Astronaut Capital takes exposure in the FundRequest token sale.

On the 28th of January, Astronaut Capital (ASTRO) released a report stating that they have become an investor in FundRequest (FND). You can view the full report here.

Summary

The FundRequest platform will act as a marketplace and escrow service for the ongoing development and improvement of Open Source Software (OSS).

Through a simplified escrow and transactional service, Fund Request allows any participant holding FND to:

Create issues or ‘requests’ relating to existing OSS Fund the ‘request’ utilizing either FND or other ERC20 compatible tokens Approve the solution based on the initially agreed criteria

The company advises that the first integration will be with the largest development networking hub globally, GitHub.

Commercial and technical strategy

The technical implementation is largely broken up into two segments:



1) Funders Perspective — Allows those seeking changes to OSS to submit a request through the API or browser extension and appropriate the funds securely. This results in a new contract being created on the blockchain which serves as an ‘escrow service’ for potential solvers.

2) Solvers Perspective — Solvers must stake FND tokens to be considered for ‘winning’ the contract. This ensures that the prospective solvers have skin in the game and don’t abuse the system. The solver then works on the request and on completion, submits it for approval through the FundRequest ‘escrow contract.’

In addition to the above, FundRequest has also created a protocol to deal with other events such as dispute flow, extensions, crowdfunding requests and collaborative team work contracts.

Roadmap

When analyzing the use of proceeds that are allocated towards ‘development,’ it is clear that several releases are expected with new functionality and upgrades.

The roadmap can be found here.

Token Sale

FundRequest will be issuing the tokens under the code FND.

Crowd — Exactly 40% of tokens are offered through the crowd sale between three stages: Private, Presale and Public. Various bonus amounts are offered at these stages.

FND Team — A total of 18.0% of tokens are allocated to the founding team. Supporting documentation indicates a 2 year vesting period.

Reserve/long term expenses — 10% of tokens are to be held in cold storage for future operational expenses.

Ecosystem incentivization — Approximately 30% of tokens are to be used to stimulate and launch the ecosystem within the development community.

Token Use

The FND tokens that are issued have several use cases within the FundRequest ecosystem.

FND is required to be ‘staked’ when becoming a solver for a prospective project (known as project bond)

FND is used as the mechanism to release tokens through the ‘Skill Token Factory’ by burning of the FND already pledged

Use of Proceeds

The use of proceeds indicates that the majority of funding will be utilized for development (60%). The remaining is split across operations, marketing and G&A.

Team

The website and marketing material indicate that there are ~12 team members split across operations, legal and R&D.

Karel Striegel: Karel has held senior development and devops positions dating back to 2005. He has been the CEO of FundRequest since September 2016.

Davy Van Roy: Davy is the platform architect and CTO of FundRequest. Davy has held several positions as a senior developer for the past decade.

Advisors

There are a total of five (5) advisors listed on the FundRequest material.

Lausse Clausen: Partner at 1kx blockchain angel fund

Christopher Heymann: Partner at 1kx blockchain angel fund

Strengths

FundRequest is targeting GitHub, one of the largest open-source networks in the world as its first stage of collaboration. GitHub growth across all segments and metrics has been explosive in the last several years.

It is estimated that over 80% of OSS projects fail prior to completion, citing the inability to maintain performance and a lack of time to commit. FundRequest is crafting a viable solution for this problem, allowing others to contribute to the projects and get rewarded for it securely. (ref)

The FundRequest team possess considerable experience in tech development. One of the teams strongest qualities appears to be the drive for product execution, previously delaying the token sale in 2017 so they can come to market with an MVP to launch in the short-term.

The deal structure is favorable with a fair hard-cap of $15m and an appropriate allocation of tokens to team/advisors.

Launch of the first version is expected to be in Q1 2018, meaning a fast path to market and little development/OPEX burn before launch.

Community support has been positive as well as significant media coverage within various development and blockchain publications.

Weaknesses

We believe the team to be highly capable from a technical perspective, however, it is important to acknowledge that the success of FundRequest will also be heavily reliant upon marketing, business development and partnerships.

Marketing of 10% may prove to be too low for the longer term.

Development costs are considerable. It is estimated that the team has allocated US$9m to the ongoing development of FundRequest. While this is less than many other projects in the blockchain ecosystem, it is still far more than would have been given in a private equity/venture capital setting.

Opportunities

There is ample opportunity for FundRequest to break into the enterprise segment. According to the latest GitHub figures, growth of product and use of open-source platforms is significant across organizations and enterprise level users.

FundRequest could also expand into other verticals of ‘solving’ and contributing such as the operations of Bounty0x. While this is a potential avenue for growth, it may not be a viable commercial segment to concentrate on.

As the technology becomes more robust, we foresee the same type of rewards based system being used for other verticals. An example would be ‘Quora’, where a similar process of requesting, staking and solving could take place for participation other than code/development.

Threats

The small allocation towards marketing could inhibit short and long-term growth.

New/existing solutions could become competitors. Other projects such as GitToken and GitCoin are seeking to offer solutions to very similar problems.

The growth of the token may be inhibited if there is any delay in development.

Investment

Astronaut is attracted to FundRequest and believes they provide a viable technical solution to a large existing problem.

As a comparative view, we use an example of a now-defunct company called Gratipay (previously Gittip). The venture was a small bootstrapped startup which would allow community members to ‘tip’ developers who were contributing to open-source development.

Before the company closed down in late 2017 (due to several internal issues) it was clear that the venture had gained traction boasting significant change in active-user growth and reward payments (see here). Weekly volume was exceeding $14,000 per week and over $1.1m was disbursed over the life of the project.

For the reasons below, Astronaut Capital will be taking moderate exposure to FundRequest:The use-case of the FND tokens has been proven to be relevant and a significant problem in the development community (as mentioned in the above example)

The deal structure is advantageous for investors with only a $15m hard-cap

Product release is expected in Q1 2018, meaning the use-case can be validated specifically for FundRequest in the short-term.

There has been strong community support thus far both in terms of the project and the token sale

Conclusion

Astronaut acknowledges that there are several competitors that may be actively coming to market over the next 12 months. While this can be seen as a threat, it also validates how big the problem is. It is our belief that the solution that successfully gains mass adoption will be the one which is the most flexible, stable and secure platform for the market.

In light of the preceding, Astronaut believes the FundRequest team will be well-equipped from a funding and skillset point of view. The Astronaut Investment Committee (IC) have agreed to take exposure for the medium/long term with the possibility of further investment subject to the company delivering on product milestones.