Why blockchain startup Coze turned down $5 million in funding ahead of its ICO
Blockchain hotel booking app Coze’s co-founders say their community aspirations stopped them rushing into their ICO, and saw them turn down $5 million in funding.
With its own cryptocurrency and decentralised setup, blockchain hotel booking app Coze is out to disrupt. But co-founders Jay Jenkins and Michael Cole say their community aspirations stopped them rushing into their initial coin offering, and saw them turn down $5 million in funding.
Speaking to StartupSmart, Jenkins and Cole say the Coze app is intended to put power back into the hands of hotel owners, using blockchain technology to connect them directly with their customers, while also allowing them to set their own prices, and charging nothing in commissions.
The co-founders, who are Brisbane-based, founded the platform in May 2016, and now have 16 staff, mostly based in Hong Kong. However, they are planning to grow, and are now hiring in Australia, ahead of their ICO, planned for the third quarter of 2018.
While Bitcoin has been around for some time, Cole says the introduction of the Ethereum blockchain platform was “really the game changer,” allowing new, decentralised apps to be built using the technology.
Cole explains there is no middle man under Coze’s blockchain-based model, which means customers can pay up to 20% less for accommodation, without the hotels losing out.
But Jenkins notes that, for Coze users, there is “no actual knowledge of blockchain required” for either party.
“They would just list as usual on the platform,” he says.
“The main difference is that we have a smart contact on the app that transfers fiat payment … quickly and securely.”
This means customers can pay in whatever currency they like, which will be converted to Coze’s cryptocurrency, the Coze Coin, and used to secure the room with the hotel.
Jenkins accepts that the blockchain community is still a small one. “We definitely want to address that, and make [Coze] as user-friendly as possible,” he says.
However, for those who do have knowledge of blockchain and cryptocurrency,“you can take advantage of the coins”, and receive additional benefits.
Hotels will have the option to set up or participate in a rewards system, offering cashback in Coze Coins, which can then be spent on more hotel bookings or in the rewards store, or traded on the open market.
Through the Coze Coin ICO, Jenkins and Cole are hoping to raise a total of $15 million, with $1 million already pledged by early investors. Another $3 million worth of tokens will be available will be available in the pre-sale in the third quarter of this year, and $11 million available via the public ICO in the fourth quarter.
Coze is offering up half of its 250 million coins, which Cole says will have “real utility value”.
“It’s not just speculative value. [Buyers] will be able to use those tokens in the future to be able to book hotels,” says Cole.
According to the founders, they’re taking their time over the ICO, allowing them more space to work on the front end of the application, and to build up their community user-base.
Jenkins says they turned down $5 million from private investors in Hong Kong, after deciding that wasn’t the direction they wanted to go in. The app is built around community participation, he says, and having one investor hold a significant amount of coins doesn’t quite fit this ethos.
“If you’ve got a project and you accept a large sum for a lot of coins, then you have one institution controlling a lot,” Jenkins says.
“We wanted a community.”
Because of this, they have also imposed a limit on the amount that can be invested in Coze’s ICO.
Registrant numbers are limited to 5000, and each registrant will be able to invest a maximum of 50 ETH each, or the equivalent of about $35,000.
This should encourage more people to get involved, says Jenkins, who adds that users don’t have to be savvy with cryptocurrency to use the app as the technology allows for payment in fiat currencies too.
