Sikoba is building SikobaPay, a blockchain-based system to register, track and clear debt. Small businesses in the developing world regularly use informal credit, meaning promises of future payment. SikobaPay provides the technology to overcome the limitations of informal credit, and will also allow the unbanked to establish a credit history. We already have several letters of intent signed and are only weeks away from delivering our MVP.
We have a test version ready and are aiming to deliver our MVP at the end of March.
Our main 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.
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.
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 approx eur 200k (Founders, F&F, token presale).
We are now doing a pre-MVP token sale, with the goal to raise up to EUR 250,000.
Once MVP is released and pilot testing is underway, we aim to do a larger post-MVP sale, possibly in the form of an IEO.