World Chess to Issue Digital Tokens in ‘Hybrid IPO’

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by Teuta Franjkovic · 3 min read
World Chess to Issue Digital Tokens in ‘Hybrid IPO’
Photo: Unsplash

World Chess is going to issue tokens that will use blockchain ledgers to simplify the fundraising process and will be convertible to shares at a later point.

World Chess, which is the media and online gaming company, announced on Friday its IPO for 2020. It is actually a “hybrid IPO”.  It means that this IPO will issue digital tokens before floating shares on the stock market.

As per the announcement, the security tokens of World Chess are now available for sale to all accredited investors in the United States and the European Union.

Having these tokens, private investors are provided with the early ownership of the company’s shares. Those shares can be transformed into ordinary shares when the IPO happens or they can be privately traded between accredited traders.

The CEO of the company Ilya Merenzon said that the company charged for overseeing the token sale will be Securitize. It will carefully watch that all the buyers are accredited by the firm in order to comply with regulations.

The company said that the stocks of World Chess should be on-float on London’s Alternative Investment Market (AIM) in 2020, even though, as per the announcement, the exact time is still not known. Before then, Merenzon claims, World Chess will issue so-called security tokens — digital representation of equity at “hundreds of dollars” apiece using blockchain technology of Boston company Algorand.

In his press release, Merenzon said that the “hybrid IPO” could work out as an example for all new technologies to come aiming to be used more thoroughly in fundraising rounds.

Merenzon said:

″This is a pioneering financial innovation, and one, I believe, many companies will use to raise funds in the future.”

World Chess is a leader when it comes to broadcasting and organizing the World Chess Championships. However, the company also acts as a platform for online chess players that can also compete and gain official rankings.

This company’s IPO plans are nothing new in the world of sport and gaming platforms. Nowadays, there are plenty of alternative sports broadcasters and gaming platforms that decided to make their stock public.

For example, a company, which is known as a competitive video game tournaments or esports broadcaster, Gfinity, floated its shares on London’s AIM back in 2014. However, since then, it hasn’t been a pretty time for shares that saw a sharp decline during the five years since the IPO.

Still, Chinese companies seem to be doing pretty well. In July this year, Chinese sports events company Wanda Sports Group raised $190.4 million from its U.S. IPO. Also, the same month, the Chinese esports streaming platform DouYu International raised more than $775 million by listing on the Nasdaq.

In the meantime, there were some media reports that came out earlier this year that international sports streaming site DAZN is also planning a London listing.

This alternative fundraising proposal is perpetually new. However, this is just one of the bunch of new ideas that have emerged for those types of businesses in the last few years. Let’s just go back in 2017, when a number of start-ups launched initial coin offerings (ICOs), that were selling new digital tokens in exchange for cryptocurrency investments into companies.

ICOs are still not regulated in most of the world’s economies. However, even as such, they managed to raise over $3.8 billion only that year. Still, a lot of controversies followed. Next year, hackers and scammers made off with more than $2 million in cryptocurrency after carrying out a fake ICO.

Merenzon claims that World Chess is currently breaking even following a period of investment.  According to Crunchbase, it has already raised $6m in its latest funding round in May from venture firm Prytek and Russian billionaire and co-owner of Technonicol Igor Rybakov.

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Teuta Franjkovic

Experienced creative professional focusing on financial and political analysis, editing daily newspapers and news sites, economical and political journalism, consulting, PR and Marketing. Teuta’s passion is to create new opportunities and bring people together.

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