The funding marks the first VC investment for the widely anticipated crypto 2.0 project, which seeks to incentivise social messaging users through the use of GEMZ, a native token issued on Counterparty that allows users to profit from the platform’s growth.
The news comes amid GetGems’ ongoing crowdsale, the first hosted by IDG-backed decentralised application development platform Koinify. Since its 1st December launch, GetGems has raised $600,000 through the sale, bringing its total funding to roughly $1m.
Magma VC general partner Ran Achituv framed the investment as just another example of how his firm is able to identify disruptive trends early. In addition to GetGems, Magma VC was an early investor in community-based traffic and navigation app Waze, which was purchased for $1.1bn by Google in 2013.
Achituv told CoinDesk:
”We are looking for disruption, differentiation, distribution and a great winning team. We felt Gems has very good characteristics in all four parameters. Chat and value transfer is a growing trend.”
GetGems CEO Daniel Peled further expressed his belief that Magma VC would in turn increase its chances of success in the long term.
“The additional funding will help us scale our company faster which is necessary since the mainstream instant messaging market is very competitive,” Peled said.
Announced in October, the GetGems encrypted messaging service is now available on Android. Gems plans to introduce its basic iOS app, wallet and token system and advertising platform in 2015 using funds from its ongoing crowdsale.
Community support proves essential
Unlike a recent investment made by 10x Venture Partners as part of a crowdsale for e-commerce software developer Ziftr, Magma’s investment has not been made in the GEMZ tokens directly.
However, Achituv indicated that the crowdsale did inform his team’s decision to back GetGems, stating that the support of the community provided assurance of the project’s viability.
“We hope our investment as a well-known venture capital firm would also increase the bitcoin community as well as general public’s trust in GetGems as a platform and therefore its cryptocurrency will have an increasing value,” Achituv added.
Following its $100m fund in 2013, the Israeli seed-stage investment group raised a $150m fund in September. Achituv suggested Magma may seek to support additional startups in the digital currency field with this capital.
“We believe in the blockchain and cryptocurrency as a macro trend and if the right opportunity is found we’re open to investing,” he said.
The appeal of crypto 2.0
While GetGems marks Magma’s first investment in the bitcoin ecosystem, Achituv said that the service, operated by Decentrlized Mobile Applications Ltd, was not the first from the industry his firm considered, having vetted a number of bitcoin mining companies in 2013.
Perhaps most notably, however, Achituv voiced his belief that Gems was attractive as it is not wholly dependant on the price of bitcoin, but rather leverages its technological benefits to provide value for consumers.
“We’re looking for investments that control their destiny on their own and create new solutions and value. What we are seeing now is not directly on bitcoin, it’s more trying to leverage the benefits of the technology for new use cases and capabilities,” he added.
Achituv indicated that he believes GetGems could prove influential in inspiring other businesses to consider leveraging the capabilities of bitcoin in similar ways.
Images via Gems
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