PARKGENE Rating Review
|Start ICO||15 Jan 2018|
|End ICO||19 Mar 2018|
We assign the PARKGENE project a “Stable” rating.
The project is entering the market with an interesting and potentially popular idea. The project is well developed, its documentation answers all foreseeable questions, and the project has a well thought-out and reasonable financial model. The team’s qualifications do not raise any doubts.
However, as with any project functioning at the intersection of the cryptocurrency and offline worlds there are some risks for the realization of all the founders’ plans. In particular, it is unclear whether it would be possible to shift all payments to tokens.
The GENE token is a utility token intended to be used for payments on the platform. The growth potential of its value will depend not only on how many parking deals will be paid for with it, but also on how clients will use it: whether for renting a parking space or to sell it to receive fiat income. In our opinion, most parking customers will still convert GENE to fiat, which will slow the growth of the token price down; however, growth will still be positive if token demand exceeds supply.
General information about the Project and ICO
Parkgene is a decentralized platform for searching and paying for parking places worldwide. The project’s developers are familiar with the parking market, and they already have one working project in this segment — an application called PARKGURU. So a transition to the blockchain sector, with a subsequent expansion of functionality, is seen as a logical and technological development of the existing service, provided that the team achieves their set goals and a really significant client base for the program is created.
The Parkgene team aims to create an international ecosystem built on the Ethereum blockchain, based primarily on P2P communication, reducing parking costs and simplifying interaction between drivers and parking space owners. The Parkgene platform itself will act as an infrastructure; participants pay commission for its use.
A significant advantage for the project may be in the fact that its plans are not limited to the solution of parking problems; they also involve future development of the platform with the addition of many other car-related services.
ICO Start: 15.01.2018
ICO End: 19.02.2018
Hard cap: US$35m
Pre-sale hard cap: 20m GENE or US$2m
Soft Cap: no data
Token: GENE Token
ICO Price: 1GENE = $0.1
Accepted currencies: Bitcoin, Litecoin, Bitcoin, Dash, Ether and USD
Total issuance: 1,000,000,000 GENE
Allocation of funds: When using the funds raised, the team will focus on the development of software functionality, product marketing and research in accordance with the roadmap:
Escrow: Funds received during the crowdsale will be automatically deposited to the escrow account.
The PARKGENE project has well-developed documentation; in particular, the white paper is detailed, and contains answers almost to all questions that might arise.
Description of the services and scope of the Project
At the moment, the application’s planned functionality is simple but sufficient for performing the task in hand: the leasing or renting of parking spaces. The developed platform will consist of mobile applications and web-applications.
Users are divided more or less into two groups: tenants and parking owners. They will receive the following opportunities:
1. Choosing and reserving a parking space. This is the main service provided by PARKGENE. At the moment, drivers using paid parking are generally forced to settle for parking spaces available at the time of arrival. The chance to book a parking space would enable booking as close to one's office as possible before leaving home. Moreover, it would be possible to book a space for the necessary period of time.
It is difficult not to agree with the team that this service will save time, reduce costs that drivers often do not notice themselves incurring while looking for parking spaces, and positively affect congestion in the centers of big cities.
On the other hand, the attractiveness of this function for parking space owners raises some doubts; due to serious congestion in business areas in major cities and a high demand for parking, space owners might prefer to provide parking for a potential client who has already reserved it rather than to a client who is a last-minute booker.
The process of finding and selecting a parking space is down to the driver, although it would be interesting to introduce a search option for an optimal parking space based on, for example, price in the region in question. For example, for parking right next to a shopping mall but for a reduced price. Generally speaking, a service similar to the one used on websites for example for finding airplane tickets at favorable prices.
2. Parking fee. To facilitate the payment process, a GENE token wallet will be integrated into the ecosystem. The project plans to provide functionality for convenient purchase of GENE tokens both for fiat and for the most popular cryptocurrencies. Transactions between users' wallets are carried out in such a way that the rent is transferred to the "repository" during the parking session, at the end of which an owner receives the fee minus commission. From ~ 20% of the sum intended for financing the ecosystem, after some time 5% will be distributed among drivers and parking space owners in return for actions such as rating each other or writing reviews.
This is a delicate nuance, as the cost of parking will be nominated in fiat currency and paid for with tokens. Tokens will be quoted on several exchanges, which may cause some difficulties with determining fair market rates. In addition, the volatility of cryptocurrency increases the risks for P2P participants renting a parking space while tokens are frozen in the repository.
The creators have announced the possibility of additional functionality, for example, such features as the key to the gate for rented parking or the ability to monitor a parking space occupied by the driver for the owner. These ideas require the purchase of additional equipment – the team assures that the cost of equipment will not exceed $29.
