The encrypted messaging has already raised $850 million in the first phase of its cryptocurrency fundraising and hopes to reach $3.8 billion. An amount that could, above all, be used to finance its cash.
Telegram wanted to aim for a big shot. And it’s more than successful. In the first stage of its initial offering (ICO), the Dourov brothers’ encrypted messaging managed to raise $850 million, well more than the initial target of $600 million. The amount was raised in just a few weeks.
But this performance, which already makes this ICO the most important digital fundraising, also raises doubts. Several skeptical analysts are wondering about the massive amount – Telegram could recover up to 3.8 billion dollars in total, almost as much as the sector has raised in 2017 – and especially towards its end.
A stratospheric amount
Why so much money? This is the first question that appeals to analysts. Just during its pre-ICO, Telegram has exceeded all expectations, leaving far behind Filecoin, holder of the previous record ($257 million).
Admittedly, the project is revolutionary: the Dourov brothers want to create the first cryptocurrency for the general public, the Gram. Backed by blockchain technology based on a new generation protocol, this would include a mircopay service free of international taxes.
But, for analysts, this does not justify such sums. “It is an amount that has no economic reality,” says Gregory Klumov, CEO, and founder of Stratis, a platform that helps companies develop applications with blockchain technology. “Let’s not forget that there is no asset against the 850 million dollars raised.” A statement shared by Travis Scher, CEO of Digital Consulting Group, quoted by Forbes: “The amounts are totally aberrant.”
Which team for the project?
The identity of the people who carry out the Telegram project is also intriguing. While the credibility of such an initiative is measured by the maturity of the team and its ability to manage the security of the project, only two names are known to insiders, those of Pavel and Nikolai Durov.
“In fact, everything is based on trust in the founders,” explains Gregory Klumov. But, an ICO project requires a strong team, with a deep knowledge of the technology. Especially when it allows to lift as much weight.
For now, that does not seem to be the case. “The teams that work well are the ones that have matured ICO’s projects with a clear vision of what they want to do,” says Nick Tomaino, founder of 1confirmation. “In my opinion, Telegram does not have the team at all to succeed in this kind of project.”
A model that intrigues
“Telegram will serve as a launch pad for TON, ensuring its technological superiority and democratizing access,” says the white paper, the document that details the operation of the ICO’s messaging.
But more than anything, it is the model of Telegram that worries analysts. The company has never been profitable and works, since its launch in 2013, thanks to the donations of its founding media. “Pavel Durov, who shares our vision, supplied Telegram with a generous donation, so we have quite enough money for the time being,” claims the FAQ on the Telegram website.
Except that it consumes a lot of cash to work: $300,000 a day, more than $9 million a month. And more than 100 million dollars per year. “Telegram needs a lot of cash, to pay for its teams, especially the developers,” explains Gregory Klumov.
“They’re promising something that will somehow be radically better than everything else out there, with no real explanation of how that will happen or outside scrutiny of those claims,” said Charles Noyes, Quant Researcher/Protocol Analyst at Pantera Capital.
“Telegram is definitely much more crazy than some of the bigger ICOs we have seen,” thinks Siddharth Kalla, Cofounder of the Turing Advisory Group.
A situation that makes several analysts say that the speech of the brothers Dourov is not completely frank. “We really feel that Telegram is a start-up that has found a way to get money and continue to finance its operations,” says Travis Scher, according to whom the most important ICO ever made could, in reality, hide the most important scams.