Selling a cryptographic token to raise money for a company is nothing new, but using crypto tokens to buy an equity stake in a company is another twist. Now leading virtual reality (VR) world builder and marketplace Voxelus, co-founded by serial entrepreneur Halsey Minor behind CNET and Salesforce.com, is to allow use of their in-game crypto token, Voxels (VOX), to buy equity in privately held Voxelus Inc.
Voxelus, which was founded in 2015 and whose platform enables users to create VR games, experiences and virtual spaces without writing a line of code, announced this December that they will offer up to a 33.3% equity stake in Delaware-registered corporation Voxelus Inc., in exchange for the 15% of the Voxel crypto currency (Ticker: VOX) that is currently issued and outstanding on the market.
The move represents the first ever time that equity is being exchanged for a company's currency, namely Voxels.
As an in-game cryptocurrency, Voxels power all sales and e-commerce on the company’s site is described as a “revolutionary new blockchain product”. It combines the same ‘proof of work’ security behind bitcoin with a unique checkpoint server that prevents possible attacks on the network.
Should all the actively traded tokens convert, then token holders participating in the exchange conversion would own a third stake in the company, which is scheduled to occur in the first quarter of 2017. The exchange will be a one-time offering for Voxels holders.
Most VR companies with the kind of entrepreneurial pedigree behind Voxelus are unavailable to everyday investors as they are tightly controlled by venture capitalists, with valuations as high as $300 million (m) or more.
While virtual reality is still viewed as a niche technology in many Western countries, VR is flourishing in China as a form of mainstream entertainment. Hundreds of VR arcades, kiosks, cafes, and 'experience rooms' are springing up in cities across the country, and offer a VR experience for about the price of a movie ticket. Analysts expect the virtual reality industry in China to boom to US$8.5 billion by 2020.
The Voxels cryptocurrency, which began trading on March 31 2016, currently trades on a number of exchanges for alternative cryptocurrency - Bittrex, Poloniex and ShapeShift - and has a total market capitalization of around $342,068 as of today - equivalent to 440 bitcoin (BTC). This compares with a market cap of a just over $2.6m earlier this year in mid-July. Today $1 buys around 92 Voxels (VOX).
The Voxelus platform consists of Voxelus Creator, a 3D design app for PC and Mac; Voxelus Viewer, which works on desktop PCs, Oculus Rift, and Samsung VR devices; and, the Voxelus Marketplace, which allows creators to sell and user to buy VR content and games for the Voxelus ecosystem, using the Voxel in-game crypto currency.
With more than 100,000 sign-ups to date, it was started by entrepreneur Halsey Minor, who founded of CNET and was co-founder of Google Voice, Salesforce.com, GrandCentral (now Google Voice), OpenDNS, Uphold and Rhapsody, and a team of Buenos Aires developers led by Argentinean software industry veteran Martin Repetto, CEO and co-founder.
Repetto previously created the popular Massively Multiplayer Online Game (MMOG), Atmosphir, a video game creation tool that ended up as a runner up on the TechCruch 50 back in 2008. MMOG is capable of supporting large numbers of players, typically from hundreds to thousands, simultaneously in the same world over an internet connection.
Prior to Voxelus, Repetto was CEO of Minor Studios managing a team of twenty developers in the creation of Atmosphir. As co-founders, Repetto and Minor are joined by Maximo Radice, who has worked in the software industry for 14 years and mostly focussed on the development of video games.
The 33.3% equity stake, which equates to 31.5 million VOX, will be taken once the exchange process is completed in Q1 next year. And, since one needs to buy Voxels on an exchange, they would be definition have to come from the crypto audience.
As to why the company decided choosing on this crypto-to-equity conversion route, Repetto, CEO of Voxelus based in Buenos Aires, explained: “We firmly believe in the future of our VR token, the Voxel, but wanted to give those who share our vision another way to participate in the success of the company.”
Given that the company also owns a significant amount of Voxels, which uses a blockchain to keep track of ownership, any rise in its price resulting from increased scarcity as demand in the marketplace rises should increase the value of the company. Add to that the company’s ability to sell Voxels to buy content would also help increase its value. Use of the blockchain also makes accepting and sending value easy.
As a company Voxelus has business development and marketing in the US in Los Angeles, while development and technical operations work is located in the city of Rosario some 300 km (186 miles) northwest of Buenos Aires. A total staff of ten are currently working on the project.
Repetto added: “We have decided to provide this one-time option for Voxels holders to convert their coins into equity in the company”.
The corporate event that provide this one-time option for Voxels holders to convert their coins into equity in the company, also allows anyone to take advantage of the opportunity to own equity in what is touted as a “promising VR platform at an attractive valuation.”
The company will specify a minimum investment in early 2017 when they unveil further details, but whatever it turns out to be it could offer an opportunity and a glance at the future in the virtual reality and games space.
Specifically, Voxelus will provide an online form and wallet address to the exchanged of Voxels for equity on a basis of 33.33% of the company for the outstanding 31.5m Voxels or any fraction thereof. Additional information for those investors wishing to participate in the exchange will be made available at the time of the offer.
There is no obligation for holders to trade in their Voxels, as they will continue to trade on Bittrex, Poloniex and ShapeShift - as well as other two smaller exchanges. These exchanges will still remain the only method of purchasing VR assets, games and worlds on the Voxelus marketplace.
ShapeShift was an early investor in Voxels and facilitated its $500,000 crowdsale that ended in December 2015. The amount received plus and additional c.$500,000 has been deployed in building the multi-platform VR world builder. (Note: It was Erik Voorhees, ShapeShift’s CEO and an American/Panamanian start-up founder, who was responsible for naming the in-game cryptocurrency token the Voxel).
In terms of content VR assets could be anything from a comic book world to a sponsored branded auto race track.
“We have the basic physics around which many VR worlds can be built,” says Repetto. “Already we have many different kinds of content packs with different kinds of worlds." Some of these can be seen via their site under ‘marketplace’.
The cypto-to-equity exchange program will run for a month and be at a fixed rate of 1.058% of the company for every 1,000,000 Voxels - regardless of the price of crypto currency on the day.
Those Voxels re-acquired by Voxelus will be used for its next round of funding at the rate of no more than 1,000,000 Voxels per month, which represents less than one-half of 1% of all outstanding voxels (6% per year).
In relation to the next round of funding, the company will be able to “sell a limited number of Voxels” according to Repetto, which will he added will be used for operations and “to buy branded content just as legos does with branded lego packs”.
The equity stake in Voxelus will be in common stock in Voxelus Inc. Since there is no preferred stock issued, all persons participating “will be on an even playing field with the founders, early investors and employees”, the company indicated.
“We will use these funds to build upon our early leadership in the VR content sector,” explained Repetto. He added: “We have a number of new technical initiatives that will further enhance our user interface, as well as branded content deals, teed up to be announced in the coming weeks and months.”
Speaking from Argentina he revealed that they will shortly reveal “exciting new functionality" to the Voxelus software platform. On forthcoming announcements related to the company’s technology plan in the near future, Repetto said: “We expect many releases from the company between now and the conversion”. That said, he declined to mention exact specifics when canvassed.
As to the use of cryptocurrency and its adoption when it comes to the VR space, products and in-game cryptocurrency tokens - be it Voxelus or others - the Argentinian ventured: “Our belief is that 2017 is going to mark the beginning of the VR market. Most games have in game currency. Only the Voxel can be taken out of the game and still have value. This we expect to be widely copied over time.”