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Weathering the crypto winter: Liven raises $14 million and opens sale to the public (but don’t call it an ICO)

Stephanie Palmer-Derrien /

Liven

Liven co-founders William Wong and Grace Wong. Source: Supplied.

Cryptocurrency loyalty startup Liven has raised $US10 million ($14.2 million) in a private token sale, and has now opened the sale to the public as well — but co-founder William Wong has stressed this is not an ICO.

Founded in 2014, Liven is a rewards-based platform giving users digital cashback on purchases at participating cafes and restaurants, that can be used towards future purchases.

The startup received $10 million in VC funding in 2017. In March last year, the startup announced plans to raise $74 million through an ICO, however, the sale has been delayed until now.

The startup may be selling coins for the first time, but this time it’s consciously not calling the sale an initial coin offering. At the crux of this decision is the word ‘initial’, Wong tells StartupSmart.

“Essentially an ICO is the same thing as a token sale,” he says.

“The perception is that an ICO is mostly for companies that are new … with a business plan, asking people to trust their vision in a white paper.”

This has means when Liven has spoken to investors, they have tended to assume the business has been up and running for mere months.

Actually, “we have been operating on this model for years”, Wong says.

The startup has some 400,000 customers on the platform, and has seen 700% revenue growth year-on-year.

“What we are is a true battle-tested startup, a revenue-generating and VC-backed startup, and totally not what they think we are.”

This is why Liven “stopped associating” with the term ‘ICO’, Wong explains.

“There are so many new projects with no business credentials or personal credentials, starting up a business and selling these tokens, and 99% of them fail,” he says.

“We don’t want to be seen in the same light as those other scammers, when we are one of the most successful startups in Australia.”

The token sale is likely to be open until late April, depending on demand, Wong says.

This is all part of Liven’s expansion strategy, he adds. Having more coins in the market increases awareness and builds on the ecosystem.

The funds raised will also be focused on expanding the business.

“We’re at a scale-up stage right now,” Wong says.

“We’ve already proven product-market fit, we see the opp of doubling down on the hospitality sector.”

Liven has traditionally focused on the lunch and dinner trade, but is now looking at broadening its offering to include morning coffee and bars and nightclubs.

The team is also looking into implementing technologies such as machine learning and AI to improve user experience, as well as continuing to work on expanding to the UK and New Zealand.

Crypto controversy

Liven has also brought several new faces onto its board of advisors, including controversial so-called ‘Bitcoin Jesus’ Roger Ver.

An early proponent of Bitcoin and avid investor in cryptocurrency startups, Ver was sued last year over an alleged plot to control the Bitcoin Cash network.

When it comes to Ver, “people need to realise there are always two sides to a story”, Wong says.

“What you read in the media is not exactly a source of truth,” he adds.

Wong suggests there are “fanatics” in the cryptocurrency world that believe no currency but Bitcoin should exist, and “that anyone who dares to challenge the top coin is a scammer”.

Liven, however, is coin-agnostic, he says, and strives to drive mass adoption of cryptocurrency as a whole.

“Roger is quite vocal about cryptocurrency having a pivotal role in mass adoption and he’s pushing for that,” Wong says.

“We appreciate his passion and his alignments,” he adds.

“He’s had undeniable success across the blockchain ecosystem, and has been an early backer of the industry.”

Weathering the crypto winter

Although this time last year, investment in cryptocurrency startups were reaching fever pitch, more recently they’ve seen a significant drop.

However, Wong says this has “zero influence” on Liven’s business.

“We would be concerned if our business was dependent on cryptocurrency markets,” he says.

Liven is based on retail, clients, customers and cash, he adds. Companies that are vulnerable are those that have raised all of their funding via ICOs, and base their businesses entirely on the value of cryptocurrency.

“They used to have $100 million in crypto. Now it’s worth $1 million, so they’re completely screwed,” Wong says.

Cryptocurrency is just a small part of Liven’s business, he says. Until now, the startup has been using Liven Cash, a centralised ledger of digital points. Now, all it’s doing is “tokenising” those points into cryptographic tokens.

“There are a lot of benefits of blockchain and the decentralised currency that we can take advantage of,” Wong says.

“That doesn’t change the business itself.”

According to Wong, there have also been investors burnt by the cryptocurrency crash.

“A lot of people were drunk and bought into the hype last year,” he says.

“When all these shakey businesses based on whitepapers fail, in the ashes of that, the ones that are left standing are the ones who actually have the fundamentals,” he adds.

“We’re beginning to see that we’re getting noticed.”

In this way “the crypto winter has actually worked in our favour”, Wong says.

Get the fundamentals right

Wong’s main piece of advice for other startups is “don’t get drunk on the crypto fad”.

Founders should focus on what the business itself is all about, rather than just jumping on a bandwagon.

“If the business fundamentals aren’t sound, no matter what you do, it’s not going to work out,” Wong warns.

“This is especially true for the businesses that are starting out in the cryptocurrency space.”

He stresses that cryptocurrency isn’t a way to get rich quick. You still have to build a business, understand your customers, network, make deals, fine-tune your product and finance the business properly.

“These are the things that the young entrepreneurs typically entering these crypto startups don’t realise,” Wong says.

“It’s great that you’re entering into this amazing work of blockchain, but don’t forget that at the end of the day, it’s a business, and for the business to make money, there has got to be value.”

NOW READ: “May you power the world”: Aussie blockchain startup Power Ledger wins Richard Branson’s Extreme Tech Challenge 2018

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Stephanie Palmer-Derrien

Stephanie Palmer-Derrien is the editor at StartupSmart. You can contact her at [email protected].

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