What’s behind the TaTaTu $575 Million ICO? A Movie producer, a Bacardi heiress, royalty, and a blockchain video platform….
$575 Million?
Last week a blockchain entertainment + video startup called TaTaTu raised the 3rd largest initial coin offering (ICO) EVER via a private sale (exceeded only by Block.one-EOS and Telegram) Wait…What? Tell me more…
TaTaTu‘s founder is Andrea Iervolino, the 30-year old Italian-Canadian film producer and one of the anchor investors of The AMBI Group, a film distribution powerhouse. Some of the movies Iervolino has worked on are Rush, Apocalypto, Siding Doors, The Passion of Christ, and Memento, to name a few. Iervolino plans on building TaTaTu as a blockchain-based video-on-demand platform to compete with Netflix and YouTube. Content providers, producers and viewers earn tokens (known as TaTaTu Tokens or TTU Tokens) for their engagement on the platform. The token will also be used in the financing + production of movies, and later the financing and ticketing of events and more. TaTaTu claims this will allow the industry to have a greater transparency and efficiency. TaTaTu’s limited alpha trials started on June 15 with less than 1,000 users, however 200,000 people have joined the waiting list.
The $575 million ICO raise will be used to build the platform, grow the audience, secure content and launch the advertising capabilities. Blurring the business model, the white paper prioritizes content over technology, with only 15% of the funds raised slated for overhead (which includes platform development). The remaining funds are split 35% for user acquisition, 15% for marketing, and 35% for content acquisition.
The content acquisition funds will be used by Iervolino to launch TaTaTu as a film and music video studio, an industry he is well acquainted with. Initially with 50 new movies, 1,000 videos and 50,000 music videos targeted for production, they have hit the ground running. Here are some of the film projects already announced: a documentary about Jeremy Renner recording the soundtrack for an upcoming animated movie Artic Justice, an upcoming biopic of Lamborghini starring Antonio Banderas and Alec Baldwin, and “Sound of Freedom” with Mira Sorvino.
Regardless or not TaTaTu realizes its lofty goal of a billion users in six years, it has succeeded in at least joining eager money with famous names.
Who invested?
Askewing a typical crowdsale ICO, TaTaTu (Iervolino) privately secured $575 million from a small group of the uber-wealthy and global elite. Here is a sample:
- Patricio Slim (the son of Mexican Billionaire Carlos Slim)
- Lady Monika Bacardi the Bacardi rum heiress,
- Prince Felix of Luxembourg
- The Allan Cassis family, the CEO of Lvna Capital, to name a few.
In addition, BlockTower Capital investing and Lvna Capital have joined as strategic advisors of TaTaTu.
Regarding Lady Monika Bacardi, she is the other anchor investor with Iervolino at The AMBI Group, which may blur the lines of TaTaTu as its own content distribution channel. According to TaTaTu’s blog, Lady Bacardi is backing the start-up with $100 million.
Concerns?
There are a few concerns with the TaTaTu offering:
- How Big?: A raise of this size, especially a private one, from a little known start-up in the space adds some skepticism, less confidence.
- Dilution Risk: TaTaTu is silent on the exact number of the ethereum-based tokens being created with the round, or if more will be created over time. The white paper shed little light on this.
- My Own Private Unicorn: The White Paper states 57% of the tokens are being set aside for private sale. Assuming the recent $575 million round is the total private sale amount, the total TTU token value would be $1 Billion!
- Crypto launches tapping celebrity endorsers or buzz don't usually add credibility. Remember Steven Segal and Bitcoiin2Gen?
- Scam Alert?: Sloppy supporting material, such typos and errors on the website, press releases, white paper, etc. This often isn’t just viewed as “sloppy” but raises concerns of scammers.
- Transaction Fees: The TaTaTu model is simple: viewers of content on TaTaTu share the ad-revenue with the content creators. However, instead of the usual revenue model of most ICO funded blockchain companies where all revenues are sent to the users (viewers & content creators), TaTaTu plans to take a small percentage of token transaction profits as a management/platform fee while the large majority goes to the users.
- TTU Reserve Amounts: Many ICO business models make money, with scale and adoption of their tokens, with their reserve pools growing in value as token prices rise. TaTaTu’s white paper describes a 35% pool of unsold reserve tokens for "stabilizing the market” with another 7.5% split amount the founder, management & advisor teams.
- TTU or Fiat: Ad revenue is to be paid in TTU tokens, even for the premium video services. However, the business model gets a bit fuzzy when the white paper identifies Google’s AdMob as the "preferred monetization solution” which will "pay TaTaTu in fiat." It will be interesting to see how this is implemented.
- KICS: Keep It Complicated Stupid. By March 2019, according to the white paper, the following additional services will be available on the TaTaTu ecosystem: peer-to-peer recommendations, blockchain-based digital rights management, celebrity profiles, user-generated content, music and sports videos and streaming. That's a lofty goal to create, launch and scale.#
- Competition: Looking at TaTaTu for a moment only as a blockchain-based film/content distribution play, it will face fierce competition from the likes of Flixxo, but others include YouNow and VideoCoin and Viewly....in addition to Netflix and YourTube of course.
It has yet to be seen how the team below fares in launching the TaTaTu platform and in growing the content and user pools.
Team TaTaTu:
Andrea Iervolino Founder & CEO
Marcello Mari Head of Blockchain and Public Relations
James Aufenast Head of Marketing
Anthony McGuire Head of Advertising
Ed McCulloch Head of Platform
Hans Hagman Head of Programming and Content
Mario Alberto Casiraghi Financial Strategy and Investor Relations,
Tom Ara Entertainment & Media Attorney
Denis Dembia PR Entertainment
Daniel Santos Business Development
Ray Goeden Head of Programmatic