We assign the Crowd Genie project a "Stable" rating. We consider that participation in the project’s ICO may be interesting to long-term investors who are betting on growth in the online lending market and increase in the number of platform users, as well as to future users of the platform.
The Crowd Genie project has been operating since 2016 and has a working business based in Singapore together with a customer base.
The growth rate in the online lending market in the Asia-Pacific region and prospects for its development will contribute to the successful implementation of this project.
Among the positive aspects, the team has sufficient experience and expertise to implement a transition to new technologies. However, there are a number of negative points that prevent us assigning a higher rating to the project.
Ð¡rypto assets are not yet sufficiently widely used for carrying out credit transactions on a large scale. Popularity is growing, but payments made exclusively in tokens on the platform create the risk that many market participants would choose not to use the platform, instead opting for classic models of lending. We note that the founders take this risk into account in their model, and plan a gradual transition to payments in tokens in order to decrease it. To further decrease this risk, they are offering beneficial terms to token holders, e.g. the admin fee will be 0% for the first 2 years. In subsequent years the fee will be increased, but it will remain lower than the market average. This factor will surely play a positive role in project development, but currently it is hard to assess its future effect.
All of the above reasons, together with growing competition in the market, a not fully elaborated mechanism for guarantees for investors and some other factors detailed below, have influenced the project rating for Crowd Genie
General information about the Project and ICO
Crowd Genie, a company based in Singapore providing small and medium business lending since 2016, is moving its lending platform to blockchain technology. The main reasons for the transfer of the existing business to this technology are to make business loans faster, cheaper and more convenient for all participants using their own cryptocurrency, CGCOIN, as well as an opportunity for the company to expand its business in the Asia-Pacific region.
The company has a "Dealing in Securities" license from the MAS.
Smart contract platform: Ethereum blockchain
Contract Type: ERC-20
Start: November 21, 2017
End: January 31, 2018
Price: 1CGCOIN = 0.0025 ETH
Minimum Purchasing Volume: 1ETH (400 CGCOIN)
Maximum Purchasing Volume: No restrictions
Accepted currencies: BTC, ETH.
ICO Start: February 1, 2018
ICO End: March 1, 2018
Minimum Purchasing Volume: 0.1 ETH
Maximum Purchasing Volume: No restrictions
Soft cap: US$5m
Hard cap: US$35m
Maximum number of issued tokens: 60,000,000 (no additional emissions)
A bonus program is provided for Pre-ICO and ICO:
The referral bonus of 5% is valid until January 31, 2018. Each ICO participant has an opportunity to receive a referral fee each time their friends buy CGCOIN tokens before 31.01.2018. Payment of the referral fee will be in the currency in which these friends pay for their tokens.
The 60,000,000 token distribution will be as follows:
Funding raised during the ICO would be distributed as follows:
Investment in Crowd Genie platform listings — 45%.
Team expansion and platform development — 30%.
Regulatory compliance, legal licenses and cybersecurity — 10%.
Business development and overhead costs — 15%.
There will be no additional issue of tokens.
Description of the services and scope of the project
The Crowd Genie platform has been in operation for 1.5 years and provides only unsecured loans at present. According to statistics given in the documentation, the typical loan size is from $30,000 to $1m, with an average loan term being between 6 and 24 months.
After switching to blockchain, Crowd Genie will offer the following features:
Borrowers and lenders will be both able to carry out transactions using CGCOIN tokens.
Loans on the platform will be pegged to fiat currency, for example to US dollars, and they will be issued in tokens at equivalent market price on the date of loan issue. Repayment is also made in CGCOIN at the rate at the time of redemption. This mechanism will allow the platform to be an international one.
After receiving a loan, a borrower can exchange their CGCOIN tokens through a third-party exchange to a currency of their choice.
GenieShield is a service fund which serves to protect lenders from delays in payments (delayed payment of a contribution of more than 21 days) and defaults (overdue payment of a contribution of more than 120 days) from borrowers. It will be managed by a regulated escrow agent in Singapore.
