What Happened to Last Year’s Mycelium Crowdsale?
Mycelium’s plans to crowdfund revamped versions of its mobile wallets were almost derailed by management and legal costs, according to reports. News is trickling out of updates to its development plans and some of the details surrounding the sale.
Funds raised in last May’s crowdsale went mostly on salaries for managers, developers and other support staff, product manager Dmitry “Rassah” Murashchik told Bitsonline.
However the nature of Mycelium’s crowdfund itself also made it expensive. Raising funds via an initial coin offering (ICO) of Colu-based tokens required lots of expensive legal and licensing advice. Far more expensive, it seems, than Mycelium’s lower management and developers anticipated.
Why the Crowdsale Happened
Mycelium held its much-publicized token sale in May 2016 to fund a radical new direction. The already-popular mobile wallets would become a complete financial package, managing as many digital and fiat assets as users desired. There would also be extensive API access for third party distributed-app developers. Android and iOS versions would offer the same features.
The fundraising method was also radical. Mycelium sold colu tokens that would effectively be “shares” in Mycelium wallet — though not the company itself. It planned to sell 5% initially, with another 20% later.
Colu tokens are essentially marked bitcoin tokens that function as separate digital assets, like shares. They live on the Bitcoin blockchain, but you need Colu’s wallet software to see and use them. They were once known as “colored coins”.
Mycelium’s new version is also due to support colu tokens.
What Happened Since May
According to the official campaign page, the ICO raised 5,131.445 BTC. Mycelium locked the BTC price at $458.67 USD in June 2016, for a total of $2.353 million.
Since then, however, there hadn’t been much news. Mycelium’s popular Android wallet has had only minor updates and the iOS version has only basic features.
Financially separating wallet development from the rest of the company required Mycelium to form new corporations. This process also reportedly drained funds.
There was also a second ICO around December 2016 to raise funds for Mycelium’s Swish restaurant order automation system. However the response was poor and Mycelium agreed to cancel it and return all funds, which it is still doing. Developers continue to work on Swish regardless.
Mycelium’s last official news update before this week was a blog post in December 2016, which announced the integration of Mycelium Swish into the mobile app. This feature allows some users to buy BTC with a credit card directly from the app.
That update also added: “… we are still making progress on the new wallet too. Colu support is finally going through testing stages, as is our SPV module”.
Development for colu support is also supposedly still on track, though there’s no firm target date. As well as the wallet, Mycelium is also actively working on its Swish and Gear products for businesses. However the company has reportedly canceled its “Card” ad-hoc network payments project.
Some Investor Grumbling, and Reassurance
In Mycelium-related chat groups, some investors grumbled their money had been wasted. They also questioned the lack of transparency from the company over where the funds were spent and why there hadn’t been any new release.
The Mycelium Colu tokens investors bought in the crowdsale aren’t actively traded on any popular exchange. Activity on P2P exchange Bitsquare is almost non-existent. It’s important to note that Mycelium intended buyers to hold the tokens, not trade them. But holders have the freedom to trade if they wished.
One investor, who didn’t wish to be named, told Bitsonline they had initially expected faster profits on the Colu tokens. However they now consider the investment a future bet with a 5-10 year timeframe at least.
What Are the Tokens Actually For?
There were always legal questions over what the colu tokens actually represented. Mycelium itself said they were “not a security, are not listed, authorized, issued or traded on any regulated market”.
The whole idea was that the tokens were shares in wallet development, and that holders would somehow profit if the wallet became more valuable. However the exact process by which users would collect returns seemed vague.
Murashchik himself has kept in touch with the community and answered all questions in as much detail as possible. However, the team works remotely and it appears he wasn’t always privy to management’s latest decisions — or news of their actions. He also did not handle any of the crowdsale funds, and it was not his suggestion to raise funds via the token sale.
About Mycelium and its Wallet
CEO Alexander Kuzmin founded Mycelium the company in 2008. Murashchik joined three years ago, first as Community/Brand manager for the whole company and then Product Manager for the wallet. His job for the past year has been trying to implement his vision for the redesigned wallet.
The wallet portion of the company is incorporated in Latvia, though the team is distributed and works remotely.
Mycelium’s mobile wallet for Android remains one of the most popular with Bitcoin users. As well as more sophisticated key management than most mobile options, it also lets users connect hardware storage like Ledger and Trezor devices. It also has local P2P trading and for some, the ability to buy bitcoin directly.
While there’s also an iOS Mycelium wallet, its feature set is bare-bones and it was developed separately.
Where Does it Go From Here?
At this stage, Mycelium is still operating as normal and is pushing ahead with its plans to release a new wallet. This means there’s still some hope that crowdsale token buyers can recoup or even profit from their investments — somehow, someday.
If anything, the story reveals the inherent risks in raising (and using) funds for any tech startup. There are unseen costs, development and staffing hurdles, and bad decisions. Kickstarter and its ilk have left hundreds of sad tales along with the successes — and those contributors didn’t get any shares in the company.
Blockchain technology allows experiments with more exotic fundraising methods. Digital share tokens allow more to participate. But companies who wish to raise funds this way owe their investors more transparency, at the very least.
Did you participate in Mycelium’s, or any other token sale? If so, tell us about your experiences.
Images via Mycelium, Colu