By Julius Tan | Imagine a marketplace of candy merchants, with stalls so neatly arranged that you are able to immediately identify your favorite sweets and how much they cost. This marketplace welcomes merchants from all over the country, with each vendor bringing a wide selection of candy of all kinds.
Best of all, the marketplace also allows people who made candy at home to sell their excess sweets at the market. Receipts at this marketplace are carved into chains of magic blocks owned by everyone at the marketplace that cannot be changed. That way, nobody at the market will ever get cheated.
Electrify functions much like the aforementioned marketplace, except that we will soon be developing smart contracts for electricity purchases and a new peer-to-peer energy trading platform. The technology will be built on a distributed ledger architecture with all transactions written to the blockchain.
ICO A Natural Step
In the case of Electrify, an ICO represented a natural step as a token economy was central to the functioning of our electricity smart contract and P2P energy trading platform, which is built on the blockchain. We recently raised US$30 million in less than 10 days through the sale of our ELEC tokens.
In a bid to ensure good behavior, we require energy producers to deposit tokens when they list. Beyond that, a token sale was also critical in helping us to quickly establish a community of users, which was invaluable in speeding up the realization of the ecosystem.
Through tokens, we’re seeking to empower our users with a means of participation in the process. The idea is that when users fund the development of a project, the interests of the project builder and user are aligned. This may not always be the case in traditional venture funding scenarios.
Traditional Backers, Too
However, the strategic value and access that traditional venture backing can bring cannot be understated. We made sure to engage institutional investors during our fundraise. These include organizations such as Global Brain, a leading Japanese venture capital firm, and Thailand-based OmiseGO, a business-to-business e-wallet payment provider.
Electrify’s long-term vision is fundamentally about democratizing access to energy. Having spent the bulk of my career in the energy sector, I saw how the industry was highly reliant on manual processes and physical records, mired in complexity and inefficiency in terms of time and money. I quickly came to the realization that these issues could be mitigated through digitization, optimizing processes and lowering costs.
At the same time, I observed that regional energy markets were steadily undergoing deregulation, opening the markets to competition and enabling consumers to purchase electricity from privatized energy companies. However, the conventional structure of power markets today poses challenges for small-scale producers in terms of accessing trading and settlement facilities. Entry into power markets for distributed energy sources has become economically unsustainable as they struggle to engage consumers in the same way as larger generators.
These observations ultimately formed the basis for Electrify – a transparent, cost-effective and simple way for consumers and producers of any scale to meaningfully participate in energy markets. As far as we are aware, no other company is offering a similar product to Electrify’s – a peer-to-peer energy trading platform operating on the main grid.
While many have championed an unregulated space without government intervention as being integral to the success and appeal of ICOs, it doesn’t mitigate the fact that the lack of government oversight increases the potential for less-savvy investors to be preyed upon.
In this regard, Singapore has some of the most forward-looking regulations for cryptocurrencies/digital tokens in Asia Pacific.
Regulations such as those introduced recently by the Monetary Authority of Singapore are a heartening sign that authorities are starting to recognize that ICOs are here to stay and are introducing measures to weed out the bad actors. We have been careful to design our token as a necessary facilitator of the network’s utility, without consideration of securitization. We heartily applaud the authorities’ national approach to this space.
Beyond ICOs, the Asia Pacific energy sector is also anticipated to offer many growth opportunities for us, with energy demand in the region anticipated to almost double in the coming years. There is also an overall move towards deregulation of energy markets in Asia Pacific, with major economies such as Japan and Singapore having embarked on the liberalisation of their energy markets. With energy efficiency likely to be a top priority, deregulation is also on the cards for the Philippines, China, and Vietnam.
As we expand our presence overseas, we anticipate encountering nuances across geographies, with each country having its own unique policy framework. To mitigate such regulatory risks, we will engage local authorities along with local partners prior to our formal entry into each market.
The first step to any successful venture is a willingness to take risks. For long-term sustainability, it is critical for startups to be supported by a capable team; that is, like-minded people and mentors/advisors that believe in the same vision for the company. Paired with intelligent execution, it is entirely possible for innovative ideas to be brought into reality. electrify.asia
About The Author
Julius Tan is the CEO & Founder of Electrify, an energy retail marketplace based in Singapore. Its next move is a new energy marketplace based on blockchain technology, which enables peer-to-peer trading from small-scale producers such as residential rooftop solar and wind turbines.