A team of experts together with an AI-powered credit scoring engine will assess the creditworthiness of each borrower, and approve applications only from the most creditworthy; Due diligence will be carried out for each SME borrower and lender, and for SME borrowers, a check on 40+ variables will be held, to confirm information provided by the company and its key directors.
It is planned to create digital passports containing verified information on each Crowd Genie user. Data from these passports as well as SME borrowers will be recorded on the blockchain, guaranteeing their invariability and ease of verification.
The directors of Crowd Genie will be co-investors for each issued loan, together with the principal creditors.
A Business Loans Asset Exchange system will be present, whereby lenders can trade and transfer ownership of assets either in fraction or full to interested buyers.
Crowd Genie will use the Equitasasia debt icollection agency and a team of lawyers to recover funds from borrowers who do not fulfil obligations.
The use of CGCOIN tokens on the platform provide the following additional features for participants:
For the timely redemption of a loan a borrower will accrue CGCOIN "credits", which will be monitored via the digital passport as an aspect of the borrower’s reputation. Reputation is stored as a record. This record can be shared with banks who have earlier rejected a borrower’s application due to lack of records — this could potentially benefit both borrower and bank. Most importantly, borrowers would now have access to a global community of lenders i.e. greateer access to capital.
A possibility for selling tokens at any time on any exchange where CGCOIN is quoted.
By using the tokens, a borrower will be able to transfer their loan directly with a small commission fee (0.5% per transaction).
The scheme for token use in the ecosystem is presented in the diagram below:
After conducting due diligence/KYC and obtaining a digital passport, a borrower will begin to create their credit history based on records on the blockchain for each transaction, ensuring transparency. Those paying debts when due will create a positive credit history and can expect better terms for lending in future. The better the history, the lower the interest rate.
In our opinion, the information provided in the documentation clearly illustrates the platform’s mechanisms for protecting lenders’ assets, as well as its provision for anonymity of transactions.
Engineering features of the project
The smart contract repository is available on Github:
CGCOIN is a cryptographic token of the ERC20 standard on the Ethereum blockchain; it is a utility token.
The following data protection measures are used when using the current platform:
Login and password are used to log in; passwords are saved in the system in encrypted form.
Any information entered on the Crowd Genie website is encrypted using SSL encryption.
For security reasons, the system automatically exits after a certain period of inactivity.
According to a University of Cambridge report, an Australian Centre for Financial Studies report and also a report from Tsinghua university1, an alternative online financing market is actively developing in the Asia-Pacific region. The total market volume in 2016 for the following countries in the region (China is excluded) was as follows:
The alternative financing market in Southeast Asia in the period from 2013 to 2015 showed rapid growth, with an average annual growth rate of 109%. In 2016 total market volume reached $215.94m, which corresponds to a growth of 363% compared to the previous year, when only $46.65m were attracted.
If these growth rates are maintained at an average of that of recent years, the size of the market could exceed $1bln by 2019.
The market for P2P business lending has shown explosive growth; the growth rate in this segment for 2016 exceeded 1000% per annum.
Thus, the growth rates for alternative online lending business reflect an increased demand for this type of service. In our opinion, companies providing loans such as Crowd Genie could also grow given these conditions if they attract sufficient investment. Favorable conditions could well be created for expansion of the company and scaling the business in the Asia-Pacific region.
Competitors and competitive advantages of the project
Among Crowd Genie's direct competitors on blockchain we note the following ones:
SALT Lending - a FinTech company built on the Ethereum blockchain, allowing one to use blockchain assets to provide cash loans. Main conditions for loans on the platform:
To obtain a loan you must be a tokenholder.
AML/KYC procedures are carried out.
Minimum loan size is $5000, maximum is not limited.
Loan repayment is available using BTC, ETH, credit and debit cards.
Instead of using credit scoring, volume of a borrower’s blockchain assets is estimated.
All lenders are tested against a SALT Lending Suitability test.
WishFinance is a global blockchain Platform as a Service for small business lending, operating since 2016. Main conditions for loans on the site are as follows:
The interest rate depends on the size of the capital and ranges from 5% to 28% per annum.
