San Francisco Based Blockchain Startup Dispatch Labs On A Verge Of Shutdown
Even though the crypto bear market seems long gone for most investors, people who were building businesses around this space during that time are still facing the repercussions now. Dispatch Labs is one such company whose operational capital is running on fumes.
According to their CEO, Matt McGraw, they are running on “Life support.” Notably, Dispatch was the first blockchain protocol to leverage on-chain smart contracts to manage distributed storage of application data off-chain.
It enables business applications to migrate to blockchain securely and without losing functionality or increasing costs. By moving to the distributed architecture of blockchain, these business applications become much less susceptible to hacking or security breaches and cheaper to deploy and manage.
They were not always low on cash. Back in the first half of 2018, Dispatch Labs raised over $13 million in funds from their executive team and other investors like China’s capital firm Fenbushi Capital.
The problem with the raised capital was that the value in Bitcoins kept dropping. Lack of the availability of over the counter services to liquidate assets made them lose even more cash as the markets kept plunging.
This consequently led to Dispatch Labs being able to utilize only $6.5 million of the initially raised $13 million. However, McGraw notified that the company has adequate working capital to work till the last day of the year, particularly given that the market is probably starting to recover. Although they are looking to raise an additional $600,000 to finalize their product and launch it.
McGraw still is not sure that the company will survive. He regrets not raising more money when he had the chance. Now, raising money for a product like Dispatch Labs has become harder due to competition in the market.