Lykke equity is for sale on their exchange in the form of LKK tokens. The current token price values the company at ~$64m USD. I’ve played with their app a bit and it’s nice but this valuation seems much too high given the small amount of traction they’ve achieved thus far.
I work for Lykke (https://www.lykke.com) on the „communication-front“ but usually with focus on the Crypto/Blockchain-space (Bitcointalk etc.). That’s why I missed this thread and forum - but it seems to be a great place for Lykke!
The question of the valuation is often controversial. And it’s like a funny paradox that while people (most of them) really like the App, it also seems to be a reason to underestimate the project as a whole and what it already is and even more important: What Lykke will be about - it’s future potential, while „future“ will realize pretty soon. With other words: Lykke is already bigger and has more achieved than it might seem out of public perspective on first sight. And what’s most likely even harder, even for me personally: to understand what it will make possible, how easily it can grow and combine a lot of supposedly different spaces.
The reason why I’ve made the choice to invest in Lykke (I found it as an Investor) some months ago is: The combination of easy-to-use and high security. The App may be a reason to reduce the project and to focus on „what’s not possible until now“ but it also shows their abilities to build something that will have impact without much doubt (and it won’t be only about the App in future) especially because Lykke doesn’t only target on the Crypto-space. It won’t be only a Cryptocurrency-exchange without connection to the established system. Lykke is like an open door into all different spaces, from Crypto to Forex and it will be possible to buy and sell and trade all kinds of assets and financial instruments one can think of.
And in comparison to other blockchain-projects, I’ve never seen a project with such a high frequency of news, updates and releases. Very soon btw: Margin trading (https://www.youtube.com/watch?v=DUwhxfc3fi0). And as an Investor in the blockchain-space, because that’s still my focus and priority, I always search for projects I recognize that the fundamentals are ahead of what I call „psychological market“, because that are the pearls that are not already recognized as those. A majority usually focuses on marketing-hypes and follows others on the markets into projects that are most likely without any chance.
Regarding traction, because that’s an important question of course: Once Lykke will be licensed also in the USA and accessible over the browser plus some other things that will come, it’s predictable that the project will get high attention and be seen and understand as what it really is. And whenever Lykke will list the shares of a promising startup or a Cryptocurrency with already big community, it will benefit from their marketing. That effect will be even bigger once it’s more about forex-trading and so on.
To make a long story short: I believe, Lykke will turn out as a loaded catapult.
An overview in quotes and links:
Richard Olsen of OANDA fame on his new startup Lykke LeapRate Interview
OANDA’s Richard Olsen Launches Lykke Wallet for iOS Devices
Swiss Startup Lykke Seeks To Disrupt The Retail Trading Market With Blockchain Tech
MR. IVLIEV, LYKKE: “THOSE WHO WANT TO WIN SHOULD BE GRABBING THE OPPORTUNITIES BLOCKCHAIN OFFERS”
„Not many startups boast as their founder an entrepreneur whose previous company is a multi-million dollar success. And not many startups have as their stated mission changing the way all financial instruments are traded while reforming the global banking system.“
„Olsen founded Lykke in Zurich and received initial seed funding in 2015. In May 2016, Lykke closed a second seed round where the new shareholders included angel investors Marco Brockhaus and Carlo Koelzer, founding partner of 360T’s Group Executive Board and member of Deutsche Börse Group Management Committee.“
Bitcoin Legend Nick Szabo Joins Lykke Advisory Board
Lykke cofounder Sergey Ivliev is Named Best Risk Manager in Russia and CIS
Lykke at IATA World Financial Symposium
Lykke Exchange is now Licensed to Provide Financial Services in Asian and African Countries
Lykke has hired Demetrios Zamboglou and opened an office in London.
Lykke Joins the Hyperledger Project
Richard Olsen is the Forex Person of the Year 2016
WISeKey and Lykke to Integrate Cybersecurity into Blockchain Applications
ChronoBank Partners with Lykke
Lykke does have a BHA (Big Hairy Audacious) mission!
I have to admit: I had to google that (BHA) first!