Loans are issued only for companies with more than 6 months’ history of non-cash transactions.
A neural network analyzing Big Data and portfolio performance reports is running (currently in prototype).
The token is used to create and manage a credit portfolio on the platform; each token allows you to manage one active loan.
Commission for the use of the platform is 2% of the entire loan portfolio managed by the platform.
The whole process from application submission to loan issue takes no more than 24 hours.
ETH Lend is a p2p/b2b/b2c lending platform, which has operated on the Ethereum blockchain since May 2017. The main conditions are as follows:
ERC-20 compatible tokens or Ethereum Name Service (ENS) domains are used as security for loans.
Credit risk assessment is performed using artificial intelligence and ledger Big Data.
A decentralized insurance policy provides credit risk insurance.
An API for creation of lending brokers-bots.
The platform token provides an opportunity to receive discounts on granting loans, rewards for active platform participants etc.
The advantages of Crowd Genie over competition are as follows:
A digital passport containing key information for credit ratings is available. Crowd Genie will be building an asset exchange for the purpose of liquidity.
The platform is licensed in Singapore.
Protection for investors' funds is provided by the GenieShield reserve fund. All loans are backed by the directors as a personal guarantee.
To align with stakeholder interest, the directors of Crowd Genie co-invest in each loan together with the main lender.
Borrowers must be established companies operating for more than 2 years, having their own product/service and regular customers.
Crowd Genie is a working business, having been providing loans for 1.5 years; consequently, it has already occupied a niche in the lending market. However a transition to payments exclusively in tokens for the platform could alienate some clients as not everyone is ready to move from fiat currency to cryptocurrency payments, with all their unpredictable volatility. The reason for this is that the cryptocurrency market is still only in its beginnings of popularity; many participants will need more time to accept these new market realities. The founders take this risk into account in their model; to decrease it they are planning a gradual transition to payments in tokens.
Interest rates on loans provided on the platform are at the same level as the average interest rate in Singapore, and they do not offer much of an advantage to lenders and borrowers compared to loans in fiat. Thus the founders’ expectations regarding the number of borrowers on the platform may not be realized; this would lead to a decrease in token turnover rate, token demand and therefore CGCOIN token price.
The rate for 1 CGCOIN during the ICO period is pegged to ETH. Given the high volatility of cryptocurrency this creates an additional risk, because in the case of growth for ETH, the price of 1 CGCOIN clearly increases as well.
Also, we believe that the mechanism developed by the founders to guarantee repayment to lenders does not offer the level of security announced in the documentation. According to information on the site, decisions about repayment are at the management’s discretion.
As we can see, the Crowd Genie project has a number of risks that could significantly affect the success of the ICO.
The project team is represented by 11 specialists and advisors. Leading positions are occupied by:
AKSHAY MEHRA – CEO and Co-Founder of Crowd Genie (LINKEDIN)
Akshay has worked for Crowd Genie since January 2016. He has experience in capital markets and financial consulting. In the past, he was brand manager at Procter & Gamble, and gained a Master of Administration at the Indian Institute of Management. More than 15 years of experience.
Indian Institute of Management, Calcutta.
BIKASH SAHA – Executive Director and Co-Founder of Crowd Genie. (LINKEDIN)
Retail banker with 20 years of experience. COO of Standard Chartered Capital Korea, 2011 – 2014.
Executive vice-president of Standard Chartered Bank, 2014 -2016. Working for Crowd Genie since March 2016.
Indian Institute of Technology, Madras.
Indian Institute of Management, Calcutta.
PETTER SEHLIN – Blockchain Adviser (LINKEDIN)
Member of True Global Ventures I, II and III investment committee. Petter has worked in the digital consulting business, representing technical knowledge and the financing of blockchain-based products. Working for Crowd Genie since August, 2017.
Risbergska School, Örebro
EDUARD DZHAMGARYAN – Marketing Advisor (LINKEDIN). Crowd Genie since January 2018.
SHAILESH VENKATRAMAN – Advisor on Capital Markets (LINKEDIN). Crowd Genie since March 2017.
