Some early Blockstack token investors could soon become very rich, at least on paper.
On Thursday morning, Blockstack, a decentralized computing network, announced plans to conduct a $50 million token offering under the SEC Regulation A+ framework. According to the filing, Blockstack will be offering its Stacks token in three primary buckets:
- 215 million tokens at a purchase price of $0.12 per token to holders of its early token vouchers
- 40 million tokens at a purchase price of $0.30 per token to "qualified purchases", designated high net-worth investors deploying more than $5 million as an individual or $25 million of outside capital.
- 40 million tokens for non-cash consideration as part of its "App Mining" program
Interestingly, on page 118 of the filing Blockstack notes it had sold approximately 323 million Stacks tokens to "24 accredited investors that were shareholders of Blockstack PBC at $0.00012 per token." This $0.00012 token valuation was given by Foresight Valuation Group, an independent consulting firm. According to the filing, to get to the valuation, "Foresight used another traditional method for valuing software called the cost approach, which is based on the costs of development of the software underlying the token."
Stacks is not Blockstack's first project. It's the result of years of iteration with the token offering coming relatively recently. November 2017's original issuance of Stacks was likely a conversion of Stacks tokens for early shareholders. An additional offering to qualified purchasers will allow the team to raise capital at a markedly higher price from strategic long-term holders.
If these early investors held on to their tokens, they could be potentially sitting on a paper return of 1000X ($0.12/token) or over 2000X ($0.30/token) on their initial investments.
In a statement sent to The Block, Blockstack CEO Muneeb Ali clarified that the issued tokens at a cost base of $0.00012 per token were given to existing equity investors, rather than the new investors who invested $5.1M for equity. He also added that these issued tokens have a three-year lockup period starting in November 2018. Ali denied to comment on what these token grants are now worth. The return on investment on paper, however, for the $5.1 million is now approximately 4x according to Ali.
This post has been updated to include remarks from Blockstack Co-founder and CEO Muneeb Ali
Arjun Balaji contributed to this report