In the documentation the team also describes the expansion of the ecosystem by supplementing it with participants from other areas of the automotive sector (as an assumption). The functionality in question and the role in the program are not described, but this aspect could be a large proportion of what might be claimed by drivers.
The application's client interaction process is represented by the following scheme:
The success factor for the project, in our opinion, could be the facility for the simple renting or subletting of parking spaces by private individuals using their parking only at certain times of the day, for example, for night parking, while the space remains empty during the day. Providing an hourly lease of your vacant parking space without using such an application really seems complicated, and using PARKGENE will enable the parking space owner to receive additional income and also increase the number of available parking spaces in the city. However the increase will be insignificant since many sought-after parking spaces do not belong to the private sector. This prospect will provide an influx of users seeking additional income or wishing to reduce the cost of renting a space by subletting.
The project team has carried out a detailed and comprehensive market analysis in its white paper, taking into account various international studies in the field.
The emphasis in the analysis is laid not only on the price of the parking itself, but also on associated additional costs such as fuel spent during the search for a free space, as well as time costs and the increase of traffic in cities. In general, based on an analysis by Frost & Sullivan, volume in the parking industry at the 2014 stage has been estimated at US$100 bln.
So as not to repeat the detailed report on the state of the industry that can be found in the project’s white paper, we will focus on the market for parking solutions. An increase in the number of cars, the shortage of parking spaces in large cities, and the fact that road traffic is compounded by drivers searching for free parking spaces by approximately a third, all create favorable conditions for growth and development of the so-called parking management market, whose volume was assessed at US$4.19 bln in 2013. By 2018 according to the forecasts it should make up US$7.2 bln. The situation for the organization of parking spaces depends on the specific region, economic conditions in the region, parking infrastructure and the number of cars; however in general the global market shows stable growth. Considering for example the USA, one of the world's largest parking management markets, projected growth will be from US$1.5 billion in 2013 to US$4.11 billion in 2022. This is clearly favorable for companies offering smart parking solutions.
The project team has an impressive number of specialists, and information about the management is provided in detail. The description of the project indicates that its employees have sufficient experience in application development, business management and the launching of products.
The project site and white paper provide the following information about the team members:
Key figures are:
Tasos Flambouras, Chief of Digital Strategy (Facebook, LinkedIn, Twitter) — entrepreneur and pioneer in the gaming field in Greece, has a considerable track record and plenty of experience in product development and the launching of products. He is a mentor for startup projects.
One of the positive aspects of the project is the fact that advisors consulting the team are also represented on the site. Some advisors are experts in blockchain, IT, cryptocurrency and parking.
In general, we can conclude that the project team has a fairly high level of competence and professional experience in their various fields, which points to a successful implementation of the idea.
Development strategy and Roadmap
A beta version of the service should be released in February 2018 according to stated plans. Further geographical expansion would be gradual: the team cites Athens (where it would probably be easier to consolidate, as 50,000 residents already use their other service, PARKGURU, according to the team); London, Manchester, Moscow, St. Petersburg, Paris, Marseille, Rome, Milan, Barcelona, Warsaw, Bucharest, Chicago, Los Angeles, New York, Bangkok, Istanbul, Shanghai, Beijing, Guangzhou, Mexico City, Tokyo and Osaka. In May 2018 a full-fledged working version of the application will be launched; in June the global marketing program commences.
We believe that the service has better chances for development in countries where centralized municipal parking is not so developed. For example, in Russia, where in many places parking along the road is still not regulated, there are not many paid parking spaces in city centers, but there are a lot of areas for residents which lack traffic rules for parking (mostly due to the fact that police access there is limited). These are the type of place that can be rented to people working nearby and those with problems locating parking spaces.
In Western Europe, for the most part, parking is very tightly regulated. There is a large quantity of paid underground or multi-storey parking, and there are often signs showing the number of available parking spaces at the entrances to city centers. Thus in Western Europe from our point of view, the prospects of development for Parkgene are less promising.
The Parkgene team, realizing that P2P parking is a burgeoning market, is apparently realistic about its own strength. Indeed, if PARKGENE reaches hard cap, the team will have an advantage over many small regional players, which will allow it to win the competition for market share and customers. In addition, M & A is pledged to the budget which is planned to be financed by GENE tokens from the Future Fund.
1. Product marketing
The team is planning to spend 40% of funds raised during the token sale on marketing; these funds will be used to create global advertising campaigns starting in June 2018, aimed at attracting new users. We believe that marketing campaigns will be conducted in cities indicated in the previous chapter.
