on the crypto
The Stellar Development Fund (SDF) has loaned $ 550.000 in to the micro-payment company SatoshiPay quotation XLM token after the coronavirus pandemic put the kibosh in its Series A funding round
An investment turned into a loan
SatoshiPay CEO Meinhard Benn recently told the media that Serie A, which should have been finalized in the beginning of the second quarter, "collapsed" at the last minute due to the coronavirus pandemic, as it became impossible to organize meetings with potential investors and market turmoil they have led investors already retired.
Through its Enterprise fund, SDF had already pledged $ 550.000 for Series A. Following the effects of the pandemic, the Foundation agreed to convert its investments into a loan to provide the company with cash flow for the next 12 months.
The loan value was transferred in lumens at a fixed exchange rate, which SatoshiPay can choose to convert back to legal tender when required. Overall, SatoshiPay has cut costs by almost 60%, which gives it a year-long perspective - enough, according to Benn, to see the tail of the coronavirus pandemic.
SDF will allow SatoshiPay to prepare for the 2021 Serie A
Like many other German companies, SatoshiPay relies on Kurzarbeit, a scheme in which the German state pays a portion of employee salaries. SatoshiPay staff are currently working part time and the government pays 50% of wages, said Benn.
Fortunately, Benn added, SatoshiPay was in a comfortable position before the pandemic. The SDF loan will allow the company to continue operating in a reduced format until it can start Serie A in 2021. Once the financing round is over, the SDF loan will be converted into an equity investment.
SatoshiPay is "a close ally"
The relationship between SatoshiPay and SDF was already close. SatoshiPay runs Stellar nodes and will now launch Solar, an open source portfolio on the protocol. "We are a close ally," said Benn. "We make two or three calls with the Foundation every week on technical and strategic issues."
How much would the SDF shareholding be worth? Benn did not go into details but to give a perspective, it would be less than the 27,7% share held by the largest investor of SatoshiPay, the London-listed Blue Star Capital, which invested $ 700,00 in early 2017.
Take advantage of the lockdown to grow
Postponing Serie A because of the coronavirus was not the best thing, but Benn sees the glass half full. The lockdown gives the company more time to work on product development.
When Series A takes place, SatoshiPay will have a new B2B solution for money transfers and cross-border micropayments in public beta, said Benn. Does the loan give SDF excessive control over SatoshiPay?
Benn doesn't think so: "They want to keep us as independent as possible, while supporting us," he said. "I think we managed to maintain that balance perfectly," he added.