Sikoba is building sikobaPay, a blockchain-based system to register, track and clear debt. SikobaPay provides the technology to overcome the limitations of informal credit, as widely used in developing countries. The product is currently in beta testing.
In the context of COVID-19, we also see many applications of sikobaPay in developed countries. Reintroducing the use of inter-company credit on a large scale, if possible with some degree of public backing or guarantees, could become a life saver for many companies. sikobaPay is perfectly suited for this.
We have have launched our MVP at the end of March 2020 and are now in the beta testing stage. Together with a local currency operator in Luxembourg, we are also working to introduce sikobaPay to local SMEs, so that they can start using IOUs to help overcome the current liquidity crisis caused by the covid-19 lockdown.
In the developing world, our targets are networks of small businesses in developing countries, who mostly use informal credit already and understand our added value. The number of small businesses in Latin America alone is more than 60 million. Once small businesses use SikobaPay, they will have an incentive to encourage their clients to use SikobaPay too. On a global scale, the market for SikobaPay is therefore in the hundreds of millions.
In developed countries: many small businesses are affcetd by the COVID-19 pandemic. sikobaPay offers them a tool to leverage existing trust relationships and jump-start an efficient and flexible IOU economy, even when money is in short supply. We will also be seeking the support of governments and local authorities for the introduction of sikobaPay.
Problem or Opportunity
Informal credit is widely used in developing countries to overcome money scarcity: IOUs (from “I owe you” - an acknowledgement of debt) are used instead of cash. However, informal credit does have certain limitations, including a lack of legal recognition, the inability to transact outside of one’s trusted network an no verifiable audit trail.
Solution (product or service)
SikobaPay overcomes the limitations of informal credit:
1) Because debt is registered on a blockchain, users obtain legal recognition;
2) Users can transact beyond their immediate circle of trust, as Sikoba will automatically identify trusted intermediaries;
3) SikobaPay automatically clears circular debt, thus reducing the need for cash settlement;
4) SikobaPay produces a verifiable audit trail, and thus a credit history.
SikobaPay can also be adapted to support many different applications, for example local currencies, mutual credit networks, micro-lending, basic income programs as well as digital cash programs.
SikobaPay will initially be launched as a centralised service, but with the transaction history stored on a blockchain. We will then aim to migrate it to a consortium blockchain, with nodes run by trusted partner institutions such as NGOs, banks or public institutions. A (not yet created) Sikoba Foundation will act as a caretaker of the project, without having control over the network itself.
The P2P IOU market is still wide open, we do not see any competition of note. Projects like Trustlines or Splitwise are not business-oriented.
Advantages or differentiators
Our main differentiation is the focus on developing countries and on business features.
The main indicator of our success will be the number of active users, with an aim of generating at least EUR 10/user/year - although we may find that a slightly lower amount is appropriate in some poor countries. Initially, we will also give free trial periods, so that income per user may be significantly lower in the first 12-18 months. We still aim to reach 1 million users by 1Q22, within 18 months after mainnet launch (planned for Sep-Oct 2020). We thus target revenues of EUR 10 million in 2022.
We target transaction fee revenues of EUR 10-15 per year for a micro-business. We will ask NGOs to subsidise SikobaPay users in poor regions and also plan to generate revenue from co-branded versions of SikobaPay for basic income, micro-lending or local currency projects.
We are currently in the process of reviewing the fee model for developed countries, with a view to have fees reflect the local standard of living.
Money will be spent on
IT development, marketing, preparing significant post-MVP fundraising round needed for global expansion.
Offer for investor
So far we have so far raised slightly more than eur 200k (Founders, F&F, token presale).
We are now preparing doing a post-MVP token sale, with the goal to raise to EUR 250,000 to prepare a series A equivalent round.