The marketing budget until 2027 is estimated by the team between approximately $15.4 million and $77.4 million for attraction of new customers and from $10.2 million to $43.8 million for brand recognition, depending on which scenario the project will be developed (there are three possible scenarios: pessimistic, conservative and optimistic). Moreover, annual volume of the marketing budget increases from $600,000 ($1,000,000) in 2018 up to $5,000,000 ($25,000,000) in 2027 which seems illogical, since an aggressive marketing strategy is required at the initial stage of project development to attract the maximum number of participants. Information about the project will then be transferred from consumer to consumer which wll increase participation without active marketing.
A good marketing point is the audience already gained for the first project by the developers - PARKGURU. The team estimates this to be 50,000 people.
Another marketing tool will be the creation of a charity fund announced in the Parkgene white paper, which will be replenished by:
Tokens which are not used for the bounty program during the ICO
Donations from third parties
Donations from the Parkgene Future Fund
Distribution of funds, including user voting, will be implemented as follows:
2. ICO Marketing
The bounty program has been announced in the white paper and on the website. The issuance of tokens is planned to be limited to a figure of 50,000,000 GENE or 5% of the total planned token emission. There are two methods for obtaining bonus tokens within the program:
5% of transaction amounts from clients who purchased tokens at participants’ recommendation: A referral program.
Traditional implementation of various tasks to disseminate information about the project that offers free tokens to participants. Schematically this is represented as follows:
ICO marketing is implemented at an appropriate level. The project was announced on bitcointalk.org; the thread includes 45 pages of discussion, but is generally characterized by low interest from the community and low activity. As for social media, the project is covered on Instagram pages (105 followers), Facebook (6,133 subscribers), Twitter (1116 followers), Medium (10 subscribers). The team leads a chat group on Telegram (783 participants) and a youtube channel (13 subscribers). There are also a number of references to the project in mainstream media such as the International Business Times (16 million audience) , InvestorPlace (3 million audience), FOX12News (4,2million audience), STAR Tribune (10,8 million audience), and NEWS BOSTON; the team mentions about 150 articles in various media.
The website itself has a convenient interface and a well-developed FAQ section; there is more than enough information about the project in the documentation. There are problems with switching between languages on the website; thus information is provided in English only.
Competitors and competitive advantages of the project
Considering PARKGENE as a decentralized platform for parking space rental, it is difficult to be precise about direct competitors for the project. The founders themselves compare the concept with the companies Airbnb and Uber, and mention several recent start-ups which offer a P2P Parking scheme but do not have enough scale to take serious positions in the market; JustPark (which has been operating since 2006 and is used by 1.5 million drivers and about 20,000 parking owners), ParkEasier and CitiFYD are regarded as competitors.
In addition, the team shared with us an analysis of competitors including 27 third-party companies; only two of which operate worldwide. According to the team’s analysis of competitors, only Parkguru covers all three segments - On Street Parking, Off Street Parking and P2P.
We can add that there are many local mobile applications which offer parking for rental or search for parking places by one means or another. It is also worth mentioning that Google maps or other navigation systems show free parking in a given location. The main difference with PARKGENE is the following points:
Firstly, it is a decentralized platform, although the advantage of is not obvious to the user. We do not believe that the blockchain component can become a main advantage for the project, or that it is necessary for implementing the application.
Secondly, extensive marketing is a resource for which PARKGENE is planning to attract funding during the ICO. Scaling the project, its audience and connecting the maximum number of parking owners is vital for successful functioning.
The PARKGENE team provides an ultimate scenario for developing its business, consisting of two key points:
1. Due to ease of leasing user-owned parking spots, a two-fold increase in parking spots in cities is expected:
Doubling is supposed to be achieved due to the fact that each user will not only rent a parking spot, for example, next to work, but at the same time rent out his own parking spot (at home). Most likely, this effect will not be so significant. The claimed parking spots, as we have pointed out are often not in the hands of private individuals and the number of individual parking spots to be leased does not match the number of municipal and professional parking lots. In addition, the relevance of parking depends on the demand and the number of available spots. These two variables depend on time of day, area, etc. In other words, demand for parking in the CBD of the city on a weekday will not be equal to demand for parking on the outskirts at the same time of day.
2. PARKGENE is a ten-times cheaper alternative to parking lots and garages.
The sense is in balancing parking costs with income from renting your own parking at the same time. In this case, net flow rate will be equal to the value of the PARKGENE commission. But in practice the cost of parking will be different, as well as the rental hours.
We also have doubts that parking will really cost $5 instead of $10 as described in the documentation (i.e. twice as cheap). In areas where parking is in demand, demand will still exceed supply. As a result, price will tend to the market average figure which minimizes PARKGENE’s parking discount in comparison with municipal or private paid parking.
Nevertheless, we note that despite optimism on the part of the team regarding the ultimate scenario, this is not laid out in the financial model, where it is clear that the actual effect will be less significant.
