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Tezos, a Switzerland-based blockchain technology startup, raised a record-setting amount via an initial coin offering (ICO) in July, and has now revealed that it will use $50 million of this capital to establish a VC fund. Additionally, it will invest some of the money in stocks, bonds, and precious metals.
Tezos, which has been in development since 2014, offers a blockchain-based platform on which banks and other corporations can build smart (self-executing) contracts.
Tezos is unusual among startups in being able to afford to invest externally. The reason it can afford to pursue this strategy is undoubtedly its $232 million ICO, which is said to be the largest such fundraise to date. Generally, startups lack the money to establish investment funds, instead having to dedicate all of their funding to covering costs such as product development and salaries. Unlike most early stage companies, Tezos is now in a position to invest more widely. The fund will invest exclusively in startups using the company’s platform to build solutions.
Although Tezos’ move is unconventional, it may make sense for what appears to be its long-term objective. Tezos is positioning itself as a rival to open-source blockchain platforms like Ethereum, which offer their technology platforms to third-party developers to build solutions on, and then distribute to end users. Giving external developers access to their technology allows players like Ethereum to scale and amass new functionalities.
Given that Tezos’ goals are similar — it lists its long-term goals as “security, scaling, privacy, usability, and features” — incentivizing more developers to leverage its platform seems like a solid way to attain scale, usability, and the creation of new functionalities, and users might also supply the platform with security solutions. In light of Tezos’ business model, this VC fund play is arguably logical, especially since the company can afford it.
Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on blockchain in banking that:
- Outlines banks’ experiments with blockchain technology.
- Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews.
- Discusses the likely trends that will emerge in the technology over the next several years.
- Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.
You can also purchase and download the full report from our research store.