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Iconiq Lab Aims to be the Y Combinator for the Token Markets

Interview

Interview with Sandris Murins, co-founder of Iconiq by Jason Manolopoulos

Could you tell us a bit about yourself and how you got involved with the crypto world?

I am a co-founder and the strategic director of Iconiq Lab, an ICO and Token Sale Accelerator. It is my second blockchain-connected company. The first blockchain company I founded was the FIC network (or previously known as Factury).

I am very proud of my previous academic life in Latvia – I was visiting lecturer on innovation and creativity in three leading universities and the co-author of the sustainable development strategy for Latvia for the year 2030.  The document is approved by the parliament of Latvia as the primary guidelines for the future development of my home country.

My first interest in the crypto field originated in 2014 when I attended my first bitcoin-related meetup in Riga. My interest in blockchain technology resulted in the FIC network.   The company was a part of the first New York batch of StartupBootCamp Fintech in 2016. It was selected among the final ten companies from more than 480 applications.  It was a significantly new experience for me. Based on the knowledge I got in New York, and later in Berlin, I wrote more than 15 articles on different blockchain use cases. You can find them on my LinkedIn or Medium profile.

So, can you tell us what Iconic Labs is all about?

Iconiq Lab is a Frankfurt-based Initial Coin Offer and Token Launch accelerator program. We source, fund, develop and accelerate the best crypto, blockchain and tokenizable startups to their own ICO or Token Sale.  We help the best teams with the best ideas raise funds and fight against scams and poor quality ICOs.

What does it mean for startups?

First of all, we help to build financially and legally sound token models. Second, we help to cover costs for preparing their token sales through seed funding we provide. Whats more important though is that we organize token pre-sales by attracting our network of token-buyers, the ICNQ token holders themselves.

What does Iconiq lab mean for token buyers?

For our ICNQ token holders, we provide a membership opportunity in our premium token buyer’s club. The ICNQ club is provided with a deal flow of quality token sales.

How do you identify quality token business models?

We select only the most promising startups in our accelerator programme by performing profound due diligence on the teams, technology, business idea and legal structure of the applicants. We improve the token models, co-create legal and smart contracts to protect token buyers interests through our team and strategic partners. In one sentence, we take out the pain and save time for token buyers to protect their token investments from scams and poor quality ICOs by creating a shortlist of promising token sales which our ICNQ token holders have exclusive access to the presales of.

And you are also launching an ICO soon. Tell us a bit about it, please.

Yes, our public presale will be launched on March 31st and our public sales on April 15th. We have three encouraging news bits for our prospective token buyers. First, we already successfully finished a private presale round worth $1 million. Second, our equity investor is a public listed company, FinLab AG, and the third, our first batch – Braincities, Topl, Wunder, BasedGlobal, and Vreo –  started our accelerator program on February 18th! These five companies were selected out of 165 applicants.

How does the token function within the platform and why is it needed?

For the ICNQ token buyers, we offer tokenized access to our premium services. We created the ICNQ membership token that gives exclusive access to a pro-rata base to participate in pre-sales of tokens issued by the startups that graduate our acceleration programme. It means if I do not have any ICNQ, but you have one ICNQ, then you can participate in pre-sales of tokens issued by the Iconiq Lab startups but I can not. But if I have one ICNQ, but you have 10 ICNQ then you can buy ten times more than me.

Are token sales of the companies in your accelerator exclusive to members? 

Only members can buy startup tokens for pre-sales, but non-members can purchase startup tokens in public sales. Yes, one of the primary added values of having ICNQ token is the opportunity to buy startup tokens in early stages with discounts. But it is not the only value. ICNQ token holders have privilege rights to provide feedback on applicants during the selection process, thus helping the Iconiq Lab team to source only the most exciting projects from their perspective as well as to help selected startups shape their token models. The startups’ public sales, after the exclusive presales, create downstream liquidity for our ICNQ club members.

And how, do you believe, that blockchain popularity would help in the acceleration of your business?

We are already observing many increasing applications from startups that would like to issue tokens. For example in August, we received around six applications per week, but in February we were receiving around 20 applications per day. The acceleration is driven not yet by mass adoption of blockchain technology but by mass adoption of blockchain as a concept. More people in conferences, meetups, and other events are actively discussing blockchain and tokenization. This drives interest towards Iconiq Lab services and our program.

And do you think there’s a demand for token acceleration programs?

It is 100% clear that there is a strong demand for our token acceleration program. There are a lot of startups who do not have money, the competence or required networks to prepare and successfully run an ICO. But they have good coding skills, excellent ideas, and experienced teams. We provide the funding, guidance and our brand and reputation towards their ICOs.

Token buyers, especially those who are coming from traditional finance, demand meticulous due diligence and vetting on tokens because they are afraid of scams and poor quality projects. We see that demand for our services is increasing due to legal uncertainty, scams and sky-rocketing ICO marketing budgets. Additionally, traditional and crypto investors are demanding higher quality insurances on token issuances. These complexities are the main drivers for our services.

Your selection funnel is quite big and going from 165  to the 5 – how do you perform this process? What is your method?

There are ten due diligence steps before we sign a contract with startups. They include – screening applications, contacting applicants, collecting documents, analyzing documents, follow up calls, token reviews, legal reviews, liquidity reviews, technological reviews, and seemingly countless in-person meeting and calls. We apply the skills and knowledge that our team learned from vetting and selecting hundreds of investment projects working as venture capitalists and in private equity for many years.

For your applications, do you focus on any specific sectors or countries? 