Economy of the Project
PARKGENE acts as an infrastructure intermediary between driver and parking space owner. The price of PARKGENE commissions will be 10-20% of parking cost. Commission variability is due to the fact that parking is worth different amounts in different regions, whereas PARKGENE’s costs are nominated in absolute numbers. Thus, the company is planning to regulate its revenues in different countries in order to equalize the regional margin.
PARKGENE plans to cover operational, development, cloud services and advertising costs through commissions.
PARKGENE approaches its financial aspect in a highly responsible manner. The team provided us with its own financial model which includes three scenarios for platform development, calculations of profit before taxes, cash flow, as well as a forecast for the future price of the token.
We appreciate the financial model for the P & L forecast: the team made realistic assumptions regarding the dynamics of market share. This increases the relevance of the data since figures provided are achievable on condition of developing a truly high-quality product. Moreover, they could be much higher.
According to the basic conservative scenario, PARKGENE will be unprofitable until 2022; however, the accumulated loss will be easily compensated for by means of funds attracted during the crowdsale.
Conceptually, from our point of view, the ICO is not the best mechanism for attracting investments for PARKGENE and tokens are not the best means of payment for services. The project is aimed at ordinary people, not the crypto community or representatives of any advanced industries. For an ordinary person, buying a token is still inconvenient, which means that PARKGENE takes on all the risks associated with both the regulation of cryptocurrencies and utility tokens in various jurisdictions in the future and the usability of cryptocurrency for the average person.
Providing a service allowing you to purchase GENE tokens via a bank card, in many jurisdictions would be illegal. It also complicates the functioning of the application regarding municipal parking.
At the end of the section, we would like to talk about the security of using PARKGENE: the business process assumes a temporary "freeze" of GENE tokens in the PARKGENE depository between the moment of writing them off the driver's balance and expiration of the rental period, i.e. the moment when tokens are credited to the parking space owner. We have discussed the problem of hacking with the team; we get the impression that the team is approaching the problem in a very responsible manner.
Token investment attractiveness
The GENE token is a utility token which will be used for payments within the platform. The driver buys GENE tokens and pays for services provided by the parking owner with them. The owner receives 70-80% of the value of tokens written off from the driver’s balance. The rest is platform commission, minus 5% of tokens which will be returned to users as a reward, a sort of cashback.
The investment attractiveness of GENE tokens will depend on the extent to which the structure of the movement of assets within the platform will be looped. Let us consider two scenarios for the development of events:
Scenario 1: Implementing the ultimate scenario
An assumption of the founders is that the P2P parking service will be looped. In other words, drivers in the city center will simultaneously rent out their own parking lots on the outskirts where they live and vice versa. Thus, the driver simultaneously acts as a parking owner which enables doubling the number of parking spots and significantly reduces costs.
In this case, 80-90% of money flowing into the ecosystem will remain there forever (or, at least until PARKGENE loses competition to anyone, if this happens). In any case, 10-20% of funds will leave, since these are PARKGENE’s commissions levied for the payment of fiat costs.
As the popularity of the platform increases and the number of users increases, GENE token will exponentially increase in price.
Scenario 2: Implementing our assumption
Above we have expressed our doubts that it would be possible to achieve a looping of the movement of money in the ecosystem. In this case, parking owners do not have a motivation to keep GENE tokens, at least when they can be used for nothing but parking, i.e. in the first iteration of the service. Parking owners will sell tokens; this will balance supply and demand, and the prospect of a token price increase would decline significantly.
From our point of view, the second scenario is much more likely; however, it is impossible to predict what percentage of parking owners will sell tokens received. In any case, the truth is most likely to be somewhere in between, provided that the project is successfully launched. The dynamics of the token’s price should be positive if total volume of demand exceeds supply, i.e. at least a partial looping of the system is achieved.
We would like to describe two token funds created by PARKGENE in this section:
Charity fund: This will include unallocated tokens from the bounty program, tokens from parking smart contracts that were not executed, one month after their completion, as well as donations from all comers including the Future Fund. The funds received will support research and research institutions working on solutions for the automotive and parking industry. Token holders will be able to put their propositions forward and vote for a Charity Fund distribution.
Future Fund: Will receive 40% of issued tokens. Annually, at least 1% of the Future Fund will be transferred to the Charity Fund. M & A transactions will also be conducted at the expense of the Future Fund, as well as short and long term investments in industry-related projects.
According to the white paper, PARKGENE undertakes to put decisions on major transactions, including M & A financed by the Future Fund on token holders’ vote. Moreover, PARKGENE will be obliged to take all decisions determined by the majority of token holders; tokens from the Future Fund will not have voting rights. This is a good solution that protects token holders from possible solutions from the project team that might potentially be unprofitable in terms of the token’s price.
Thus, the Future Fund could become a tool which increases demand for GENE tokens in the long term.