ICO​ ​Analysis:​ ​McAfee​ ​Coin

According to many blockchain enthusiasts, the modern venture capital system is inherently flawed and broken. With this in mind, McAfee Coin has set out to develop a platform that will completely the fix the inefficiencies of the venture capital system.

McAfee Coin aims to fix and modernize the venture capital system by taking a hands-on approach to equity investment. The company plans to help its portfolio companies succeed by giving them dedicated attention, guidance, and support. As stated on the website, McAfee Coin will “nurture the total health of the companies with blockchain strategies, governance, overseas marketing, and any other special needs the companies may have.” While McAfee Coin may never be the “missing link” in the evolution of venture capital, the company does have great potential.

TOKEN

The McAfee Coin Token (MCF) will be implemented using the Ethereum ERC20. This means that participants in the ICO will have the ability to withdraw and store their MCF tokens on any ERC20 compatible wallet. MCF holders generate value from the token in three distinct ways: (1) the tokens represent investment capital for equity investments, (2) the tokens function as the fundamental unit of account on the McAfee Coin blockchain, and (3) the tokens provide a reward mechanism on the McAfee Social Investment Network.

According to the whitepaper, the company will be conducting three separate, consecutive ICOs. For ICO I, 46.12% of the funds raised will go towards portfolio company investments, 22.3% towards R&D, 20% to the founders, 6% towards social rewards, with the remainder of the pot (5.58%) towards sustaining operations.

ICO I MCF tokens are valued at $1.00 per MCF token. The amount of the tokens to be sold is capped at 48,000,000 MCF. Token holders will distributed 100% of additional net profit on a semi-annual basis through the distribution of ETH via smart contracts. All token holders will be eligible for distribution on a predetermined and publicly stated date.

The company intends to list the MCF token on major crypto exchanges right after the completion of ICO I.

TEAM

McAfee Coin’s core team consists of multiple industry veterans, a world-renowned entrepreneur, and several senior professionals. As compared with the majority of ICOs, McAfee Coin has put together a solid team.

The company’s CEO, Yale ReiSoleil, co-managed the Sichuan Hongjian Medical Fund, a ¥20 billion M&A and venture capital fund. The company’s Director, John McAfee, founded McAfee Associates which was acquired by Intel in 2011 and was an investor in Zone Labs which was acquired by Check Point Software in 2003. The company’s COO, Ricky Ng, was the co-founder of Iclick Interactive, one of the largest digital advertising platforms in Greater China. The team also consists of nine experienced business development professionals, software and blockchain engineers, and investment managers.

The team’s advisory board consists of thirteen senior professionals, including several partners at investment funds, quantitative traders, strategic consultants, and lawyers.

VERDICT

McAfee Coin presents a speculative buying opportunity for investors interested in long-term capital appreciation.

The blockchain ecosystem in China is booming and McAfee Coin is well-positioned to invest in the leading early-stage companies in the space. With a current portfolio of five promising companies, a Beijing-based accelerator, and a strong team, McAfee Coin has significant runway for growth. The risks to the downside are not a huge cause for concern, nor do they raise any red flags. Provided the team can execute properly on deal origination and analysis efforts for equity investment, there is a potential that the company could invest in China’s next blockchain unicorn. Overall, the potential upside outweighs the inherent risks associated with early-stage investing.

Risks

  • In general, early-stage investing involves a high degree of speculation and risk. According to several studies, 95% of venture capital funds do not generate their target IRRs. When investing in companies that have yet to achieve product/market fit, both failure and market adoption risk run high. -1
  • John McAfee is renowned for creating the world’s first anti-virus software company, McAfee Associates, which went public and was then acquired by Intel in 2011. While John is a renowned entrepreneur, his past has been highly volatile, as he has been associated with heavy drug use and accused of committing two tropical homicides. Currently, a biopic is being made on John McAfee’s “madness and paranoia,” in which Johnny Depp will star. -1.5
  • The 20% allocation of tokens to the founders is quite significant in comparison to other ICOs. While the company does state that the tokens will be subjected to a lock-up period, no details on divestment clauses were given. -1

Growth​ ​Opportunity

  • Mainland China’s central government published an Informatization Strategy in December of 2016 that states, “the Internet, cloud computing, large data, artificial intelligence, machine learning and blockchain will drive the evolution of everything – digital, network and intelligent services will be everywhere.” With the government’s backing, Mainland China is primed to become the global leader in the implementation of blockchain technologies, which will be highly beneficial to McAfee Coin’s portfolio companies. +3
  • Mainland China is the second-largest venture capital market in the world, with early-stage fundraising having doubled over the past two years. According to Peter Fuhrman, CEO of China-focused investment bank China First Capital, there has been “a tsunami of government-backed entities that are seeding incubators, VC funds, locally, provincially, and nationally. China has a lot of money in its government apparatus. It wants to seed innovation
    and entrepreneurship and this is how it’s doing it.” This momentum in China’s early-stage fundraising landscape will drive more quality companies to be considered for equity investment, thereby decreasing the risk of early-stage investment. +3
  • McAfee Coin already has a portfolio of five companies, which are: Actuality Co, I-House Co, X-Med Co, eSports Co, and GoLive Games Studios AG. Each company already has a small track record of market adoption, which curbs early-stage investment risk. Actuality Co seems to be the most promising portfolio company and ICO I will commit to an $8.1 million investment in the company. +4

DISPOSITION

Early-stage investing is speculative and risky, however McAfee Coin is developing a solid platform that is backed by a strong team investing in a large, explosive market. The company has a clear vision to invest in China-focused blockchain start-ups and provide them with operational support.

While McAfee Coin’s ambition to revolutionize the venture capital system may be over-hyped, the company’s ICO represents a rare chance for individual investors to participate in a venture capital fund. With net profits from the company’s equity investments being distributed to MCF token holders, the potential for a meaningful ROI is relatively high as compared to other ICOs. Against this backdrop, we believe that a score of 6.5​ ​out​ ​of​ ​10​ is warranted.

INVESTMENT​ ​DETAILS

  • Type: Crowdsale
  • Symbol: MCF
  • Pre-ICO Sale: November 6th, 2017
  • Public Sale: TBD November 2017
  • Payments Accepted: BTC, ETH, BCH, and LTC

Disclaimer: no position in McAfee Coin at the time of writing.

Featured image courtesy of Shutterstock.