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Token Sales, with Graham Jenkin of CoinList

podcasts

Token Sales, with Graham Jenkin of CoinList

CoinList is a platform where investors can have early access to tokens. They have significantly changed over the past couple of years. Graham Jenkin, their CEO, speaks with Jamie Burke, outlining the journey that they have took.

Posted by Token Sales, with Graham Jenkin of CoinList - January 2022

Their Recent Raise

Token Sales, with Graham Jenkin of CoinList Outlier Ventures

  • Raised $100 million at $1.5 billion valuation
  • Realized that they were meant to be a bridge to a decentralized future and that their cap table should reflect that
  • Started to broaden the base of industries they talked to and the regions where they are from (e.g. Middle East, Eastern Europe, and Asia)
  • Ended up with an awesome group of investors that could help them to think through strategy with respect to growth in those regions

His Insights On The Market

Changes In The Market

  • Markets have changed a lot
  • In 2017, their focus was on accredited investors. A lot of people still think that the CoinList platform is for accredited investors in the US
  • The market has shifted to audiences that’s outside the US
  • In 2017, teams would raise larger amounts from a smaller number of investors. By the time they get listed on CoinList, teams would have already completed their VC rounds
  • Teams are coming to CoinList because they want to have a large community of engaged token holders

Quality Of Teams

  • In the 2018/2019 winter, very little capital was coming in. There were only a few projects coming through
  • With additional capital coming in now, the number of high quality teams have increased
  • Have seen a massive evolution in the types of projects that are coming through. A few years ago, every project that came through was an Ethereum killer/smart contract layer 1 platform
  • Now, they are seeing projects coming from almost every vertical (e.g. DeFi, gaming, etc.)

Mainstream View Of Cryptocurrencies

  • Mainstream people, and even people within the industry, are just focused on the value of tokens and the financialization side of the industry
  • They are missing out on this revolution in software development

Every piece of software that was built over the course of the Internet age is potentially under threat, at least in terms of having some decentralized competitor.

– Graham Jenkin

From AngelList To CoinList

Token Sales, with Graham Jenkin of CoinList Outlier Ventures

  • AngelList started around the time when the Bitcoin whitepaper was written
  • There was a global financial crisis at that time and not a lot of capital was getting put into startups
  • Babak Nivi began writing a blog called Venture Hacks, educating entrepreneurs on how to negotiate a term sheet
  • It eventually grew into AngelList
  • Graham left Google and joined AngelList in 2011. Got to know Naval by trying to pitch to him
  • AngelList played a role in getting crowdfunding into the US
  • In 2017, they saw what was going on in the crypto space with ICOs. Viewed it as a purer form of crowdfunding

I gave him [Naval] a bit of a high level on some of my startup ideas, then, and he’s like, what your ideas are stupid, don’t do any of this stuff, just come and work for me. And I’ll teach you everything I could teach you about how to pitch investors, how to raise capital, what kind of patterns investors are looking for.

– Graham Jenkin

  • There were plenty of scams that came out. The US wanted to shut down the crypto sector’s access to US capital. They came up with a framework to help legitimate teams in the space to raise capital
  • AngelList and Protocol Labs formed a joint venture to create CoinList, which became the first compliant token sale platform in the US

Token Sales, with Graham Jenkin of CoinList Outlier Ventures

  • The Simple Agreement for Future Tokens (SAFT) was used as a standardized investment contract for these deals
  • AngelList spun out CoinList in late 2017

Rationale For Spinning Out CoinList

  • Nivi and Naval’s philosophy is to create independent entities and to give independence to people within their circle
  • Crypto is unique enough in its own way that necessitated its own focus

Change In Public’s Perception Of CoinList

  • Was one of the first platforms that received a broker-dealer license to run private placements for digital assets. They got the license so that they can specifically focus on the US market
  • Over time, the projects that they work with became less confident in the US regulatory climate and requested for CoinList to block US participation. This trend has continued till today
  • If US regulators consider an asset to be a security, it becomes very difficult for that asset to be listed on a crypto exchange in the US
  • CoinList has the tools needed to target US residents, but they do not do so at the request of the teams
  • Working with regulators to help build laws that support crypto
  • “Crypto mom” Hester Peirce, SEC Commissioner, came up with a proposal for a 3-year token safe harbour for token issuers and token developers so that they can raise capital. Within 3 years of event, they have to demonstrate that their network is sufficiently decentralized

Politicization Of Crypto

  • Democrats are generally against cryptos
  • Trying to find people who are willing to understand the industry and support innovation and job creation
  • Will be working on engaging the US market from both angles

Their Metrics

  • At the end of last year, their user base consisted of 150k users with 28 day actives
  • Currently, they are at 4-4.5 million users with 28 day actives
  • Had 20-25 people on their team at the start of the year. Grew to 80-85 members now

Their Approach

  • Other platforms start out as a piece of technology (e.g. wallet or an exchange) and try to acquire users and monetize them
  • CoinList’s approach is to find the best teams in the space and help them to be successful
  • They run the CoinList seed every quarter. It has been very successful as many great projects have gone through it
  • When projects launch, teams have to distribute tokens to investors who have participated in the sales. This is a logistical challenge for them and CoinList handles distribution and custody for them
  • Realized that users wanted to do something with their tokens. Hence, they created their own spot exchange CoinList Pro
  • Have a mobile app
  • Ended up building their staking services and partnering with different staking service providers
  • Recently built a governance service. Early tests showed 60% participation and the CoinList team is happy that their product is able to drive high quality, engaged token holders into these communities

CoinList Karma

Token Sales, with Graham Jenkin of CoinList Outlier Ventures

  • Created a loyalty program called CoinList Karma where users get rewarded for their activity:
    • Participating in governance
    • Participating in validator programs
    • Participating in their hackathons
  • Karma points gives users access to the priority queue for tokens offered on their platform

Thoughts On Governance

  • A lot of power goes to individuals with a lot of coins
  • A better model would be to empower individuals who are contributing to projects in other ways:
    • For developers, a bunch of commits on Github
    • Validators contribute to the success of the protocol and should have additional reward/weightage in terms of governance vote

Token Sales, with Graham Jenkin of CoinList Outlier Ventures

This podcast summary was prepared by The Reading Ape in collaboration with Outlier Ventures. The Reading Ape is a humble servant of the written word.

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