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Kik CEO claims an ICO is better than venture fundraising

Ted Livingston, CEO of messaging app Kik, spoke on stage at TechCrunch’s event in Shenzhen, China on Tuesday. Moderator Jon Russell asked him about why the company is doing an initial coin offering (ICO), a newly popularized method of fundraising.

It’s”a way to raise funding” and “a way to get money into the company,” he said about the ICO. “What’s exciting about cryptocurrency is for us it’s been very hard to monetize in the western world.”

The ICO is resulting in what they’re calling “Kin,” a bitcoin-like currency. He said that the introduction of Kin payments into the community will “turn Kik into an economy” for its “millions and millions of monthly active users.”

But while many startups have been going the ICO route in recent weeks, what’s unusual about Kik is that they previously raised significant venture capital. When asked if the unicorn-valued startup had trouble raising additional funding, he demurred but claimed that the ICO is an alternative form of exit.

He believes that the ICO will provide an adequate return for the existing investors, which would take pressure off a possible acquisition or an IPO.

“We didn’t really like the idea of having to sell Kik one day,” said Livingston. As for an IPO, “I hope it’s not required,” he said.

While some people have made significant money off of bitcoin, others are skeptical that volatile cryptocurrencies are a good investment. Livingston can see it going either way.

“The way I think about ICOs is it’s very similar to the dot-com era. There was a bunch of excitement, people made a bunch of money, people lost a bunch of money but Amazon and Google came out of it.”

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