Happy Sunday!
There is a lot going on in crypto lately so I spend some time trying to get smarter around NFTs, digital collectibles and crypto tokens. Partially successful, I ended up joining a group of OMI-llionaires, more below.
Also, I got my first shot of AstraZeneca this week. In Germany it’s now available to anyone who wants it, regardless of prioritization groups.
Have a great rest of the weekend! — and if you find this newsletter interesting and know people who might enjoy it, it would mean a lot if you forward it on 🙏
NEWS | IPO & SPAC | OPPORTUNITIES | READING
Apple announced a bunch of new products this week including
a new iPad Pro that’s supposed to represent a 50% performance increase over the previous model,
Amazon is opening a 140m square hair salon in London to test AR and other retail technologies. Things you can do in the salon:
A “point-and-learn” technology lets customers point to products on a display shelf. A video on a screen next to it will then start showing information about that product
Customers can order products by scanning QR codes on the shelf, which open the Amazon shopping page where they can add it to their cart and check out on the spot
The salon’s AR technology allows customers to experiment by virtually trying on different hair colors before making a commitment to a new shade
Source: Amazon
In related news, Amazon continues to roll out its Amazon One palm scanner as payment option, which will now be available in some Whole Foods stores in the US. The scanner uses computer vision technology to create a unique palm signature, which is associated with the payment card of the customer. This way customers can enter the store and shop with their palm. The future is now.
Discord and Microsoft were deep in acquisition talks that valued Discord at around $10 billion. Now it sounds like the company is considering an IPO instead. Discord’s valuation went from $3.5 billion in June 2020 to $7 billion in December 2020. More here.
Tax for the Rich. President Biden intends to double the capital gains tax rate for wealthy individuals from the current base rate of 20% to 40% to help pay for the country’s social spending programs. For those earning $1 million or more, the new rate would mean that federal tax rates for wealthy investors could be as high as 43.4%, reports the outlet. This would reverse the long-standing provision that returns on investments are taxed lower than labor. More here.
NEWS | IPO & SPAC | OPPORTUNITIES | READING
UiPath, one of the leading companies in Robotic Process Automation, went public this week. Its share price rose 23% on the first day. With an enterprise value of c. $40 billion and ARR of $580 million as of January 2021, the company is valued at an EV / ARR multiple of >70x. A rich valuation. In comparison, the median TEV / ARR multiple of Meritech’s SaaS index is 22x for a growth rate of 34%. However, the company does have stellar metrics. S-1. More here.
Source: Azeem Azhar
DoubleVerify, a US digital media company which provides engagement tracking software, also started trading this week. Its shares jumped nearly 30%, giving the business a market value of about $5.4 billion. More here.
Oatly Group, the Sweden-based oat milk producer, has filed for IPO in the U.S., just 9 months after Blackstone and several high-profile celebrities including Oprah and Natalie Portman invested in the company. More here.
NEWS | IPO & SPAC | OPPORTUNITIES | READING
Active
Docebo (DCBO) - Target price: $70 (+44% to current PPS)
Wix.com (WIX) -Target price: $350 (+19% to current PPS)
Pexip (PEXIP) - Target price: $20 (+95% to current PPS)
New
Not the typical SaaS stock opportunity but a fascinating topic and definitely worth discussing:
ECOMI / OMI / VEVE
I am by no means an expert in blockchain technology or cryptocurrencies, so bear with me as I am sorting a few thoughts underlying this opportunity.
A non-fungible token (NFT) is a digital asset (can be a picture, song, video, tweet, anything else), which is made unique through a blockchain certification. Let’s say we have a digital picture that is a NFT. If we copy the picture there will be 2 identical versions of it. The only difference is that there is a unique blockchain certification which cannot be copied and which is linked to the “original” version of the picture. This certification makes the picture unique in a way. And unique assets are perceived as more valuable due to rarity.
Just like most analog collectibles, NFTs have little or no practical use. Collectors don’t pay for the practical use of an asset, but rather for a personal, subjective or collector-value. So paying millions for a JPEG file is not more or less reasonable than paying millions for a stamp.
The price of an item is determined by what someone is willing to pay for it.
If you are like me, you probably paid for collectibles as a kid for example in the form of Pokemon playing cards or stickers in a magazine and shared and traded those with friends. With the ability to make digital items unique, there will be more forms of digital collectibles, such as cards or action figures. Digitalization is starting to hit the collectibles world and allows people to trade, share and show off their digital collectibles with the entire online world.
Who will create these digital items and how and where can people buy, trade and showcase them?
Rather than Nintendo creating their own NFTs it’s more likely that they will license their rights to other companies who will then sell the NFTs to collectors; just as they have done with analog collectibles in the past. For those companies creating the NFTs it makes a whole lot of sense to create a platform on which users can communicate and trade their collectibles with each other as well (secondary market).
The Singapore-based company ECOMI offers such a platform, which is one of the first on the market. In its mobile app called Veve, users can buy collectibles or sell them to each other. The app lets you view your NFT collection through a personal, walkable, virtual show-room or via an augmented reality projection through your phone. (AR demo video)
ECOMI’s mission is to create the world’s best platform to purchase, protect and collect premium licensed digital collectibles using Distributed Ledger Technology.
Since launching the platform in December 20, over 69,000 users have joined the app until mid March. As of mid April, this number has grown to over 250,000, with thousands more signing up each day. In the first 3 months, the company already sold more than 110,000 collectibles, generating over $7 million in revenue.
