The archive · Money & Fintech · Financial decision · 2014–2018
Telegram banks $850M in the biggest ICO pre-sale yet to build TON
Self-funded Telegram sold $850M of Gram tokens to 81 investors, betting its crypto-community reach could fund a would-be Ethereum rival without equity.
Telegram
What the business is
Telegram is an encrypted messaging app that claimed 170M monthly users by late 2017, and it was raising to build TON, a blockchain platform for payments, distributed storage, decentralized VPNs and dApps.
Starting capital：$850M ICO pre-sale per SEC Form D (81 investors, first sale 2018-01-29); Telegram had previously taken no outside investment, self-funded by Pavel and Nikolai Durov.
How it started
Pavel and Nikolai Durov built VKontakte, Russia's answer to Facebook, then left Russia in 2014 after a falling-out with investors they linked to the government; they later set up Telegram and kept it self-funded. By October 2017 the app reported 170M monthly users and 70B daily messages, and it claimed over 60% of ICO projects ran their communities on it — the audience that made a token sale the natural first monetization.
What happened
In January 2018 TechCrunch obtained TON's white paper and investor prospectuses: Telegram planned a $1.2B raise in two stages — a $600M invite-only pre-sale to VCs and insiders (minimum $20M, discounts above 50%) plus a $600M public sale in March — which would double the $257M Filecoin record. Demand outran the plan: Bloomberg reported the pre-sale growing from its $600M target, and by the time the SEC Form D was signed on 2018-02-13, $850M had been sold to 81 investors under 'purchase agreements for cryptocurrency,' with proceeds earmarked for TON and Telegram. TON's roadmap promised an MVP in Q2 2018, a wallet in Q4 2018, and storage, proxy and dApp services in 2019 — all before the underlying technology existed. Pre-sale allocations were already reportedly changing hands at double the price, and scammers were running fake ICO sites to ride the interest.
No ending yet — it is still running.
Background
In February 2018 Telegram closed the first stage of what TechCrunch called the largest ICO seen to date: $850M from 81 investors, disclosed in an SEC Form D for 'purchase agreements for cryptocurrency' signed by CEO Pavel Durov. The proceeds were earmarked for TON, a would-be Ethereum rival, and for Telegram itself — and the sale was the company's first outside capital after years of self-funding.
The bet rested on Telegram's position inside crypto. Its January 2018 prospectus claimed 170M monthly users, 70B daily messages and adoption by more than 60% of ICO projects, and the plan was to raise $1.2B — a $600M invite-only pre-sale to VCs and insiders at discounts above 50%, then a $600M public sale — to build a blockchain offering payments, distributed storage, decentralized VPNs and dApps.
Demand ran ahead of the plan: the pre-sale grew from $600M to $850M, Bloomberg reported the public sale could expand to $1.15B and take the total near $2B, and allocations were reportedly flipping at double the price even before tokens existed. TON's roadmap promised an MVP in Q2 2018 and a wallet by the end of 2018, with storage and dApp services in 2019; TechCrunch noted the underlying technology was still to be developed while fake ICO sites circled the hype.
What has to be true
- Telegram had the asset other token projects lacked: a consumer app with 170M monthly users, making this the first ICO aimed at an existing mass audience.
- The app hosted communities for a majority of ICO projects, so its credibility inside crypto came from usage, not marketing.
- A $20M minimum and discounts above 50% pointed the pre-sale at whales and VCs, letting demand overshoot the $600M target to $850M.
- Selling tokens instead of equity let the Durov brothers keep control of a company they had self-funded since leaving Russia.
What can be applied
Existing distribution can fund an unbuilt product — Grams sold on messenger trust alone — but whale discounts front-load hype with cash, so delivery must outrun the story.
Aftermath
As of 2018-02-17 the pre-sale had closed at $850M and the public sale was pending: scheduled for March at $600M, with Bloomberg reporting it could expand to $1.15B and near $2B total. TON's MVP was planned for Q2 2018, the wallet for Q4 2018, and services for 2019, though the technology was still to be developed. Telegram kept shipping the messenger: new Android and iOS versions in February, a web login widget, and a brief removal from Apple's stores over content moderation. The sources record no outcome beyond this stage.
Sources
- Telegram has raised an initial $850M for its billion-dollar ICO
- SEC Form D — TON Issuer Inc / Telegram Group Inc ($850,000,000)
- Inside Telegram's ambitious $1.2B ICO to create the next Ethereum
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