But yes, it’s true! And what is most challenging for me personally is to find a way to explain Lykke without writing a book - plus: It’s also not easy (also for me) to keep track with all what happens and to understand it. The project is different to most of all projects I know in the blockchain-space - much more professional and also faster. A lot of what will come is not visible yet and only those who do deeper research about it are able to imagine the future. But it’s a safe bet that Lykke will surprise and impress and best is: It will become pretty much self-explaining over time, like a puzzle that becomes a picture.
What differentiates Lykke from any other crypto exchange?
I would point on 4 major aspects:
- Semi-decentralized and on the blockchain - higher security plus direct ownership
- Not only Cryptocurrencies, but potentially every asset one can think of (represented as colored coins)
- More than an exchange
- Useful for potentially everybody, everywhere and easy to use
If you think about all the hacked and corrupted exchanges, from MtGox over smaller exchanges like Mintpal to Bitfinex last summer (there were much more over the years) one major problem is: Customers don’t really own what they have stored on such exchanges - all assets are stored centralized. And that’s a very high risk. The main-advantage of a centralized exchange is especially speed while a totally decentralized exchange would be comparatively slow (dependent on the blockchain - Bitcoin is highly secure but slow when it’s about confirmations). Lykke aims to combine the best of both, since the matching-engine is central, to make everything possible what’s possible on professional exchanges and with high-speed(!), plus direct ownership over the blockchain.
The colored coin protocol makes it possible to represent potentially every kind of value one can think of as colored coin. That can be Currencies (from Forex to Crypto) but also company-shares (a company can also use Lykke to issue shares and to do a crowdfunding for example) or even cars or whatever.
„Suppose there is a car rental company. The company can release one colored coin to represent each car, and then configure the car to turn on only if it receives a message signed with the private key that currently owns the colored coin. It can then release a smartphone app that anyone can use to broadcast a message signed with their private key, and put up the colored coins on a trading platform. Anyone will be able to then purchase a colored coin, use the car for whatever period of time using the smartphone app as a “car key”, and sell the coin again at their leisure.“
The Lykke-platform can grow into multiple spaces besides being an exchange - payment system for example or prediction market, and it will be possible to connect with a lot of other blockchain-innovations to utilize what they offer (smart contracts for example), and also the established financial system and not only banks - like a door between „both worlds“.
No matter if somebody is a forex-trading-millionair in Manhatten or a guy in Nigeria without access to a bank-account, Lykke can be potentially useful for everybody wherever somebody lives or in which circumstances and what somebody needs. That’s the reason to start on mobile btw., to give everybody with a smartphone easy access.
And when I’ve found Lykke there was especially one aspect I haven’t seen this way in Crypto yet: They are very focused on building user-friendly software. I believe that a main-aspect for anyone and always is to „feel safe“. Or: to not feel uncertain. And the combination of easy to use, that something works intuitive and fluent, plus high security - that is what makes Lykke already unique and highly attractive. I personally don’t even like it to use Smartphone Apps - but it makes visible in which direction they go - and how.
A good explanation about 1 (but also „connecting to other systems“) is also this: https://lykke.com/city/blog/2016-09-30/lykke_integrates_ethereum
@dailyfintechrocks watch the recording from last night’s Lykke event.
I asked the question of valuation in the end (for you). Enjoy.
Thank you Efi, I will check that out!
@tempus I’m reading that Lykke just issued 50,000,000 new coins??? There are only 30,000,000 coins on the market.
They are now fundraising. The Lykke Coins are Altcoins (smaller parts of a bitcoin which has (which has 100,000,000 satoshis and therefore, could be divided in that many pieces). Read more in this post, hopefully the ICO altcoins will make more sense.
Those Coins are not new issued (total number of shares won’t change). The company sells LKK-1-year-forwards at 20% discount in a crowdfunding. It’s like buying contracts at a cheaper price that entitle to shares in 1 year. But, important is: Those shares already exist.
Here is a link with screenshots to a newsletter, sent out by Richard Olsen today:
It gives additional informations. But if you or anybody else should have further questions, feel free to ask. The current offering is a little bit different and more complex than it’s usual - at least for the Crypto-Space and many are scratching their heads like “what is this???” But it’s really interesting and in my opinion a good opportunity especially for those who with longterm-strategy and who would like to get Lykke-shares cheaper as the market-price.
