Crypto app store Magic Square is in constant fundraising mode, despite the bear market.
To date, the early-stage startup has raised $4 million at a $75 million valuation, all from token rounds, Andrey Nayman, co-founder and CEO of Magic Square, told The Block in an interview.
The startup first closed an oversubscribed $3 million seed round co-led by Binance and Republic Capital in July. Since then, Huobi Global, Gate.io and most recently Crypto.com have joined the cap table as strategic investors.
So, why does Nayman keep raising funds? “The answer is very simple: uncertainty,” Nayman said. “Because I don't know when the crypto winter is over, so it's very important for us to be sustainable.”
The fundraising isn’t stopping with Crypto.com's contribution. Magic Square plans to raise an additional $4.4 million at a $120 million valuation in another strategic token round, Nayman said.
“We're raising more from strategic partners that can assist us to grow, assist us to build the brand promise,” he added. “For us, the perfect timing to raise money is when you can, not when you need.”
What is Magic Square?
Magic Square is a one-year-old platform that wants to help the crypto industry garner one billion users with improved discovery tools.
Users can use Magic Square's Magic Store desktop application to easily find new crypto projects and applications.
“YouTube is a discovery channel, the app store is a discovery channel,” Nayman said. “In the crypto space, somehow people think that exchanges are discovery channels. They are not. They are good for tokens, liquidity but not for the discovery of the product.”
There are currently 40 people working to build what Magic Square hopes will be a decentralized community.
To get listed on the store, apps and projects must go through a community validation process, which includes a review of the project’s litepaper, audit reports and more. This process is managed by Magic Square validators.
Why so many strategic investors?
Backers of Magic Square include Binance, GSR, Republic Capital, Gravity Ventures, and more recently strategic investors Crypto.com, Huobi Global, and Gate.io.
The strategic investors play a vital role in helping build out the discovery platform by enabling partnerships with portfolio companies.
“This is something that was really helpful for us to grow our community, because we barely invested any budget on marketing or to promote the product,” Michael Landsberger, Magic Square's COO, said.
Around 95% of the projects on the platform came from an introduction by one of the company’s investors, Landsberger said.
Plotting a Series A
All the funding raised by Magic Square so far has been secured via token sales. Pure token sales are becoming a less favored fundraising method in crypto, with investors instead choosing equity plus token warrant structures, due to regulatory fears and depressed token markets.
Despite raising funds via tokens, Magic Square won't be launching the token on exchanges until market conditions improve.
After the Token Generation Event (TGE), which will occur alongside the launch of the live version of the Magic Store, the startup will look to secure a Series A round that will involve selling equity to investors, Nayman said.
A public beta version of the Magic Store is expected to launch by the end of this year.
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