Instead of our usual community updates, we wanted to up the ante even further with the continuation of our commitment to transparency as discussed in Update #9, across a multi-part series.

Part 1, includes a contextual overview around token sales vs. traditional equity funding, touching on the variety of similarities and differences, and what it means for companies operating in the blockchain industry. Most importantly, we’re going to provide insight into the overall health of the company, YTD expenditures, projected Q4 burn rate, executive compensation, dev progress and more.

Part 2, coming out the week of the 10/8, will cover a variety of the regulatory considerations behind our decision to delay token distribution.

Part 3, coming out later in October, will cover an update to our product roadmap, future milestones impacting token unlock, as well as an update to our overall communication strategy moving forward.

All parts to this series will be posted in October. For any remaining questions regarding the topics discussed in this series, we intend to hold an AMA every month or so.

We want to set a new precedent of openness (where possible), rarely seen in the blockchain/cryptocurrency industries, and call on our peers in similar positions to do the same. Over time, we believe we must communicate much in the same way as a public company as at the end of the day, our private backers and community who supported us deserve the full picture.

What it means to raise capital through a token sale vs. traditional venture funding.

Raising capital through a token sale has similarities to raising money in a traditional venture capital setting with a few core differences. For example, in most token sales, a company is selling a token with a future application, while traditional venture funding is offering equity. Despite a few differences, we can look at conventional capital raises and draw parallels to the blockchain space later in the post.

Startups going through traditional equity raises all have the following, albeit very generalized path. A company begins with a small pre-seed round to get off the ground. Next, it will raise a larger seed round to continue vying for adoption. Only when product market fit is proven, and the company has evident growth and traction, will the company seek a series of larger venture funding rounds, beginning with a Series A. As the company grows and requires more funding to continue growth, subsequent and larger rounds take place until the company is either acquired, IPOs, or generates enough revenue to become self-sustaining.

Even though this path is hugely generalized, it doesn’t change the fact that only 48% of companies ever raise past their pre-seed round (CB Insights). Additionally, less than 21% ever make it to their Series A, according to a study done by Towards Data Science. Each round after that becomes more and more difficult to secure.

With the rise of blockchain technology in the last two years, the token sale has provided an attractive alternative for raising capital. You can raise an extraordinary amount of money in a relatively short time, without selling equity like you are in a traditional raise. However attractive it may seem, it comes with a whole host of unique complexities, of which three stand out the most.

For most jurisdictions, this industry is mostly an unregulated wild west. No two domains are the same. Just because it’s unregulated doesn’t mean that regulators won’t pick the closest regulated market and treat it similarly. Unregulated isn’t a substitute for “easy” or a “do whatever you want” mindset. It should mean, “legally complex and extremely expensive to do so compliantly.”

In the peak of the token sale season at the end of 2017 and beginning of 2018, most projects raised on average $15 million. Many raised far more than that, with the largest, EOS, raising more than $4 billion. Comparing this to how typical venture funding goes, a pre-seed startup is raising the equivalent to their Series A or B right away. In other cases, it means they’re surpassing all funding stages entirely.

Before we jump out of our seats in outrage, let’s give these projects the benefit of the doubt. Maybe they have products generating stable revenue or killer token economics, demonstrable product-market fits, and well-developed teams and business plans.

The reality is, most don’t, and unlike companies operating under traditional series rounds, companies that take the token sale path have little to no legal responsibilities to disclose anything — financials, operational or product details, just to name a few. The vast majority also operate without a formal board of directors who are in charge of holding the executive team of the company accountable for protecting the interests of the stakeholders.

Therein lies one of the core problems in the industry. Investors worldwide are trusting what would otherwise be very late stage capital to pre-seed stage companies with the expectations of tokens for a product that has yet to be entirely built out, let alone proven. The hype cycle needs to be broken, and companies should be allotted the time to create the underlying token economics that provides real value to the token. The technical revolution of blockchain will spur the next generation of Apples, Microsofts, Amazons, and Googles, but this will not occur overnight.

