‘Unicorn’ Crypto Project Links Value to Equity in Growing Emerging Companies

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Alex Konanykhin is a brave soul.

He launched a cryptocurrency project at the start of a war in Ukraine, decades-high inflation in the United States and Europe, monetary tightening by the Fed, and the potential for food shortages driving up raw material prices. He appears to have anticipated the collapse of traditional coins as his Feb. 23 press release touted Unicoin as the “solution to high volatility in cryptocurrencies.” His idea stems from a notion popularized by Warren Buffet, a famous Bitcoin

BTC
bear, who said that cryptocurrency has no value because it is not backed by anything.

Cryptocurrencies are not backed by the good faith and credit of any nation, let alone the founders of start-ups or their venture capitalists. It is also not backed by durable assets. It’s not like Dogecoin

DOGE
is supported by Shiba Inu

SHIB
dog breeders or whatever – fewer dogs, more Doge. It is literally a coin worth tens of billions of dollars.

So if you can create a coin worth tens of billions, maybe you can create a coin backed by emerging revenue-stage growth companies. “Our idea is to create crypto 2.0,” Konanykhin explains. “Something that can be understood by the market. Bitcoin is created by an anonymous person for other people seeking anonymity. It does not pay interest. What if your coin was backed by venture capital investments in scale-ups? This is what we do.

Of course, scale-ups – as they are called and not to be confused with the world of pre-revenue startups – can become worthless.

Unicoin’s wallet is available on its website. The coin itself is considered a security token by the Securities and Exchange Commission.

“I think right now, venture capital and speculative money seem to be getting a lot harder to come by,” says John Sarson, founder of Sarson Funds, an Indiana-based cryptocurrency investment firm. . “I don’t think it’s the right time to start a new project, because investors are currently consolidating in the biggest and safest projects. But the dust settles pretty quickly in crypto,” he says. “I think the animal spirit will come back and it will only take about a year for the risk appetite to come back.”

This is Konanykhin’s first foray into cryptocurrency. Unicoin claims to be the cryptocurrency that Konanykhin and a team of investors will use to invest in startups that feature on a show he created – the year-old Unicorn Hunters. You can see the show here.

Unicorn Hunters is like a Shark Tank, but open to millions of investors. Its hosts include Steve Wozniak, one of the founders of Apple.

On the show, business founders have 20 minutes in a roundtable called the Circle of Money to pitch their business and answer related questions. They are not crypto companies. One of the Unicoin funds’ investments is in a healthcare company called Mymee in New York.

This show is the center of the Unicoin universe, for sure.

Show attendees are seated in front of Wozniak and others, including Rosie Rios, a former United States Treasurer under President Obama; Moe Vela, another Obama White House staffer and former senior adviser to Vice President Biden; and Lance Bass, a 90s popstar during his time singing with NSYNC.

Unicoin will invest unicoins in some of the businesses that appear on Unicorn Hunters. But investors do not hold any positions in these companies. Only Unicoin itself does this. The value of Unicoin increases, in theory, with the value of the companies in which the fund has chosen to invest.

The show does not appear on any major television channel, but has its own YouTube channel with 125,000 subscribers. Some episodes only have a few hundred views, while others have garnered millions of views. The show can be accessed via YouTube and other live streaming channels, as well as UnicornHunters.com.

Wozniak told Fortune magazine in March that Unicoin was “really opening up the world of startup investing to the masses.” It is really only open to the masses, as well as retail investors, outside of the United States

Wozniak pitted Unicoin against other cryptocurrencies, telling Fortune’s Jonathan Vanian that it’s not “just based on words and talk” but rather “truly based on the outcome of investments”.

Konanykhin’s crypto depends in part on the success of this show and Wozniak, of course, is a headliner. “I approached Wozniak because I wanted the co-founder of one of the world’s most innovative companies, which later became the only company to achieve a $3 trillion valuation, on the show and he agreed,” he said. “As he stated on the show, a show like Unicorn Hunters would have been ideal for Apple when he and Steve Jobs were looking for ways to fund their business.”

I likened the idea of ​​Unicoin to venture capital, crypto-style, but Konanykhin said the investors own the coin and have no stake in the companies. The companies that the Unicoin fund invests in are what bring value to the coin and pay dividends.

Unicoin is currently invested in five startups (like Mymee) that have appeared on Unicorn Hunters, as well as 5 million shares of the show itself.

So far, Unicorn Hunters has raised $55 million and used those funds to launch the show and Unicoin.

Konanykhin, a Russian immigrant who defected during the breakup of the Soviet Union and has lived in the United States ever since, runs a six-year-old software services company called Transparent Business with a partner named Silvina Moschini. Transparent Business serves as a Unicoin fund manager. It’s called a holding company.

Argentinian entrepreneur Moschini is best known for creating a company called SheWorks, a platform targeting women looking for remote work.

“We raised funds from 3,000 investors from about 45 different countries for Transparent Business in 2018 just by creating videos explaining what we do and we increased traffic through social media,” Konanykhin explains. “We raised money that way. Once we saw that, we decided – okay, now we know how to do it via social media platforms – let’s produce a TV show, and we hired a production company to film it in Beverly Hills at CBS Television City. Konanykhin is the executive producer of Unicorn Hunter.

They claim to have sold $25 million unicoins and spend a lot of that capital on advertising. They have ads in airports in New York, Miami International, San Francisco, Los Angeles and Denver.

“The business model of our Unicorn Hunters show is to take 5-10% of the business to give them exposure on the show and they think it’s worth it because they can be watched by millions of people at around the world,” Konanykhin says, though most shows won’t have that sizeable audience. “It gives us a chance to create this cryptocurrency, with the backing of the assets in which we invest, which are stakes in these companies held by the Unicoin fund managed by Transparent Business. You can see the founders giving their presentations, you can see what the panelists are saying about these companies, you can visit their websites and do your own due diligence. We are inundated with applications from large scale companies. I expect the value of the portfolio to increase by investing in more of these companies over the next year. »

Stakeholders are not just a few institutional investors like in traditional venture capital funds, but are coin holders. Like many private funds, this one has a six-month lock-up period.

“We’re just trying to capture a lot of the demand for cryptocurrency investment by offering the first equity-backed, dividend-paying cryptocurrency,” he says.

Unicoin is trying to raise $50 million from global investors in this ongoing first round, which is expected to close by September. Then they hope to up the ante in a second round and raise $100 million, then double it to $200 million in a third round by 2023. Unicoin is currently worth around 10 cents. It is not traded on any exchange.

“The first fund is a beta test for us. It is invested in the salon itself and in the five portfolio companies,” says Konanykhin. “These companies generate dividends for the shareholders of Transparent Business. We are now building a new portfolio for new investors.

If it works, Unicorn Hunters and the attached Unicoin will eventually be invested in different sectors. “We believe a Unicoin fund would focus on metaverse, SaaS, FinTECH and pharmaceutical companies,” he says. “We will create individual Unicoin funds for each major category.”

If crypto died out in the coming months and looked less attractive to newcomers, the worst case scenario is that Konanykhin could still switch to old-school venture capital. It’s just that retail investors won’t be able to invest in these Unicorn Hunter projects, even if they only do so indirectly.

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