Astronaut Capital takes exposure in Simple Token as one of its first initial coin offering investments.

On the 28th of November, Astronaut Capital (ASTRO) released a report stating that they have become an investor of Simple Token (ST), a Hong Kong based services platform which seeks to disrupt the B2B market for token generation.

Company Overview

Simple Token aims to bring the power and marketability of the token economy to mainstream business and everyday use-cases.

We break down the goals of Simple Token as follows:

Establishment of a platform named as ‘OpenST’ which enables the creation of utility tokens on a utility blockchain and staked by crypto-assets. Operability and bridging of two separate chains (value and utility) to reduce transaction fees and optimise for speed. Create a seamless ‘CMS-style’ platform for the creation and branding of such tokens by businesses globally. This involves an end-to-end system of designing the token, establishment of a wallet, enablement of transactions and creation of ledger functionality.

Simple Token has released several posts and videos in relation to Alpha-staged demonstrations of the OpenST platform. View on Github here.

Commercial & Technical Strategy

Simple Token has outlined a technical and commercial roadmap that follows through to Q1 2019.

Milestone 1 (OpenST v0.9): The initial milestone has already been released on Github (https://github.com/OpenSTFoundation). The first step of the protocol involves having company users earn and spend branded tokens as well as transfer them within company applications. Milestone 2 (OpenST v1): In Q1 2018, the company seeks to expand on the first version, focusing on escrow (supported by the foundation) as well as security and audits. Milestone 3 (Public Launch): The expectation of a public launch to initial member companies is for Q2 2018. This milestone will be focused on consumer engagement and feedback. Milestone 4 (Founding Member Companies): Significant scaling of all founding member companies is expected in the second half of 2018. At this point in time, the technology must be robust enough for heavy volume and the attraction of third party developers. Milestone 5 (Consolidation): By 2019, ST seeks to have an open and scalable platform used by over 10,000 companies.

The roadmap and overall strategy has a strong focus on technical development, however, marketing and outreach has not been clearly defined.

Token Sale & Structure

Simple Token has launched their offering under the ticker ST.

The token sale has been focused on the distribution of extra bonuses once certain volumes have been achieved.

In addition to the above, a further 15% bonus had been applied due to recent ETH fluctuations during the public sale.

The overall cap of 240m ST equates to +$20m to be raised. As of the 30th of November, Simple Token has raised approximately 155m ST. It is communicated on the company website that leftover tokens from the sale will be burned.

The token sale split can be a point of contention. Approximately 30% of the tokens are allocated to the crowd, while a further 17% is for future sale. The accelerator component also takes up a substantial amount of the distribution.

Despite this, circulating supply in the market will likely be tight as the remaining tokens are either frozen or vested.

Token Use

Simple Tokens (ST) are staked in favor of a Branded Token (BT) or Utility Token. ST becomes the driving force of the entire ecosystem and will act as the central currency that fuels the design, branding, and creation of new tokens.

Increasing demand for the creation of branded tokens will appreciate the value of ST as the ecosystem grows.

Use of Proceeds

Simple Token has defined a specific ‘use of proceeds’ which is heavily catered towards technical development (50%). The remaining funds are used for a mix of operational costs. Only a small portion (10%) is allocated to Sales & Marketing.

Team

The management team are from a heavily entrepreneurial background and have a vast range of experience between Europe and Asia. The team is further supported by approximately 28 other operational staff.

Jason Goldberg (CEO): 18+ years of startups, previously working at fab.com and XING. Attended Stanford.

Nishith Shah (CTO): Founder of several consumer-related internet ventures such as Fabulis, Social Media and True Sparrow. Attended University of Southern California.

Ben Bollen (CTS): Experience with Hyperledger Burrow and Maidsafe. Attended Ghent University in Berlin.

Advisors

There are currently 13 advisors listed on the whitepaper, many of which come from a research, private equity and development background.

Brian Lio: CEO and Co-founder of Smith + Crown.

Rick Dudley: President of Blockchain services firm Vulcanize.

Jehan Chu: Managing Partner of Kenetic Capital, a Blockchain fund.

Previous Investors

Simple Token claims that they have a number of early-stage backers that are supporting the product including Tencent, 500 Startups and Greycroft amongst others.

Upon further research, we find that most of the early backers are actually investors of a previous venture by the same team (Pepo) which was a social media and messaging app. The details of some of the investment structure (including Tencent) can be found here. Pepo is claimed to be a ‘founding member’ company which means they will be the first test and use-case.

Moderators from the team advised that these early investors were given free tokens which are subject to three year vesting.

Pepo remains as a separate company.

In light of the above, we are disregarding claims of early institutional investment as it would appear to be in relation to a separate venture.

Strengths

Simple Token is creating an equivalent of a B2B SaaS (software-as-a-service) product that has significant potential should the token economy continue to go mainstream and adoption amongst everyday consumers become prevalent. A streamlined and self-service platform that requires minimal input from developers is one of the first steps in gaining mass market adoption.

Simple Token has already released several instances of an MVP which illustrates a strict focus on technical development.

The roadmap appears to be quite realistic from a development perspective and suggests an agile rollout of approximately 14 months to mass market launch.

The Use of Proceeds has been allocated well, illustrating a company that is heavily focused on development. Approximately 10% has been allocated to marketing, however, this figure may need to change in the future should adoption be harder than originally anticipated.

The sale thus far has been quite successful, particularly with a small market capitalization. While there is only a small allocation that has been offered at the first stage, we anticipate this to be trading on a tight register. The token sale will likely finish with between 6000–8000 purchasers.

Weaknesses

There are competitors in the space, albeit targeting different levels of consumers. Lisk provides similar services using sidechains and is based on a simple javascript framework.

The allocation of only 30% of tokens to the crowd (for stage 1) is quite small. As there is a future sale to occur in 2018, it would be expected that the team has high hopes of successful adoption and a largely demand driven sale.

While the management team comes from a successful background, we don’t find direct or well-defined links to the blockchain segment of innovation.

Early backers that are noted on the website appear to be from a past venture and are not directly involved with Simple Token.

Opportunities

Simple Token may find strategic opportunities to enter into and focus on certain verticals in the token market. For example, should ‘loyalty tokens’ become a business product which is highly in demand, niche offerings, and tailored deployment processes can be offered for such a setup.

While the token market is yet to go mainstream, ST could find itself in a leading position as a service provider for new entrants should they implement a successful marketing strategy.

Collaboration of marketing and affiliate networks may boost sales activity and user onboarding.

Threats

Competition in the ecosystem is one of the larger threats. As ST is focused on a B2B product, they must develop and maintain an experience that is simple, efficient and flexible for new businesses.

Failure to sign new customers will result in lackluster activity for ST and their tokens. A strong commitment to business development is a must.

Marketing spend may be too low given the infancy of the market. It would be suggested that the use of proceeds from the next sale are used predominantly for business growth and expansion.

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