Sometimes one just has to call it quits: despite still being solvent, the Cofound team have decided to voluntarily wind the business down and make good its token holders:
"The purpose of Cofound.it was to build a platform and protocol to enable an alternative VC ecosystem; to continue with this purpose for a market that does not exist is not responsible.
From the beginning Cofound.it was created to set better crowdfunding practices, we did so at the beginning and are hopefully doing so at the end.".
Cofound made the headlines in less suspicious times when in June 2017 it raised what back then classified as the largest public presale ever, closing $15M (57k ETH) and subsequently cancelling the public ICO for its "decentralized startup incubator". Oh, how different the times were!
Barely 12 months later and it's game over. With still $14M in net assets though (pretty close to what they raised, good treasury management!), they clearly didn't run out of cash, perhaps only of steam. According to the CEO, the market they aimed to address completely dried up over this time period, with public ICOs (not so unexpectedly
) disappearing under mounting global regulatory pressure. After a failed attempt to pivot, it was time to draw a line. The tone of his farewell letter feels genuinely bittersweet, grateful but filled with disappointment about an industry that has gone through an over-hype cycle:
"The state of technology today does not match the hopes raised by thousands of ICO projects. The blockchain space has been full of over-promises, and it’s largely the community that has had to take the blows so far."
Now someone (a guy by the name of Ervin Ursic, whose previous business was acquired with a portion of token supply) has taken over
the management of the business with the aim of winding it down swiftly.
The most interesting bit about all this is that CFI token holders are effectively getting a shareholder-like treatment despite technically not deserving one by the law (tokens != legal rights over assets): for all the talk about projects trading at market caps lower than their treasury balances, Cofound's plan is to return their net assets to token holders after liquidation. Which is pretty honorable overall and a sign that the team behind it is acting professionally and in good faith. Whether a similar outcome could have been achieved via decentralized governance by the token holders remains to be seen
Another rather surreal aspect about this wind down is that there are suspicions
of insider trading, clearly not something a 2 year old start-up would normally have to worry about, highlighting one of the many dichotomies of this industry and adding that extra dose of drama.
For now we'll file this one under the 'unwinding ICOs'
folder alongside Digipulse detokenization that we covered
in #61, but buckle up as similar stories emerge over the next 6-12 months. And some won't look nearly as pretty as this one.(h/t Beltran for flagging this to us).