VeVe’s team numbers just under 20, spread across the UK, Asia, Australasia, and North America. Roughly half of the team is in app development, and there are five artists, while the rest are in social media and marketing.
Marketplaces can obtain a monopolistic position if they can provide visitors the most complete range of products or services. Think Amazon and ebay. A niche platform for licensed digital collectibles will only become a dominant player if it can obtain the most valuable licenses.
ECOMI’s head of licensing is Alfred Kahn, a man who may have had an influence on your life already. His company, 4Kids Entertainment, was responsible for some of the world's biggest and most recognizable brands, including Pokémon, Yu-Gi-Oh, and Teenage Mutant Ninja Turtles. He is also credited with renaming ‘Pocket Monsters’ to Pokémon and bringing the international megahit out of Japan in the early 90s.
Mr. Kahn has already helped Veve sign on a list of valuable license partners, including Warner Brothers, Capcom, CBS, Cartoon Network and more. The company stated that it is currently in partnership discussions with over 100 brands and will use 55% of the financing it raised last year to acquire additional licenses.
Source: ECOMI
Tokenomics
In order for you to actually be able to own a digital collectible the platform needs and uses a token.
This token is called the OMI token.
The total amount of OMI tokens is limited to 750 billion. When you buy, trade or sell your digital collectibles on the platform, the OMI token is used as the medium of exchange and to ensure a record of ownership. When a purchase is made using OMI tokens, the tokens involved in the transaction are exchanged for the digital collectible and then expire. After a successful purchase the invalid OMI tokens are sent to an inaccessible smart contract where they reside permanently.
To avoid that the reserve of tokens available for transactions would eventually deplete, each in-app purchase of a collectible will trigger an automatic buyback of OMI tokens from public exchanges at the current market rate. As a result of the buy-back mechanisms, the circulating supply of OMI tokens is deflationary by nature and will diminish over time as the OMI used to facilitate new NFT sales will be permanently sent out of circulation.
This not only ensures a continued supply of OMI tokens in the app, but it also creates constant buy pressure for the OMI token. Additionally, this system allows the value of the OMI token to grow organically as more users are added and more purchases made.
The price of OMI increases with the demand for collectibles on its platform. So the price of OMI moves with the success or failure of its parent company ECOMI. This is why the founders, employees and advisors to ECOMI are financially incentivised through ownership in OMI. This is common practice for startups with their own digital tokens and is comparable to employee stock options at conventional startups.
In order to raise funds and begin building VeVe, the OMI token was sold in a private/pre-sale round and to the public through an initial exchange offering, which sold out in under 12 hours.
How can you buy OMI?
If you have never bought any cryptocurrency before, the process of buying OMI can be a little tricky, but there are some step-by-step video guides. On a high level:
OMI can be bought on Bitforex, a crypto exchange
On Bitforex, OMI tokens can be exchanged for USDT
USDT can be bought on Bitforex or exchanged for Bitcoin
The increased difficulty of buying OMI is both good and bad. While it is a little more complex to buy OMI tokens than it is to buy Bitcoin or stocks, with growing popularity of the token, it will be listed on a larger number of exchanges, which will make it easier for people to buy it, which will in turn drive up the price. So doing the extra effort now may be worthwhile later.
Investment risk and potential
Buying OMI tokens is not the same as acquiring shares in an early stage start-up, but some of the investment risks and potentials are quite similar. While ECOMI is not a public company, its token is publicly traded, the value of which will - to some degree - mirror the success of the company and the popularity of its Veve platform.
Early-stage start-ups represent one of the riskiest type of investment opportunities due to their high rate of failure. Buying OMI is a bet on the company’s ability to acquire and retain valuable licenses and the increasing public demand for digital collectibles. Risks include competition from similar or better funded platforms or fading demand after the recent hype around NFTs. Similar to conventional investments in companies, there is also company-specific risk that the management fails to execute on its mission or cannot overcome the hurdles of scaling the company. The company has a long way to go and an investment requires a lot of “need to believe”. There is a significant risk of a total or near-total loss on an investment.
On the other hand, investments in early-stage companies have the highest return potential. The NFT market is still young and there are very few competing players. The OMI token only began trading recently so attention from the broader market is still relatively low and so is its price. If the product-market fit continues to solidify this year and the company grows into one of the dominant platforms globally, the upside potential for people who invested “before it was obvious” is significant.
In summary
Arguments against / risk factors
Market trend around digital collectibles may not hold up
Company may fail to acquire enough valuable licenses fast
Potential competition from well-funded platforms
No way of measuring whether the digital currency is overvalued or undervalued. Market cap measures popularity, not value
Arguments in favour / potentials
First-mover advantage in a market with huge potential
Ideal timing to capture and build on a quickly developing trend
Successful acquisition of top tier licenses with all star head of licensing
Significant growth of user base provides early proof of concept
Listing on additional exchanges will increase popularity
For the foreseeable future I expect the price of the token to fluctuate significantly on a day-to-day basis. Personally, I plan to hold my tokens for around 1 - 3 years, while continuously re-evaluating the development of the platform and market.
In any way:
You should not invest more than what you would be comfortable losing.
Additional information sources:
NEWS | IPO & SPAC | OPPORTUNITIES | READING
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🐶 What started as a joke …
🚀 Nasa's rover makes breathable oxygen on Mars.
🤖 Check out Disney’s robot Groot. Video.
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Disclosure: I am long DCBO, PEXIP, OMI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from paid subscribers of my newsletter. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: I am not a registered investment, legal or tax advisor or a broker / dealer. All investment / financial opinions expressed by me are from personal research and experience and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.