Sirin Labs, Moshe Hogeg's startup, which is due to begin selling the blockchain phone it developed, is now considering abandoning production of telephones and concentrating on providing software to other phone manufacturers, according to an interview with Hogeg published last Thursday by "Bloomberg."
Sirin Labs raised $158 million in an initial coin offering (ICO) in December 2017, after previously raising $97 million from investors. The company has raised a total of $255 million. In late November, Sirin Labs launched its Finney telephone in a gala event in Barcelona starring soccer player Lionel Messi, who was introduced as Sirin Labs' "brand ambassador," as reported by "Globes." Co-CEO Hogeg told Bloomberg, however, that the company had enough money to continue operating for only 6-12 more months.
Sirin Labs today confirmed to "Globes" that Hogeg had made these statements to "Bloomberg", but added that because the ICO had been in ether, the digital currency of Ethererum, and the price of ether had plummeted this year, the assumption that the money would suffice to operate the company for 6-12 months was reasonable.
The company added that it had focused from the beginning on developing its Sirin OS telephone operating system, in addition to its blockchain telephone, and had already spoken with a major phone manufacturer about the use of this software.
Sirin Labs said, "Sirin Labs raised over 200,000 ethers with a current value of $16 million. The company is managing its risks wisely and correctly, given the state of the market, by converting enough of the currency for its developmental needs. It is generally agreed that the amount raised in the state of market a year ago was not enough to develop a smartphone. We still have a product of which we are very proud. We believe in our ability to make the company profitable, and are aware that it involves a big challenge in the market's current state.
"As for the quote reported in another media, it relates to a specific scenario we were asked about in which there are no sales. In such a situation, the company will switch its focus to sales of the software for other telephones. Fortunately, this is not the situation at present; we have orders for 100,000 devices from distributors alone. As we announced before and at the launch, selling software is indeed part of our vision, and of the company's business model, together with the sales of devices."
Temporary liquidator for Hogeg's invest.com
The troubles of Hogeg's blockchain startup should come as no surprise, given the state of the digital currencies market in recent months. The market price of bitcoin, the leading digital currency, dropped to a 14-month low of $3,500, and lost another 16% last week, after sinking 37% in November. The total value of the cryptocurrencies market, of which bitcoin accounts for 55%, is currently $110 billion, after crashing from a peak of $831 billion in January 2018.
The price of ether, the currency in which Sirin Labs raised $158 million from investors a year ago, was down 21% over the past week, putting it 93% below its January peak. The downtrend also reached Sirin Labs' own digital currency, which plunged 40% in the past week and is now down 95% since early this year.
What Hogeg told "Bloomberg", however, isn't likely to surprise anyone following his conduct over the past year. Hogeg, 37, recently became the owner of the Beitar Jerusalem soccer club, after buying it from Eli Tabib in August for NIS 26 million. Several weeks before that, Hogeg paid businessperson Ilan Ben-Dov $19 million for a five-dunam (1.25-acre) lot in Kfar Shmaryahu, paying 15% of the purchase price in bitcoin.
Hogeg manages the Singulariteam investment company, which he founded jointly with Kazakh millionaire Kenges Rakishev. Over the past two years, Singulariteam invested in several blockchain startups, and Hogeg made no secret of his enthusiasm for this sector. As reported in "Globes," a temporary liquidator from the Yigal Arnon law firm was appointed two weeks ago for one of them, invest.com. Last Thursday, invest.com petitioned the Tel Aviv District court to vacate the decision to appoint a temporary liquidator. 17 shareholders in the AnyOption company, which markets binary options and was acquired by invest.com, filed the petition for appointment of a temporary liquidator.
Sirin Labs and invest.com are not Hogeg's first startups. Mobli, which he founded in 2010, closed down in 2017 after raising $86 million for developing of a photo-sharing app. Mobli's patent was sold to Snapchat for $7.7 million.
The Finney phone is the second developed by Sirin Labs after launching Solarin, which it portrayed as the world's safest smartphone. Solarin, which bore a price tag of $15,000, was a commercial failure.
Sirin Labs priced its new blockchain phone at $999, but it was available on the company website for $899 immediately after the late November launch. According to "Bloomberg", the new phone may not survive long in the market.
Published by Globes, Israel business news - en.globes.co.il - on December 9, 2018
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