If you’re a blockchain-based tech startup and you plan on having an initial coin offering, you have some competition.
Blockchain-related projects have raised more than $1.6 billion in ICOs to date, and most of it — about $1.4 billion worth — was raised in 2017, according to CoinDesk.
As arguments mount for an ICO bubble, tech firms planning initial coin offerings are partnering with celebrities to help them stand out and get media attention.
Paragon is a blockchain for the marijuana industry, and the San Francisco-based company is issuing an ICO, a blockchain-based fundraising method, in the hopes it will transform the industry.
Despite increased legalization for medical and/or recreational use, the burgeoning cannabis industry has a deficit of infrastructure, security and transparency, Paragon said in a press release.
Jayceon Terrell Taylor, better known by his rap name, The Game, is on the Paragon advisory board. He explained why he supports Paragon:
“This is a crucial moment for the cannabis industry. This is its moment – legalization is happening. What Paragon is doing is bringing cannabis up to speed with mainstream businesses – actually not just up to speed, but bringing it ahead of other businesses with next-generation technology.”
Paragon hopes to use blockchain — a public distributed ledger touted for tracking data securely and transparently — in the expanding cannabis market. Paragon says its data and tracking services will be open to all participants in the cannabis supply chain from growers, labs and doctors to customers and retailers.
“For example, a doctor could use Paragon to digitally certify a patient’s prescription, which a vendor could then verify at the point of sale. Or a batch of cannabis leaving the farm could be digitally stamped onto the blockchain, creating an indelible digital record of when it was harvested, shipped, and perhaps certified by an organic certification body.”
These are components of the cannabis ecosystem that present opportunities for new businesses and economic development, which Paragon says it will support and accelerate.
It hopes to do so by building coworking spaces in cities around the world.
But first Paragon must raise money. It hopes to do this by selling 100 million ParagonCoins at $1 each from Sept. 15, 2017 to Oct. 16, 2017. ParagonCoin will begin trading on cryptocurrency exchanges in November 2017.
Holders of their digital token, ParagonCoin, will be able to vote on where the coworking spaces will be built. In addition to voting rights, ParagonCoin can be used to pay for goods and services in the coworking spaces — anything from office space to coffee and a donut, though it will not be used by end-users to purchase cannabis products. ParagonOnline will be a community platform similar to Reddit and Steemit for the network of cannabis professionals to share knowledge. ParagonAccelerator will be a startup accelerator for cannabis-related businesses using ParagonCoin, ParagonSpace, and ParagonOnline.
The Game recently tweeted a photo of himself with Paragon founder and CEO, Jessica Versteeg, a former model, reality TV star (“Amazing Race”) and Miss Iowa 2014. The firm is preparing to “revolutionize cannabis and the world,” he said:
— Black Jesus (@thegame) August 10, 2017
Paragon explained its protocol in a white paper, released Aug. 15.
While some argue for an ICO bubble, others say maybe not.
“It is clear the alluring features of ICOs could result in them being more than just a recent fad,” Pitchbook reported in an introduction to its 3Q 2017 PitchBook Fintech Analyst Note:
Technological developments move very swiftly nowadays, but even compared to the typical rush, the surge in initial coin offerings (ICOs) has been remarkable. But almost as quickly, a corresponding boom in media coverage ranging from the critical to the purely analytical has followed.
Crypto-companies have raised almost $550 million from venture capitalists so far in 2017 in 120-plus deals, according to PitchBook. That’s about a quarter of all venture capital invested in bitcoin startups since 2010, when the first bitcoin-related startups began to fundraise.
At this rate, capital raised in ICOs since January will surpass all historical VC investment in blockchain by the end of 2017.
Paragon isn’t the first ICO to get help from a celebrity. Boxing champ Floyd Mayweather Jr. promoted an ICO for Stox.com, a blockchain startup that raised $33 million worth of Ethereum, according to a press representative for the firm.
Schwark Satyavolu, a general partner at venture capital firm Trinity Ventures, was skeptical when asked his impression of Paragon and its plans to launch an ICO in a Business Insider interview published Aug. 11. That was before Paragon released its white paper:
He said he thought an ICO is practically the only way a company could raise money with such limited information. “It made me smile,” Satyavolu said. “The lack of information and visibility is quite minimal and stereotypical of these ICOs.”
Satyavolu thinks the ICO market could be a bubble akin to the mortgage bubble that ushered in the 2008 financial crisis.
“If investments continue at the current rate, this could become the next mortgage crisis with people – including institutional investors – losing hundreds of millions of dollars when (not if) many of these companies go out of business,” Satyavolu said.
In addition to The Game, other members of the Paragon advisory board include Paul Kim, CEO of Xfire, and Juan Carlos Gómez, director of Clinical Programs at the Carlos A. Costa Immigration and Human Rights Clinic.
Paragon’s chief creative officer is Egor Lavrov, an entrepreneur who sold his first business for $2 million at age 16. The Paragon team includes alumni from Facebook, Google, Cisco, and Y-Combinator.