The industry’s first certified Shariah compliant digital gold app is now finalizing details of its maiden token sale it hopes would rake in at least U$8 million to fund its international expansion strategy.
Robin Lee was careful in terming HelloGold’s upcoming fundraising exercise as a ‘token sale’ and not an ICO (initial coin offering).
“Because we are selling tokens, therefore it is more appropriate to call it that,” Lee, CEO of the Kuala Lumpur online gold trading platform, tells IFN Fintech.
Lee’s prudence is understandable: ICOs and token sales are after all unregulated and seeing ICOs are often associated with the sale of securities, it could potentially traverse into sticky areas with regulators.
Planned for the 28th August, HelloGold will make its global offering out of Singapore, where it is viewed as an ‘ICO haven’ by some. Interestingly, Singaporeans and US citizens would not be allowed to partake in the offering – an exclusion common in other token sales due to regulations in Singapore and the US treating ICOs as a security offering.
The HelloGold Token (HGT) sale, which is capped at US$9.6 million (depending on the price of Ethereum), would be the first of a series: two more are in the pipeline depending on how the first one performs.
Proceeds raised will be used to fund the start-up’s expansion plans including enhancing its technology, marketing efforts as well as the cost required to build a geographical presence: it is working on tapping the Thai, Chinese and Indonesian markets next. After four months since it launched, it now has about 2,500 users; it targets 10 million over the next five years.
“As you can see, it is still very early days for us,” says Lee, who is nonetheless optimistic about HelloGold’s growth potential – a confidence perhaps built over his successful career in the gold investment space. In his previous career, Lee was CFO of the World Gold Council where he ran the world’s largest gold exchange-trade fund with over US$24 billion in assets under management. The Malaysia-born was also instrumental in introducing the Industrial and Commerce Bank of China’s gold savings product for the mass market which generated US$6.5 billion in sales every year.
“I thought to myself – I can also do this for the not-so-rich so that people can save better and when things go south – because it always will – they will have options that the rich have. I don’t think it is right that how much money one has should determine what one can or cannot do,” Lee shares.
Buying the ethereum-powered HGT would allow holders the opportunities to be rewarded with gold-backed tokens (GBT) at the discretion of the HelloGold Foundation, depending on the performance of the start-up.
“With the tokenization of gold, we will enable people to have the opportunity to use gold and to save outside of the currency from anywhere in the world. From a crypto world perspective, the token acts as a risk-free coin or ‘stable coin’ like the US Treasury bill because all other cryptocurrencies essentially rise and fall in the same direction – what differs is just the degree of the movement. Being all positively correlated means you don’t have a diversified portfolio. GBT allows investors to park their funds in a safe space,” Lee explains.
Gold as a social solution
As the start-up has its hands full preparing for the HGT sale, the fintech firm is also engaging various non-profit and social impact organizations to explore ways in which its product can be used to alleviate social problems. Lee will be meeting with the United Nations High Commissioner for Refugees later this month to discuss potential collaboration in assisting stateless individuals in North Africa.
“We want to see if we can provide HelloGold as a service – instead of volatile currencies which are inherently unstable because of conflicts – to help them save better and because we can transfer any amount, use it on a day-to-day basis and manage their risk much better,” Lee says, adding that there’s a granular shift toward cash when it comes to donation; however, cash donations are riddled with leakages between the donor and the beneficiary; HelloGold, in theory, can remove such leakages as the transfer is direct. The firm earlier also had discussions with a Singapore-based organization involved in assisting small-scale farmers.
“These farmers are poor and have the tendency to buy low-quality fertilizer which translates into low yield – it is a vicious cycle. We are trying to figure out a way to support them in buying better-quality fertilizer to enable them to get [a] better crop yield and therefore greater access to cash and help them save better,” expounds Lee. The move is calculated: once these farmers are ready to up production and require financing, HelloGold would be well-positioned to provide credit against gold.
“While we build a business to make money, this is my project to fix these problems. Let’s be fair: we want to make money from it – we plan to charge a fair fee according to transaction sizes,” Lee clarifies. But it was also clear that Lee is passionate about removing affordability and accessibility from the financial equation – to democratize financial services.