Radovan Vávra, a financier and retail investment guru in the Czech Republic in recent years, has decided to obtain financing for SimpleCell Networks as, which he co-owns, in the form of tokens issued on the XIXOIO platform.
Much has already been written about XIXOIO and doubts about its business. XIXOIO itself determines the value of its XIX token, which is not tradable anywhere on the secondary market, and is pledging to increase its value by hundreds of percent over past periods, which is alarming in itself.
However, I would like to focus on SimpleCell itself and its planned tokenization to produce smart meters. The investment should, as we present at Fundlift, for example, contain some key information that will give the investor the comfort of deciding for it:
- Business plan: In the case of growth projects, it is difficult to look to the future. However, it is also necessary to assess each investment opportunity. Without a business plan, the investor does not know for how long the company’s funds will be sufficient, whether it will need additional financing or when it can expect a return on investment.
- Company Valuation: In the case of equity investments, the valuation of the company before the entry of the investor must be clearly defined, including the basis for its calculation.
- Reason for choosing the form of investment: It should be clear from the information provided why the company chooses the form of financing it has resorted to.
- External factors: In order for a potential investor to get the best possible picture of a given investment, it is necessary to provide sufficient information about the competition, the market situation, the companies you work with and other factors that are crucial for the future of business.
Let’s take the same look at the information we have so far on the planned tokenization of SimpleCell. The presented intention carries with it several negative signs that raise questions about the planned issue.
No business plan
According to Vávra, he does not know how the whole project will turn out, he cannot model it and he would be ashamed to put it in Excel and present it to investors. But he knows very well that he wants to raise up to CZK 200 million for SimpleCell.
If a company does not have a business plan and does not know how to model itself, how does it know how much money it will need for development? For what time horizon will such an amount be enough for her? What if only half is needed to flip to black numbers? When does it plan to start repaying investors?
SimpleCell Valuation
What is the value of the company? How much of the company will future token holders buy for those CZK 200 million? The value of the company is determined by the company itself during the issue and its creativity is not limited in any way.
Let’s at least take a look at how SimpleCell has been doing in recent years. Below you will find the published results of SimpleCell in the years 2018 – 2020. In these three years alone, the company was able to generate a loss of more than CZK 80 million, its total revenues for the same period were then slightly over CZK 13 million.
It is clear from these figures why Mr. Vávra does not approach venture capital funds, banks or, for example, the financially literate public in the form of crowdfunding with the possibility of investing. At the moment, only a few sane, rational-minded investors would rate the company at least at the CZK 200 million that SimpleCell plans to obtain through tokenization.
Reason for choosing token financing
SimpleCell has historically issued bonds worth CZK 50 million. So why not take this proven path again?
To this question, Radovan Vávra answered that the already issued bonds bear interest at a rate of 6% and due to the increase in interest rates, the company would no longer be able to obtain financing so cheaply. As part of the token issue, the company will not be bound by any promise of return, so it will have a completely free hand without the need to repay the investment.
External factors – connection to the IoT network, which is in big financial trouble
The French company Sigfox, whose technology SimpleCell devices work on, applied for protection against bankruptcy in January. Her latest published results?
- Sales 24 mil. EUR
- Net profit / (-) loss -91 million EUR
- Financial debt EUR 118 million
The concept of tokenization presented by Mr. Vávra and Mr. Watzke brings almost unlimited possibilities of setting conditions for the issuer, including the unlimited issuance of additional tokens at a price determined by the company itself and preventing their further liquidity. The whole scheme will most likely follow the lesson “Heads – I win, tails – you lose.” They were not freely translated into Czech: “If a virgin falls on a coin, I will win. When an eagle falls, you lose. ” The investment itself can transfer much of the risk to the token holder, while if successful, most of it will be enjoyed by the original investors.
In recent days, XIXOIO has decided to postpone the tokenization of Simple Cell due to the war in Ukraine and the inability to estimate the impact on the supply chain. At the same time, Mr Watzke said that he did not want to expose the community to the excessive risk that such a structured investment would always entail.
One can only hope that potential investors from the general public will receive a set of unambiguous information before the issue date, from which the investment will be decided in a qualified manner and XIXOIO traders will not push the investment beyond emotions.
Zdroj: SimpleCell, XIXOIO
Disclaimer: This article is for information purposes only and does not serve as an investment recommendation under Act No. 256/2004 Coll. on capital market business. In preparing this article, the author relied on publicly available sources. Roklen Holding as and Roklen360 as are not responsible for any errors in the text or data.
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