A Chinese start-up is aiming to raise $11.5 million in a digital token sale starting Tuesday.
The company, Walimai, is launching the sale in Singapore for funds to expand its technology and develop a loyalty program — both frequent explanations in the booming initial coin offering market. What makes this company different, though, is that its product isn’t financial technology like most of its ICO peers, but rather a play on the fast-moving consumer goods space.
Walimai created anti-counterfeit labels that use a smartphone app to let buyers confirm the authenticity of the product they’re buying. The labels can communicate directly with some phone, or they can be scanned via a QR code. A key feature of the labels, the company said, is that they’re physically tamper-proof because once they are taken off products, they stop working.
Issuing digital tokens through ICOs is an increasingly popular fundraising vehicle for start-ups where investors send some form of digital currency — usually bitcoin or rival token ether — to the companies. In exchange, they get an entirely new token that has some sort of assigned worth. That is, it can be used to redeem a service offered by the firms, or even theoretically give investors an equity stake in a company.
However, since China banned all new digital token sales earlier this year, Walimai set up a new company in Singapore called the WaBi Project. That company will issue 46 million WaBi coins for $0.25 per token to participants, excluding Chinese citizens (who it filters out by checking identifying documents, internet protocol addresses and phone numbers). It will also develop a blockchain-based loyalty program for Walimai customers.
There are about 100 million WaBi tokens in total.
Those tokens can be used instead of cash to buy products with Walimai labels, the company said. Customers can also “mine” additional WaBi coins by continuously scanning the labels.
Walimai’s current focus is in the baby food market in China, but it plans to expand into areas such as wine bottles, cosmetics and pharmaceuticals. In 2008, many Chinese infants fell ill, and some died, after drinking contaminated milk formula; it was one of China’s major food safety incidents in recent years.
Most anti-counterfeit companies have primarily focused on developing their technologies for fashion brands, Yaroslav Belinskiy, Walimai’s co-founder, told CNBC. Instead, he explained, his company opted to address infant formula, for which the “cost of buying fake” is much greater.
“We decided that (with) fashion labels, people actually know when they buy fake. If you pay $50 for a fake bag, you kind of know that it’s a fake,” he said.