Outside of a few cases, there is almost no transparency within blockchain startups of where or how much money they are spending on what. For all investors know, the company executives could be earning seven-figure salaries, blowing through company money on lavish parties, sponsoring unnecessary conferences, and burning up their much-needed runway on non-sense at the cost of the backers.

When someone invests their hard-earned fiat or cryptocurrency in a project, whether it be through a traditional capital raise, IPO, or token sale, the purpose is the same; people entrust their money to the company with the belief they will use it to build a product that will provide value. Unfortunately, in the blockchain industry, companies that raise funds through a token sale have little, if any legal responsibility, which is quite frankly, very frightening.

Because of these issues plaguing the industry, we would like to set a precedent for all blockchain ventures going forward.

We are dedicating this post to take a first look at Current’s expenditures and to provide clear insight into the overall health of the project. In addition to this, we will include what we have accomplished with our funds, a brief update on the product, and near-term roadmap. We sincerely believe that if a project isn’t comfortable giving this type of insight to you, you shouldn’t be comfortable backing them.

We encourage you to pressure any projects you support to do the same and advise you to avoid any project unwilling to commit to this level of transparency moving forward.

As of today, Current’s Treasury includes a mix of Fiat, Bitcoin, and Ether. The amount Fiat alone is enough runway to last for the next 30–36 months. This amount of runway is the minimum we believe a startup with a fighting chance will need. This holds especially true if an economic downturn sets in.

Now, let’s take a look back at our year to date expenditures, what category the expenses fall under, and what our projected burn rate looks like over the next quarter.

It should be noted that a third-party accounting firm hasn’t fully audited the following figures, and they should only be viewed as a close approximation. It is our intention, should we do an update on these, to have them fully audited, just as a public company has the responsibility to do.

Between December 2017 and August 31, 2018, Current has spent approximately $4.6M. Let’s take a look at where it’s been allocated.

The breakdown includes $2.14M on advertising and marketing which includes advertising the token sale, marketing of Current media products, user growth that has led us to over 1.7M+ registered users, public relations, and events. The vast majority of events hosted by Current took in some form sponsorship dollars to lower costs of organizing it.

The approximate breakdown includes:

~$1.14M spent on salaries for Current employees and contractors

~$632K spent on legal, accounting, and compliance. Yes, running a token sale and continuing to operate compliantly in an unregulated market is an expensive proposition.

~$595K was spent on general and administrative costs which include things like office rent, utilities, accounting, development/technical subscriptions, and employee computers just to name a few.

~$77.5K spent on travel which includes the entire worldwide roadshow. A conference in San Francisco in which we had a booth at, two events that portions of the team traveled to in Miami and one event in New York City, which also a part of the team traveled for.

Looking forward to Q4 and 2019. We have several advertising partners already secured and intend to launch monetization within Current during Q4 of this year. By doing so, we believe we can maintain a reasonable burn rate throughout 2019–2021, while also drastically growing our user base and overall top-line.

By our calculations, Current’s average burn rate for Q4 is planned to be ~$500–600K per month. This includes payroll and contractors, marketing and advertising, legal, rent and utilities, development tools, general administrative, and travel. As our accountants are still double checking the different classifications that make up each component, and they haven’t been verified by a third-party, we’ll release details in a follow-up post as well as include the YTD retrospective.

To add a bit of context within payroll, Current has a total of 15 employees and 7 contractors. The average salary for an employee at Current is $118K and have the potential to earn a 10% yearly bonus. Each employee’s salary is based on their role and experience within that role, with the bonus calculated on 5% employee performance and 5% company performance. Additionally, each salary is competitively priced to attract the highest quality employee possible. All employees have full benefits.

Our three co-founders and executives, Dan Novaes, CEO, Kiran Panesar, CTO, and Nick McEvily, CDO each earn $150K in salary and have the potential to earn an additional 20% of their salary as a yearly bonus. Their bonuses are calculated on 10% employee performance and 10% company performance and are paid accordingly.