Kik plans to raise $125M through dig­i­tal-cur­rency sale

In­vestors line up but some call cryp­tocur­rency a ‘tick­ing time-bomb’

The Hamilton Spectator - - BUSINESS - GERRIT DE VYNCK

Kik In­ter­ac­tive is about to get its big­gest cash in­fu­sion yet — but this time much of it will come from reg­u­lar peo­ple in­stead of ven­ture cap­i­tal­ists.

The Water­loo-based com­pany ex­pects to raise $125 mil­lion from an ini­tial coin of­fer­ing, a process by which it sells to­kens that can be used to buy ser­vices on its mes­sag­ing plat­form.

The idea is that as more peo­ple use Kik, the value of those to­kens, called Kin, will rise. Kik has al­ready raised $50 mil­lion from Blockchain­fo­cused in­vest­ment firms, and will re­lease an­other $75 mil­lion worth of to­kens Sept. 12 to the gen­eral public.

Ini­tial coin of­fer­ings, or ICOs, have spread in the past year, rais­ing more than $1.3 bil­lion for dozens of star­tups. Se­cu­ri­ties reg­u­la­tors around the world have voiced con­cerns and even the founders of the cryp­tocur­rency soft­ware many ICOs are built on have called them a “tick­ing time-bomb.”

Yet peo­ple are lin­ing up to throw their money into them. If Kik is suc­cess­ful in rais­ing the $125 mil­lion, it will more than dou­ble all the ven­ture funding the com­pany has re­ceived to date, which in­cludes a $50 mil­lion in­vest­ment in 2015 from Ten­cent Hold­ings Ltd. that pushed its val­u­a­tion to $1 bil­lion.

“With mil­lions of users, Kik hopes to drive main­stream con­sumer adop­tion of Kin, po­ten­tially mak­ing it the most adopted and used cryp­tocur­rency in the world,” the com­pany said in a state­ment.

It first an­nounced plans to sell the to­kens in May.

The funding will in­ject cap­i­tal into a com­pany that has been strug­gling to com­pete in the world of mes­sag­ing, which is dom­i­nated by tech ti­tan Face­book in most parts of the world.

Kik re­vealed ear­lier this year that of the 300 mil­lion peo­ple who have reg­is­tered for the app over the years, only about 15 mil­lion still use it on a monthly ba­sis.

The com­pany has also been crit­i­cized for cre­at­ing a space in which child ex­ploita­tion and ha­rass­ment can flour­ish, be­cause users can par­tic­i­pate on the app with­out link­ing their true iden­tity through a phone num­ber.

As a well-es­tab­lished and rel­a­tively well-known con­sumer com­pany, Kik has the op­por­tu­nity to bring a new sheen of au­thor­ity to ICOs.

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