Brisbane-based online betting platform Skrilla has raised $800,000 via an initial coin offering (ICO) on the Ethereum blockchain ahead of a soft launch into US markets next month.
Skrilla was created by founders Damon Oudejans, Nick Heaney, and Riad Chikhani – the founder of parent company GAMURS, which raised $3.5 million in September.
The startup operates in the emerging electronic sports – or eSports – space, which is competitive video gaming. The Skrilla platform allows users to create fantasy teams of various competitive players, with customers then winning rewards based on how well those players perform.
Taking the platform to the blockchain was a decision the founders made just four months ago, with Oudejans and Heaney telling StartupSmart the process has been an “incredibly steep learning curve”.
Tokenising the Skrilla reward system on the blockchain gives both the users and the company significant flexibility, the founders say.
“Tokenising the platform means we can get rid of traditional currency and cut out things like transaction fees and banks, and we can provide users incentives to grow the platform,” Heaney says.
“If we wanted to reward a customer [with] $10 or $20 for referring a friend, we’d have to raise that money up front, but in this instance we can use the growth pool to reward that user. That can work for things like inviting friends, sharing things on social media, or verifying accounts.
“It really helps us scale the entire network.”
The company currently has 300,000 of its SKR tokens set aside for this growth pool. A total of 405,000,000 SKR was distributed to backers during the ICO and the presale, raising 1,641 ether tokens in total, worth about $800,000 at the time of publication.
Skrilla’s offerings currently only operate through the Australian dollar locally, but StartupSmart understands the company is currently working with local regulators with an aim of becoming the first tokenised betting platform in the country.
But with a platform already established and running in Australia, the company is setting its sights further afield, looking to the US market with a soft launch planned for two weeks’ time.
“We can offer a free-to-play model with tokens as customers don’t have to stake anything. We’re launching into all 50 US states, as a majority of states there don’t have any licensing requirements for fantasy betting, and we’re working with the regulators in the ones that do,” Heaney says.
ICOs an uncharted territory
Both founders admit they hadn’t had much experience in the blockchain or ICO space before planning the SKR launch, saying it’s “uncharted territory for pretty much everyone”. The four months spent planning the launch was a steep learning curve.
The idea for a virtual currency in the Skrilla platform had been bouncing around for a while, the founders say, just not on the blockchain. Rather than offering customers something like a rewards points which could be exchanged for traditional fiat currency, the founders just decided to add the “final element” and head straight for the blockchain.
“It solves a bunch of problems for us, unlocking things like cross-border play. One of the biggest nightmares for wagering platforms in new markets is organising banking and payment providers, and this removes the need for that,” Oudejans and Heaney say.
The team got a number of high-profile advisors on board to consult on the ICO project, including former Pokerstars general manager Craig Meagher, and blockchain veteran Lucas Cullen.
While the founders are happy with the $800,000 raised, Oudejans says “they’d be lying” if they said they didn’t want to raise more, especially considering amounts raised by recent coin offerings. He puts that down to the team not being fully aware of the amount of marketing needed for a blockchain project.
“We should have gotten some strategic partners on earlier, and it takes time to cultivate strategic backers, build the community, and drum up interest,” Oudejans says.
“But for a company doing an ICO we’re a bit different. We don’t have to build things from scratch – we have a service that’s 95% of the way there. It’s more about raising money to help us scale.”
The two are also in discussion with some other partners who may be purchasing some of the tokens from the team’s allocated token pool.
To run a solid ICO, Heaney says a strong advisory panel can make or break the process, along with being realistic about when to cap an offering.
“The ICO market can change drastically in just a few months, so it’s about setting realistic goals and working towards those,” he says.
“Take the time to do it for the right reasons – not just to raise money. Think about if you have a network-based play, and does it need a token feature,” Oudejans says.