The team includes specialists in all major areas: blockchain, marketing and finance. All project members have extensive experience in their fields. Legal support is provided by Singapore firm, Allen & Gledhill. The current make-up of the team is recent, however, the stages implemented to date in the development of the project enable us to conclude that its staff have all the necessary skills to implement future plans.
As the business grows it is planned to take on more staff.
Development strategy and Roadmap
The main goal for the project is to create a single exchange for business loans in Asia. Crowd Genie has been in the market for alternative online lending (www.crowd-genie.com) since 2016.
Graphically, the company's development plans are presented on the website as follows:
Key stages in the development of the platform are:
Creation of the digital passport service — July 2018.
Lending platform tokenization — September 2018.
Implementation of the asset exchange service — February 2018.
An important stage in the development of the project which could influence the token price will be the the program for buyback of the tokens from the market. The documentation states on this subject: “At the end of every quarter beginning 1 July 2018, 80% of the net profit of CGCPV Pte. Ltd. will be used to buy back tokens at market price until the cumulative amount in USD spent on token buyback is equivalent to the amount raised in the ICO”.
After May 2019, the team will consider expanding to regions other than Singapore, Australia, India and New Zealand, such as Japan and Korea.
On social media there are comments from the founders regarding entering exchanges. According to information available, it is planned to place the tokens on the OkEx Exchange immediately after the end of the ICO.
Thus, the stages of development and promotion of Crowd Genie's platform make sense, and as can seen from the roadmap, the application of licenses in Australia and India and a Singapore retail license will increase the number of SME borrowers on the platform. It is quite possible the project will achieve its objectives within the specified time frame.
3% of CGCOIN tokens issued during the Pre-ICO and ICO periods will be allocated to the global marketing strategy. This is 1,800,000 tokens in total, which will be distributed as follows:
Google ads – 10% of marketing pool
FaceBook ads – 10% of marketing pool
Press releases on mainstream media – 20% of marketing pool
Press releases on crypto websites – 20% of marketing pool
YouTube videos – 15% of marketing pool
Banner ad – 25% of marketing pool
Additional funds for future promotion are not included in the budget.
Currently, bounty hunters are engaged in the promotion of the product. 1,800,000 CGCOIN will be allocated to the Official Bounty Program.
The distribution of CGCOIN tokens for the official bounty program is as follows:
Facebook campaign – 10% of bounty pool
Twitter campaign – 15%
Bitcointalk signature campaign – 25%
Bitcointalk translation campaign – 10%
Article or blog post – 15%
YouTube video campaign – 25%
The Crowd Genie team is currently drawing attention to its project and to the upcoming ICO via the following means:
Interaction with the community via the Bitcointalk forum (high activity) and via Telegram (5101 participants). The number of subscribers on Facebook was 7982 at the time of writing, and the number of Twitter followers amounted to 5342.
A YouTube Channel with 27 subscribers; a video about the project had 16708 views at the time of writing.
A bonus system has been developed to attract investors during the token sale period. Details in the "General information about the project and the ICO" chapter.
Accounts are present on all major social media. However, the parent company, Crowd Genie Financial Services Pte. (CGFS), has a very low level popularity on social media.
According to the information on the website, the project has already raised $2m.
As we can see, the global marketing strategy focuses mainly on drawing attention to the project through social media, press and project partners, i.e. through advertising campaigns.
Economy of the Project
The allocation of funds for main aspects of the Crowd Genie project depending on funds raised during the ICO period will be as follows:
If the soft cap ($5m) is reached:
If the hard cap ($35m) is reached:
Following the ICO, the main sources of revenue for the platform will be:
Income from investing in loans.
Profits from commissions for transactions on the platform.
The main lender on the platform will be CGSPV Pte. Ltd., a Singapore company related to Crowd Genie Financial Services Pte. Ltd. (CGFS). CGFS is a company registered in Singapore that runs the www.crowd-genie.com platform, and holds a license from the Monetary Authority of Singapore for running a crowdfunding platform in Singapore.
