June 13, 2017
Alex Wilhelm is the Editor in Chief of Crunchbase News, covering the intersection of startups and money.
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Morning Report: If you feel left out of the bitcoin boom, and have at least one friend who loves to tell you how early they bought in, prepare to feel even worse.

No matter how odd it may seem that a drone-racing startup just raised a $20 million Series B, what is going on in the crypto world is odder.

News broke yesterday that Bancor, an Initial Coin Offering (ICO) raised around $150 million in a single go. Some of that money came from more traditional capital pools, but it seems that most of it came through avenues normal to an ICO.

(If you need a primer on ICOs, or how they became so shockingly big seemingly overnight, follow the links).

Bancor, the second-largest ICO in history, comes as the two most popular cryptocurrencies – Bitcoin and Ethereum – continue to skyrocket in value. The two form something of a duopoly in crytpo – the most respectable players in a market segment that’s still rough around the edges. And there are a lot of edges.

As Crunchbase News recently reported, Ethereum has become a critical player in the ICO market. Put more simply, if Bitcoin pushed cryptocurrencies into the mind, Ethereum seems determined to carry the crypto baton next.

But how did Bancor manage such a staggering raise? Let’s briefly explore.

Bancor

If you have the time, the Bancor whitepaper is mostly readable in its raw form. And, to stay close to the metal here, we’ll quote from its directly.

First, the group deserves some points for bringing up Keynes in a field that I presume is full of folks who are not precisely his intellectual children. Regardless, there we begin:

The Bancor protocol is named in honor of the Keynesian proposal to introduce a supranational reserve currency called Bancor to systematize international currency conversion after WWII.

Admit it, you didn’t see that coming. That sentence alone was enough to hook me into the paper, the abstract of which argues that Bancor will “[enable] built-in price discovery and a liquidity mechanism for tokens on smart contract blockchains.”

No, you aren’t uncommonly dense. That’s just hard to parse. Let’s keep going with the following section which describes both the vision and proposed market-space for Bancor:

In the age of smart contract blockchains, tokens can be automatically managed by immutable code which controls their issuance and behavior. We realized this could mean allowing tokens to hold balances of other tokens (i.e. “reserves”), directly through their smart contracts, that could be designed by their creators and managed programmatically. These new technological capabilities warrant rethinking of the possible solutions for converting one currency to another and determining market prices.

Now we are making progress. You can see, from that, why Techmeme would translate CoinDesk’s headline on the matter — “$150 Million: Tim Draper-Backed Bancor Completes Largest-Ever ICO” – to “Bancor, a platform for launching blockchain tokens, raises ~$150M in largest-ever ICO.”

You can think of Bancor as an ICO for ICOs in that its token could bolster liquidity intra-cryptos, helping smaller tokens stand up in the market on their own. That hypothesis was enough to generate a staggering raise.

Here’s a question, however, for you. The crypto boom, and the current ICO spike feel slightly like the broadband buildout in the Nineties. Demand failed to materialize as expected, at least in the timeframe forecasted. The results were as you would expect. Forming the analogy, is the crypto world building ghost cities, or is there enough savvy players to fill all these new pipes?

From the Crunchbase Daily:

Clutter raises $64M to store stuff

  • Clutter, a startup that helps customers store their stuff, has closed a $64 million Series C round led by UK-based Atomico with participation from Sequoia Capital, Google’s GV and Fifth Wall. Los Angeles-based Clutter is one of at least a half-dozen companies focused on storing physical goods that have raised venture financing since last year.

Uber exec Michael steps down

  • Emil Michael, Uber’s SVP of Business and the company’s second-in-command, is stepping down in the wake of an investigation into the ride-hailing giant’s culture and business practices. David Richter, the vice president of strategic initiatives, will take his place.

Electric bus maker Proterra secures $55M

  • Proterra, a maker of zero-emission electric buses, has raised $55 million in fresh funding as it reportedly prepares for a possible IPO later this year. Generation Investment Management, the sustainability investment firm founded by Al Gore, led the round, which was joined by BMW i Ventures.

Startups, backers worry about tech stock slump

  • Tech stocks opened up today, but they’ve seen share prices fall in recent trading sessions. That raises worries in startup-land, Crunchbase News reports. Investors have been relying on the strong public market to bolster and defend private valuations, fatten wallets for acquisitions, and stick a book in the IPO window so that a startup or two can slip through.