Outlier Ventures , Europe’s leading Blockchain investment group focused on distributed ledger enabled convergence, today announces it has taken a seven-figure stake in IOTA, via the company’s Initial Token Offering (commonly referred to as an ‘ICO’).
IOTA’s distributed ledger platform provides the foundation for cost-neutral exchange of value across the Internet of Things and its recent listing has broken records – reaching over $1.5 Billion in market capitalisation during its first day of trading on the Bitfinex exchange, representing the largest CAPEX of any crypto-currency following listing. [first day of IOTA token trading 13.06.17].
IOTA is gaining significant attention within the IoT community, including leading manufacturers, due to its uniquely designed ‘Tangle’ platform. Tangle brings the benefits of decentralisation to the Internet of Things, enabling every IoT device, sensor and machine to exchange value in real-time, without a transaction fee.
Imagine a connected electric car that needs to re-charge, or a connected server with spare capacity for rent, or an internet gateway with spare bandwidth. IOTA provides the value-exchange mechanism for connected devices to use those resources and to pay for them instantly, with trusted micro-payments between the distributed devices (and the companies that own them).
As David Sønstebø, Founder of IOTA describes:
“The world is poised for a new ‘economy of things’ where connected devices exchange financial value for the resources they need. But there’s been no way for companies to collaborate in practice – the settlement layer has been missing. That’s the problem we’re solving at the IOTA Foundation with a new type of Blockchain that overcomes the scalability and cost problems we’ve seen with both Bitcoin and Ethereum.”
The world’s first ‘blockless Blockchain’ The core innovation of the IOTA protocol is the ability for developers to build applications that don’t suffer from the cost and scaling problems inherent to the first generation of Blockchains.
Unlike Bitcoin or Ethereum there are no IOTA miners, rather each connected device provides the CPU resources needed to process transactions. The incentive for the devices, or users, to do so is their very participation in the network. For each transaction a user device wishes to initiate, say a car that wants to re-charge, it must first validate two other transactions. That’s also why there’s no transaction fee and why even the smallest micropayments are now possible.
“That’s the genius of what David, Dominik, Sergey, Serguei and team have been able to achieve with IOTA. They have resolved the fundamental conflicts in the design of the first iterations of public Blockchains that have have stopped them scaling.” commented Jamie Burke, CEO at Outlier Ventures.
“At first glance the numbers involved with this project might seem shocking but if you consider a token is buying you a stake in the future economy that this protocol unlocks, which is estimated by IDC to reach $1.7 Trillion by 2020, the numbers don’t seem so large. So it's much bigger than just the IOTA core development team, it’s the community of developers building on top that then go on to use this token as the unit of value within the system.”
The IOTA team brings a wealth of experience amongst its four co-founders who’ve been active in the Bitcoin space since 2010, with Sergey Ivancheglo having invented the ‘full Proof of Stake’ consensus algorithm. The Tangle platform is already being explored by more than 30 major corporates including Bosch, Cisco, Innogy, Microsoft, Canonical/Unbuntu SAP, UBS and, one of the world’s largest automotive manufacturers, to develop a range of prototypes.
Commenting on the atypical nature of how Outlier Ventures made its IOTA investment Burke believes that all Venture Capital firms will need to adjust to the realities of a new funding environment:
“In the last 3 months the VC world has been turned on it's head. In a world where an open source project can tokenise and fractionalise its ownership and then self-finance millions in literally seconds the VC equity model becomes irrelevant. For now this has been native to Blockchain but it’s about to spread like wildfire to the rest of deep tech and that’s what we want to spearhead. Crypto-economics is an entirely new world for everyone and it is going to require a lot of trial and error but the great thing is you aren't reliant on any one realisation because these things can fork in many directions and iterations.”
Outlier Ventures will focus its investment strategy on a handful of strategic, long-term, bets in organisations and the associated tokens, it believes harness the benefits of Blockchain technology to enable the potential of other deep technology fields such as IoT, AI and 3D-Printing. The likelihood is that such companies will be in search of network effects and so a token-sale is quickly becoming the firm’s preferred investment mechanism.
Outlier Ventures was set up in 2013 to invest in and build Blockchain startups in the emerging Web 3.0 startup space. Since then having met with over 1,220 startups from around the world and invested in a growing portfolio of companies it has refined its thesis to that of ‘Blockchain enabled convergence’, or just ‘Convergence’ for shorthand, following a whitepaper published in Oct 2016.
This has led to a focus on connecting startups with incumbents and academia to accelerate innovation and grow the industry through content and thought leadership including a global network of events from Silicon Valley to Berlin, Bangalore and Tokyo called Convergence.VC
As the Internet-of-Things keeps expanding the need for interoperability and sharing of resources become a necessity. IOTA enables companies to explore new business-2-business models by making every technological resource a potential service to be traded on an open market in real time, with no fees.