Australian video game testing startup GameTester has launched a $US30 million ($39 million) initial coin offering (ICO) on the Ethereum blockchain, kicking off the alternate fundraising method as the platform seeks more users.
GameTester was founded two years ago by brothers David and Paul Dobson, with David having previously run video game company Planet Arkadia. Struggling with the high price of cost per acquisition when it came to new players, he developed a platform that allowed users to test video games and provide feedback for developers and, hopefully, purchase the game as well through currency earned by testing.
The pair launched GameTester one year ago and saw a quick uptake, landing 15,000 users in just six days. But as the company approached game development businesses, the founders realised they’d need to vastly increase their number of testers.
“It gives gamers the chance to test games before they buy and get paid to give one-on-one feedback to developers, which is a rare thing,” Paul Dobson told StartupSmart.
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“Developers wanted to get on board, but they wanted to test with specific demographics, like 100,000 females in families in North America. We had the merchandise, but we needed a few million gamers to provide to these developers.”
Faced with this problem, and needing to boost marketing get more customers on the platform, the team looked to raise capital. They first looked at traditional funding methods, such as venture capital, before coming across ICOs.
There’s two reasons behind choosing an ICO as a form of funding, says Dobson. Firstly, the company was interested in implementing blockchain technology in its own business model, and secondly, it needed a way to raise capital.
He says his team were already interested in blockchain technology as a way to develop licensing technology for video games and realised the currency aspect would be complementary to the business’ system, which already used a rewards-based “gold” system.
“We needed a better system than our in-house gold system, as users would ask if they could cash out their gold into US dollars, and we’d have no process for it. With [GameTester’s token] GTCoin, they can transfer it to an exchange and cash out whenever they want.”
Timeline in place and $780,000 raised so far
Dobson says the ICO has, to date, raised more than $780,000 — including a pre-sale event which ran in November — and the main sale will continue until January 7. The company will release 30 million of its GTCoins, each valued currently at $US1.1, with a view to listing on online cryptocurrency exchanges in March 2018.
David and Paul Dobson aren’t hoping to sell the full 30 million; they say they have already raised enough to build their platform and integrate it with GTCoin. The unsold coins will be left in a reserve account, released only to testing users of the platform as rewards.
Users rewarded with GTCoin will be able to use the currency to purchase gaming hardware and video games through the platform, with Dobson saying unlike other rewards-based gaming programs, they are focused on rewarding users with products that will be relevant to their interests.
With the value of cryptocurrencies skyrocketing in recent months, Dobson acknowledges the potential unwillingness of investors to part with their hard-bought Ethereum or Bitcoin. But he believes investments in attractive ICOs will still be commonplace thanks to crypto investors looking for diverse portfolios and stronger gains.
“Something starting off a low base can triple in value easily, but if something like Bitcoin tripled in value in the next 12 months I’d be bloody impressed. If people are getting into crypto to make big money, ICOs are a good start,” he says.
With their team not yet having much experience building blockchain techn, Dobson said the founders focused on hiring the smartest people they could, instead of looking for crypto specialists, which can be few and far between. Doing so resulted in three PhD-backed employees, who Dobson says taught themselves the relevant coding in “practically one night”.
Dobson is excited for the future of ICOs and blockchain technology in Australia, saying even though Power Ledger and its $34 million ICO “set the bar high”, he’s meeting more and more people with experience and interest in the space.
“I’m confident in Australia doing well in this space, and the government is responding pretty well. The Australian Stock Exchange launching their CHESS replacement on the blockchain also signals positive things for blockchain tech,” he says.