The granting of credits on the platform will be possible only for Singapore incorporated companies and/or Limited Liability Partnerships. Loan amounts will be from $50,000 to $500,000, and the credit period will vary from 6 to 24 months. The loan rate will be set at a level between 15 and 22%.
Loans will be offered to borrowers in CGCOIN tokens at the rate of fiat currency at the time of the transaction. A borrower, after successful registration of a loan on the platform, will be able to exchange CGCOIN tokens through crypto exchange to a fiat currency. Redemption of loans by borrowers will also be carried out in tokens at the moment of redemption, so they will first need to be purchased at a crypto exchange, to the amount necessary for redemption of the loan, to be used for payment on the platform. This mechanism enables lending and borrowing in a currency convenient to all participants of the transaction, as well as payments being made in tokens.
The purpose of the GenieShield Fund, which will also operate on the platform, is to provide guarantees to lenders. In the case of any delay in redemption of a loan or the fulfillment of obligations by borrowers, the fund will ensure borrower obligations are fulfilled and lenders are compensated. At the same time, there is a warning on the company's website that payments from the fund will be made only given availability and via a management decision.
The documentation provides a forecast for financial growth for the project:
A six-year financial model is presented. It predicts 100% annual growth in the quantity of business loans granted to borrowers by external lenders, and a 25% increase in loans provided by the Crowd Genie platform itself. As a result of this growth, the platform will also increase its income from interest by 25% annually. Commission for transactions on the platform will be charged at the rate of 0.5% starting from the second year; the amount of revenue from commissions will increase twice annually. These two items will provide the majority of income for the platform. Salary costs will increase by 25% annually (this is normal, since expansion of the staff is planned); the growth in costs for technological development will be 10% each year. Overheads will remain unchanged for six years. Developmental costs for the third year will be $300,000.
As stated by the founders, 80% of net profit will be used to redeem CGCOIN tokens from exchanges on which they are quoted. Such buybacks will be held quarterly on a permanent basis, until cumulative amount spent on buyback reaches the amount raised during the token sale period.
In our opinion, the financial model depicts an ideal situation. The growth rate for the business corresponds to the growth rate of the market in general, but this figure is difficult to forecast on a 6-year horizon.
Token investment attractiveness
There are a number of factors in the long run that could affect the liquidity and price of the CGCOIN token:
The first is listing on exchanges: Quotes on key crypto exchanges will permit token holders to exchange them for fiat currencies or other cryptocurrencies.
The second is buyback of tokens: Crowd Genie will buy back tokens at market price on a quarterly basis from exchanges starting from July 1, 2018. 80% of net profit will be allocated to this, until the aggregate amount in US dollars spent on redeeming tokens is equivalent to the amount raised during the ICO period.
CGCOIN tokens do not confer ownership rights to their holders, nor voting rights or entitlement to dividends. The CGCOIN token is exclusively of an infrastructural nature and is intended for payments within the platform. Thus, the main factor increasing the price of the tokens will be an increase in number of participants, as well as growth of turnover, since CGCOIN is the sole means of conducting transactions on the platform. This fact will certainly support token quotes, but one should consider this point in more detail as a result. Since all payments on the platform will be pegged to fiat currency exchange rates, when turnover increases and the token price therefore grows, it will require the purchase of a smaller amount of tokens than was necessary for the credit transaction. This will also affect the price. For this reason, any increase in the number of users and growth in the token price will not occur in a linear fashion. In this case, growth in the token price will be more a derivative of the loan rate.
Given all the above facts, we believe that participation in the Crowd Genie ICO may be of interest to:
Short-term investors. Given the bonuses, their expectation can be economically justified.
Investors with a long-term investment horizon, betting on the growth of the platform.
The information contained in the document is for informational purposes only. The views expressed in this document are solely personal stance of the ICOrating Team, based on data from open access and information that developers provided to the team through Skype, email or other means of communication.
Our goal is to increase the transparency and reliability of the young ICO market and to minimize the risk of fraud.
We appreciate feedback with constructive comments, suggestions and ideas on how to make the analysis more comprehensive and informative.