‘We thought about crowdfunding but took $3.5m instead’ says Travelbybit
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Cryptocurrency-based travel agency Travelbybit has just landed a $US2.5m investment from the world’s largest crypto exchange after earlier considering the equity crowdfunding route.
Brisbane-based TravelbyBit describes itself as “a blockchain payment platform and travel company that offers booking services for travellers using digital currency” such as bitcoin.
To grow the business, chief Caleb Yeoh says he initially went looking for a network of customers rather than cash — and had been considering routes like a major partnership, issuing an asset-backed crypto token or equity crowdfunding.
“Equity crowdfunding is useful if you’re trying to galvanise a network or to build a network effect among your users. so I always liked the idea for that reason,” he told Stockhead.
“But I guess the other way to get that network is to partner with another company with a strategic network as well. Binance is a very large company [with] over 10m users.”
Equity crowdfunding started in Australia in January after five years in political purgatory.
Platform operators have told Stockhead that the requirement to become a public unlisted company, nixed a month ago, deterred a range of businesses that wanted to raise but remain as private companies.
Mr Yeoh said this was a consideration for them in not choosing to raise money and customers via that route, as was the fact that they’d only get a small network of investor-customers in Australia.
He says the Binance investment will allow them to expand overseas much faster.
Also a consideration was the fact that they’d have to manage the expectations of “a whole bunch of different people” rather than one shareholder.
“Getting investment is not just about the money… you want that network you get from ‘smart money’, you don’t necessarily want passive investors,” Mr Yeoh said.
It’s all about crypto now
Mr Yeoh says “the next big thing” in fundraising is via asset-backed crypto tokens, known as security tokens.
In Australia these are regulated as a financial product by ASIC.
Already it has fans in the mining industry in Perth — an advisor is looking to launch a token called Futuregold in order to invest in gold miners around the world.
Even Jack Quigley, boss of CrowdfundUP and long-time proponent of equity crowdfunding is on the record saying “ICOs (initial coin offers) are everything crowdfunding promised to be” because they are online and offer instantaneous access to capital — no three day wait as with equity trading and no five day cooling off period as with crowdfunding.
Mr Yeoh says security tokens — the next step up from ICOs, which are like an IPO but issue tokens which don’t confer ownership instead — cut out the costs and middlemen of raising capital.
“ Everyone has gone down the ICO path and realised that nowadays you need to tie everything back to something a little bit more concrete… like equity. You really do need ownership in a company. I think a security tokens fulfil that need,” he said, as well as giving a company the international reach of an ICO.
Mr Yeoh says he has not forsaken equity markets.
“We’ve always felt that our role is to marry mainstream and the crypto ecosystem. I think it would not be unreasonable to think that we would list or do an IPO one day,” he said.
“Having said that, if security tokens become what I think they’ll become and becomes an entire new way to raise funding, we might gravitate to the security toke side of things.”