers either receive shares in a company or participate in the distribution of profits according to their shares. To this day, no normal regulation exists at the legislative level almost anywhere, and it is always a complex bureaucratic process. However, everything is different in the world of blockchain: there are no obstacles and difficulties in buying a company’s tokens, which is the same as buying a cryptocurrency. Furthermore, modern systems based on smart contracts allow for the immediate automatic and guaranteed distribution of profits according to shares. Authors on the KICKICO platform who wish to launch a crowdinvesting campaign are no different from the others, except that in their campaigns they offer their smart contracts representing company ownership shares or shares according to which their investors will receive revenues. In all other respects, the system is universal and operates according to the same rules as campaigns of other types have.
A large number of payment methods, previously unavailable to crowdfunding platforms, massively expands target audiences, making campaigns available to those who could not participate in them before. Basically it concerns third world countries and, of course, Asia. The possibility of payment with cryptocurrencies opens up the crowdfunding market to the vast part of the world’s population that, in their majority, had no access to it before. We understand how important it is to make campaigns available to everyone, and therefore we included the possibility of localization not only in the UI but in campaigns themselves. Over time, we will support all major languages in the world, and we still have unique ideas about localizing campaigns themselves, but it is too early to announce them right now.
Despite the fact that the funds of backers are transferred to campaign authors in the ETH cryptocurrency, they are collected not only in BTC or ETH itself. We understand that the crowdfunding community in the form it exists now is more accustomed to fiat currencies. Therefore, we will certainly implement the possibility of payment in USD/EUR/RUR. Funds will be automatically converted and transferred to a campaign wallet in ETH. It is one of the most important and high-priority tasks. We will implement it in such a way that users do not have to create wallets or try to understand how it all works — all of this will be done for them by us. Such implementation will allow all those not yet familiar with the world of cryptocurrencies to easily and painlessly get into in it and support the campaigns they like in a few clicks.
The possibility to launch a variety of campaigns in one place, as well as a variety of payment methods, from RUR to Bitcoins and from USD to ETH, expands the potential community and creates a tremendous synergy for all kinds of people and companies. Backers previously unfamiliar with ICO or crowdinvesting will see such campaigns, and some of them will definitely support projects that caught their interest. Those accustomed to simply invest will become acquainted with crowdfunding, and some of them will become backers. Crowdfunding in its entirety becomes open to Asian countries, especially China overflown, as of today, with money and cryptocurrencies. I believe we will be able to create a powerful crowdfunding community that never existed before, and I am sure that this will help all authors and companies placed on our platform.
Big companies well-established in the crowdfunding market are inert and slow. It is difficult for them to accept new ideas, and I think that many of them simply will not be able to switch to the blockchain for legal reasons. But the main point is not that but that rewards for backers in the form of KickCoins will allow small companies and indie teams to get more audience because the risk of their failure is secured by our cryptocurrency. Nevertheless, we don’t plan to stop here, and we explore the market for services that automatize press releases or small PR companies that we could buy and integrate into our platform. Once this is done, authors will be able to use these services or benefits automatically, either for free or at a very low cost, to conclude payment agreements after their campaigns are successfully completed. Ideally, it should be something like a PR exchange where authors are offered PR services and they can either accept or refuse them. The same applies to services offered by authors. Besides, we ourselves will support interesting (or first) campaigns with PR activities, because there is no difference for us what we will advertise — ourselves or campaigns launched on our platform. Our platform will have traffic anyway. Therefore, investments in advertising good campaigns will help both ourselves and such campaigns, and we understand this perfectly.
Finally, what is a difference between the KICKICO platform and crowdfunding, and how does it differ from ICO?
