Numerai Token Sale Raises $11 Million USD During Funding Round
It is hard to get investment today. Not that it was ever very easy, but it was easier to sell any “utility” tokens back in 2017 when Initial Coin Offerings (ICOs) were young and bright. Everybody was hyped and it looked like profit was just around the corner.
Now, however, only a few companies are able to get investment without making special partnerships or selling equity. Numerai, a hedge fund, and predictions market company, however, was able to beat the odds and do it.
The company was recently able to attract venture capital firms and to raise $11 million USD. The round was led by Placeholder and Paradigm and it only sold NMR tokens, not equities. These tokens were originally launched in 2017 via an airdrop.
According to the founder of the company, Richard Craib, the funds will be used mainly to hire more engineers for the company in order to launch their next project, Erasure. This will be a more decentralized version of the current marketplace that the company has. At the moment, the company’s platform has 44,000 registered users, but the goal is to improve on this number in 2019.
Why Tokens And Not Equity?
Joel Monegro, from Placeholder, talked to the crypto media after the round and explained why he wanted to invest in tokens instead of equity. According to the investor, the best way to use decentralized crypto networks is by capitalizing on them.
They believe that, as more people enter the marketplace, they will be able to diminish their role and exit their position as the network becomes self-sustainable.
According to the investor, the new Erasure platform will take what Numerai has already created so far with its own fund and will crowdsource insights incentivized by token rewards in order to allow people to buy and sell their predictions on a public blockchain.
The difference in buying tokens instead of buying equity is that the company has directly invested in the protocol, not on its parent company. It may not seem like much at first, but it is a very different approach.
Paradigm’s co-founder Fred Ehrsam has affirmed that what has drawn the company to this opportunity was the fact that the company had an excellent track record and that people were monetizing their own data directly using the company.
The company’s main interest in Erasure is because it is a concrete platform that has a real use case and it is very simple to use it.
The Erasure Platform
As soon as the company finally launches its new platform, the users will be able to connect their wallets to it and start trading. This way, any person can also create a track record that will show to potential buyers how good their predictions are. If you are good in making predictions, this will be proven as the blockchain technology will be used to store the data.
There is a reward system was created in order to discourage people from making wrong predictions, as their tokens are burned in case they are wrong. This way, if the models are correct, the prediction makers gain money, but they lose it if it is not. This is not a system that you can simply try until you are right because you will be losing your money by doing so.