We are both geographically and industry agnostic. We receive applications from all continents and very different sectors. About 25% of the applications aim to digitize the finance industry, about 20% build blockchain protocols with  AI or other software platforms and around 10% came from content industries such as entertainment, arts, etc.

Who do you see as your biggest competitors and how are you planning to compete against them?

The biggest competitor is cofound.it, but they are seemingly pivoting from an accelerator model towards an ICO platform. If you would compare them with us, then I would say they are building the NASDAQ for token issuances, but we want to be more like the Y Combinator for promising token projects. We add the financial service layer through our financing of the startups for the token market rather than a mere platform and perform significant due diligence to ensure only the top projects enter our program. Why can we do it? Because our core team comes from the venture capital and private equity industries and has extensive experience in crypto.

That leads me to the next question. How do you see the regulatory framework for ICOs in Europe and globally evolving?

No doubt, this year will be marked by regulation. There are two regulatory perspectives  – one that treats crypto assets as an entirely new asset class that needs separate laws, e.g., Estonia, Gibraltar, and Belarus. The second perspective, e. g. US and Germany treat crypto assets as a new form of a previously known and regulated substance. Regulatory discussions evolve into the interaction of those two perspectives. It is clear that regulations will fragment the global ICO market into regional and national and increase costs of doing ICOs on a global level. It means that only very well pre-funded ICO projects will be able to make legally compliant, global token sales. Furthermore, we will observe a new ICO trend where more and more startups will sell their tokens in very limited geographies.

So that is a bit of a nebulous environment for ICOs. What would you recommend they do? Try to create a utility token, or focus on a security?

I would suggest asking simple questions: how much tokens at a minimum do I need to sell to build and scale my company? Where are my potential token buyers? From this information, you can choose target markets of token sales. I would suggest being more proactive and strategic. It would imply to select a limited number of markets and work with local lawyers in those market and actively communicate with local regulators. And during these conversations, you can decide what token type is most appropriate for your technology and local regulations.

So where are you with Iconiq Lab now? Can you tell us more about your team?

The company headquarters are located in Frankfurt, Germany. We are a very international team of five co-founders who can speak in nearly a dozen languages. Three of us previously worked for German and U.S. VC’s and private equity funds and know what German quality means for selecting and performing due diligence of investment opportunities. In one sentence – we are a team of qualified financial professionals who can open doors to many local markets. It is our core advantage over all competitors and due to this, I envision that in the future we will be a premium quality investment club for the token markets.

Why was your ICO delayed?

We prepared all legal materials and submitted them to the German regulator. We did not receive feedback as quickly as we were promised, so we had to postpone our token sale as our goal is to issue 100% legally compliant token. We won’t compromise on it.

How do you make money? What do you charge the investors, and what do you charge the companies?

We charge token buyers with a one-time, lifetime membership fee through the purchase of the ICNQ token. This means token buyers need to have our tokens to access our services. Startup companies are charged between 3 – 8%  of all the tokens they issue to cover our initial investment and services. The first half of the fee is collected in ether and the second half is in their tokens which is locked for one year, so we promote the long-term sustainability of their tokens. In this, we are completely aligned with the interests of their token buyers. We are sitting in one boat with them as it is very important to help issue tokens that will drive value in the ecosystems we help create.

And what is your initial seed per startup?

We provide 25,000 EUR in cash and up to 250,000 EUR in additional cash and services needed to prepare them for their token pre-sales. Also, we connect them with our mentor and investor networks to sit on their advisory boards.

Do investors have to buy a specific amount of tokens?

For participation in our public sale, you need to buy at least one ETH of ICNQ tokens.

Ok, So is there any burning of the tokens? Are they a usage token?

We are not burning tokens. ICNQ is a membership token, so you can use the same token again and again to access the exclusive presales of our accelerator program graduates.

Crypto is a fascinating area, with lots of volatility, what keeps you up at night from the crypto world, and what keeps you up at night regarding Iconiq Lab?

The crypto paradigm brings radical transformations of existing financial services, and I would like to be among those who create this new financial world. This drives me forward day by day. I am worried about the legal transformation of the token market and regulatory activities that could fragment a relatively small financial industry at its moment of birth. This could impact us in very profound ways like the geography of our target markets, costs of operations and our scaling model. We need clear rules of the game as soon as possible and hopefully will have one with a global legal framework or at least with some regional, legal frameworks.

These are excellent points, and they lead me on to my next question. We see a lot of competition emerging in the blockchain platform level. Where do you see the future of blockchain platforms?

On a technological level, for me, it is interesting to see projects that connect different blockchains and automate transactions among them. I believe building interoperability among different blockchains is a future step of developing public blockchain projects. Secondly, I am interested in the emergence of a shared technological vision of private and permission-based blockchains. I believe that the future is the interplay of artificial intelligence and blockchain and I hope that we will see more and more attempts to tokenize artificial intelligence.

Currently, we are experiencing a mini-crash in the crypto market. What is your view for 2018 for the crypto market, and do you think the crash is over?

First of all, this can’t be investment advice, but I can give you my personal view. I think there are crashes, ups and down. Mini crashes create volatility, and due to the volatility, we see tremendous returns. Mini crashes is part of the crypto investment game. If everything were very stable and only growing, the returns would be much lower.

So do you think 2018 will be a positive or negative year for Crypto and ICOs?

For the ICO ecosystem, it will be both the year of legal transformation and legacy. By legacy, I mean building on the recognition that the ICO is a verified alternative financing method and it will not disappear shortly. This legacy will be validated mostly by transnational corporations like  Kodak or Mercedes who will issue their tokens in 2018.

 

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