Now let us move on to the main and most important thing. Very soon, we will launch the first ICO campaign for our own purposes, on our own platform, to demonstrate its operational capability and degree of readiness. It will be a preICO, during which we will sell a limited amount of KickCoins, with a discount of 40% to 60% (the size of the discount will depend on the amount of KickCoins purchased). This event will happen only once, most likely as soon as in July 2017. So follow the news and try not to miss out. I don’t know right now how things will go and how fast everything will be sold out. Sometimes everything is sold out in a matter of minutes, sometimes presales take a week or two. Now everything depends on our PR specialists and on how they will do their job, and also on you.
A little bit later, we will launch a full-fledged ICO campaign on selling KickCoins, this time at 100% value. Discounts for large amounts will not exceed 10%. Usually at that moment the value of a currency bought on a preICO increases to the price set for the ICO.
Why are we going to launch those campaigns? A great deal of work is ahead of us. Much has been done but even more remains to be done. We will have to spend a lot of money for PR to take a proper place in the market. This is what the collected funds will be invested in.
In this September, we will open our platform for everyone interested. In fact, although I haven’t written about it anywhere, we already have authors who want to launch their campaigns. Perhaps these early birds will get access to creating campaigns earlier, but we have to see how things go first. In any case, regardless of the results of our preICO and ICO campaigns, the platform will be launched in September if all goes as planned.
Recently, when people started to learn or guess about what I do, I received many interesting proposals for cooperation. Some of them surprised me, though. For example, “We will create an ICO for you on a turnkey basis, with a guaranteed amount of $500,000, for 30% of funds raised,” or “We have tried and tested technologies, we will do everything on a turn-key basis, and you will receive $100,000 but give us 50% of your ICO amount.” This is what’s happening now in the ICO market, and I think it’s a very dangerous situation. If we assume that such supply is in demand, then many companies conducting ICOs now are created this way, “on a turnkey basis.” This means that they don’t have any necessary technical skills, perhaps not even a team. They are ready to accept such conditions to get their money from an ICO, and what will happen next is not important to them. I don’t know a single serious entrepreneur or a single businessman who would accept such conditions if they really planned to create and develop their businesses any further. I fear that such “companies” may turn ICOs into common profiteering: even now hundreds of people buy newly appeared cryptocurrencies for 1 ruble, sell them for 100, and switch to a next “ICO.” When such “ICOs on a turnkey basis” start to disappear (which will inevitably happen), the same thing that’s happening to crowdfunding will happen here.
But we can influence this situation. After all, we don’t ask for insane hundreds of thousands of dollars, we don’t take half of ICO revenues, that’s why we are going to give real true teams an opportunity to launch their projects and show themselves to the world. Teams that will demonstrate what real technological projects are, as compared to some turnkey bubbles. Perhaps, we will even audit companies applying for ICOs ourselves. Maybe we’ll even put labels to indicate project stages: “Idea,” “Prototype,” “Alpha,” “Beta,” or “Ready for launch.” In a nutshell, the main idea is to promote many talented guys who are far from business, and allow them to occupy a place that will otherwise be occupied by bubble campaigns.
And let me conclude. Over several years that I have led the “Russians on Kickstarter” group and some other communities, many of you have gotten to know me quite well. Perhaps we met in person, or I consulted with your about your campaign. Now it’s my turn to ask for your help: please work with me to create a place where we will all create our campaigns quickly and easily. A place for ourselves to effectively raise funds for implementing those ideas and projects that would otherwise stay hidden in the drawers of our tables. To combine efforts and create the KICKONOMY ecosystem that will protect those who believe in our ideas and our projects, those who will support our authors’ campaigns, those who their success depends on. Right now your support is needed and important to me, especially at the preICO stage, because the success of the preICO will determine the future of our platform in many ways. I believe that together we will be able to improve crowdfunding to make it safe, reliable, effective, and available to everyone. KICKICO is not just a commercial project, but my effort to help people around the world with their campaigns. With this project, we will be able to make the world better, safer, and more reliable. Your support for KICKICO would mean the world to me.
Anti A. Danilevski,
The first evangelist for crowdfunding in Russia,
Founder of the KICKICO platform