- FT: Kleiner Perkins Caufield & Byers, Benchmark, and Sequoia Capital want to invest in Telegram’s upcoming $1.2 billion ICO.
- Encrypted messaging app Telegram has exploded in popularity and is the app of choice for cryptocurrency traders.
- But the app is also popular with terrorists and has become a magnet for scammers looking to get rich quick in the crypto market.
LONDON – Silicon Valley venture capital firms are keen to invest in Russian messaging app Telegram, according to the Financial Times.
The FT reported on Friday that Kleiner Perkins Caufield & Byers, an early backer of Google and Amazon, Benchmark, which backed Uber and Twitter, and Sequoia Capital, known for early bets on Apple and Google, all want to invest $20 million in Telegram.
Telegram, which claims to have 170 million monthly users, is currently looking to raise $1.2 billion through an “initial coin offering”, which means it will issue its own digital currency. The FT said the interested VCs would buy up these digital coins as a way of backing the startup.
The interest highlights the fact that many VCs are concerned that the current digital currency boom is passing them by.
Returns on ICOs last year topped 1,000% but few VCs have bought into the new asset class because their investment terms don’t allow it. Meanwhile, many tech businesses are also turning to ICOs as a way to raise money rather than venture capital.
- Business Insider/Oscar Williams-Grut/Screenshot/Telegram
Telegram wants to use the new funds it plans to raise to build its own blockchain-based platform that can “host a new generation of cryptocurrencies and decentralized applications.”
The highly encrypted and anonymised chat app has become the messaging app of choice for cryptocurrency trades and companies looking to raise money through initial coin offerings.
A recent pitch sent to Business Insider from a company doing an ICO touted the fact that it has the “fastest growing Telegram channel,” highlighting the central role the app has developed in the ecosystem.
But Telegram has also become a magnet for scammers looking to exploit the cryptocurrency world by manipulating prices, as highlighted by a Business Insider investigation last year. Our story has since been followed by The Outline and BuzzFeed.
UK Prime Minister this week also publically criticised Telegram, calling it a “home to criminals and terrorists.” The app has a problem with ISIS members using the app to communicate.
Telegram CEO Pavel Durov said at the TechCrunch Disrupt conference in 2015: “Privacy, ultimately, and the right for privacy is more important than our fear of bad things happening, like terrorism.”