cash pallet skid breaking bad

Tech startup Tezos raised $232 million in July through an “initial coin offering”;
Spending $50 million on venture investing, rest being put into stocks, bonds, and precious metals;
An unusual use of funds from a tech business, likely to fuel criticism of ICO sector.

LONDON — Early-stage tech companies are enjoying a funding boom in 2017, raising over $1 billion so far this year through so-called Initial Coin Offerings.

ICOs involve selling newly created digital currencies online. This new method of fundraising was pioneered by Ethereum in 2014 and has caught on with investors and startups this year after a big rally for Ethereum’s Ether currency.

One startup plumped for an ICO is Tezos. It raised $232 million selling “tezzies” back in July, the biggest ever ICO at the time.

Tezos is building a database-like platform for banks and other corporates to use to write “smart contracts” on. It uses blockchain technology, originally developed to underpin bitcoin, and competes with other startups like Ethereum and Bancor. Tezos has been in development since 2014 and is the brainchild of husband and wife team Arthur and Kathleen Breitman, former Morgan Stanley and Accenture workers respectively.

What has the company been doing with its huge pile of cash since raising it? Investing it, apparently.

Crowdfund Insider reports that Tezos is committing $50 million to venture capital investing, backing companies that are building on its platform. As for the rest of its cash, it’s investing it in “things like stocks, bonds and precious metals,” according to the report.

This is all pretty unusual.

Firstly, tech companies don’t often double up as venture capital offices — it’s not their area of expertise. Those that do have venture capital arms — Salesforce or Google, for example — tend to be Goliaths who are making enough spare cash to justify it, not early stage ventures.

Investing in companies that use its platform is also pretty close to paying people to use its product — never a good look. Tezos would no doubt argue that it is simply seeding the beginning of a rich tech ecosystem but one VC described it to me as like a tarmac company investing in car manufacturers to drum up business for roads.

Investing in stocks, bonds, and precious metals is relatively unusual too. Companies usually raise money to build products, launch new markets, and generally fund expansion. Traditional investment institutions would get skittish if their money was put into …read more

Source:: Business Insider

What does a tech startup do after raising $232 million selling digital coins to investors? Set up a VC fund

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