The volume of the original video was a little bit low. An edited version with fixed audio is online now:
Does anyone know about what time in the video the question of valuation comes up?
1:19 roughly (really towards th end).
@tempus Now you confused me with this statement (right when I thought I understood the kind of financial structure).
I thought of this issuance of shares, as an offer to buy Lykke shares at a 20% discount which compensates investors with the one year lockup (or one cn think of this as a vesting period).
You say now, these are not new shares? Are they shares that the founders are offering?
The shares are offered out of the company-treasury. Since their ICO and market-launch on the platform (Sept-Oct 2016), the total number is: 1,285,690,000 LKK = 12,856,900 company shares (100 LKK = 1 share). That number doesn’t and won’t change.
To explain it all a little bit more:
There are basically 3 choices if somebody wants to invest in Lykke to become a shareholder:
1) Independently of the current crowdfunding, everybody who wants to invest in Lykke can buy LKK on the market - using the Trading/Wallet-App.
2) The current offer about 1-year-LKK-forwards are in fact contracts with basically two scenarios:
a) „Lockup-Scenario“: An Investor can buy the „1yLKK-token“ and pull the 365-day-trigger to „activate“ the contract right after the crowdfunding has ended. 365 days later the 1YLKK will be swapped 1:1 to LKK. Advantage: The price is with 0.04 CHF below the current market price.
b) „Trading-Scenario“: An Investor also has the choice to pull the 365-day trigger whenever he wants (for example 2 months after end of crowdfunding) or even not at all - not to activate the 365-day-sequence but to trade the 1YLKK-token as a contract on the exchange (for example: as a collateral for margin based trading LKK-token which will be possible soon).
If we think about the people who buy the 1yLKK-tokens it’s likely that many of them will push the 365-trigger right away. But there also will be trading and it will be interesting to see how the price will develop in relation to LKK (that are on the free market right now). Over time more and more people will push the trigger and the prices will most likely tend to become equal the more time goes by and the more 1yLKK will be exchanged into LKK after the 365-day-period. And that will happen out of the companies holdings and without issuing new LKK. The number of existing shares won’t change because of that but of course: There will be more LKK available on the market - but not at once, more slightly increasing once more and more 1yLKK become “real LKK”.
Lykke had held 10% of shares in its Treasury for liquidity purposes, right?
The rest were held by the founders, the angel investors and the Oct. ICO was 2+% of shares. This Feb ICO once filled, will bring the ICO amount to roughly 5% of the total. Correct?
@Efi: Yes, that should be basically correct. I just believe the company has a little bit more. In the info-broschure of September is said that the company is in possession of 14.65% of it’s own shares. So it should be about 12% now. And yes, the majority is held by the founders.
If this crowdfunding would sell out about 50 million Lykke Coins = 500k shares would begin to reach the market after 1 year - together with the 300k of the ICO in 2016 that would be about 6.2%.
But your number (5%) is more likely since I personally don’t believe that it will sell out. Could be wrong of course, but usually crowdfundings are announced some time before with more marketing and run a longer time. This one is more a little bit like a test, also to see if there is demand for such a financial instrument and how the reactions are etc.
Thanks for asking about valuation @Efi! Very good to see that discussed. It’s difficult for me to buy in without seeing any traction from them. They’re talking about how the industry will see tremendous growth, and they’re right, but I don’t see anything to indicate that they will capture a piece of it. That’s not to say that they won’t, but so far I don’t have any reason to believe that they will. They have a long and quickly growing list of competitors doing the same thing they are.
@dailyfintechrocks who do you view as competitors of Lykke?
Besides their partway-decentralization, I don’t see how they’re different from any of the countless crypto exchanges currently in existence. The big difference is their very small list of supported coins, very small volume, very little traction, and lack of a web or desktop interface. There are now fully decentralized exchanges online such as bitsquare.io and many more in the works.
None of that would be a problem if the valuation weren’t so high.