Payments Startup Omise Joins Wave of Digital-Coin Fundraising

(Bloomberg) -- Omise, a Bangkok-based startup backed by Japan's SBI Investment, plans to raise as much as $16 million selling digital tokens as it builds a new payment service based on blockchain technology.

Prospective investors can use ether, the digital currency linked to Ethereum, to gain the tokens, which will give them a share of fee revenue from the Omise Go payments platform the company is developing. The so-called crowdsale, which works in a similar way to crowdfunding, will kick off in May and the new payments service is scheduled for the fourth quarter, Chief Executive Officer Jun Hasegawa said.

Crowdsales have mainly been used by small crypto-currency outfits. The financing model raised $240 million in 2016, according to Outlier Ventures, which tracks the blockchain industry. While that's a fraction of the $34.4 billion it estimates startups raised through conventional crowdfunding in 2015, Omise's move signals that venture-backed startups are now turning to the new model for funds.

“We will be the first mainstream business to pioneer the use of a token sale to bring new product to market,” said Hasegawa. “For the public, this token sale provides an opportunity to share the benefit of a future Omise product, and later to participate in running the mobile money network itself.”

Last year, Singapore-based startup DigixGlobal became the first in the world to launch a crowdsale on Ethereum. Though the sale was scheduled for a period of 30 days, DigixGlobal hit its target of $5.5 million in just 12 hours, according to the company. Qtum, another Singapore-based startup, last week raised more than $15 million through a crowdsale.

By using blockchain crowdfunding rather than VC firms, startups like Omise can avoid selling company equity, according to Omise's special adviser, Thomas Greco. At the same time, they can also gain public participation, hoping to secure a broad set of stakeholders who want the project to succeed, he said.

Founded in 2013, Omise, which means ‘store' in Japanese, raised $17.5 million in a Series B round last year from investors led by SBI Investment. Other backers include Sinar Mas Digital Ventures, Ascend Money and Golden Gate Ventures.

--With assistance from Lulu Yilun Chen

To contact the reporter on this story: Yoolim Lee in Singapore at yoolim@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan