The last time the folks behind Slock.it needed to raise money they reimagined the way venture capital worked, and in the process raised the largest crowdfunding round in history.
Then everything came tumbling down in one of the most definitive moments of the early years of ethereum: The DAO, and its subsequent failure.
Instead of raising a round of traditional venture capital or going to centralized crowdfunding sites like Kickstarter and Indiegogo that would have helped the Slock.it founders collect investments in exchange for a fee, the team wrote open-sourced code for decentralized funding platforms based on ethereum that could, in theory, never be shut down.
Things did not go as planned, however, and approximately $60m-worth of ether was drained from the The DAO by a hacker. Finally, the lost funds were returned via a controversial hard fork of the ethereum blockchain that resulted in what appears to be a permanent schism in the community.
Now, Slock.it has pivoted its business model. In some ways, the goal is even more lofty than before, but in others, namely the way it is raising capital, the polarizing startup has taken a much more conservative approach.
Revealed yesterday, a single, unidentified entity is said to have invested a $2m seed round in Slock.it to hire at least five new people and build out a Universal Sharing Network (USN) that uses smart contracts to monetize the Internet of Things (IoT).
Slock.it chief operating officer Stephan Tual told CoinDesk:
“The smart contracts that we’re going to write as part of the USN are going to be written keeping in mind all the lessons that we’ve learned from The DAO, both in terms of how to write smart contracts, how to keep them safe.”
CoinDesk was unable to independently confirm the investment as a result of the conditions of anonymity Tual said surround the investment.
But the COO also described a due-diligence process as part of the investment that included the verification of intellectual property ownership, and an ongoing financial auditing process related to how the company is spending funds and what the founders have accomplished.
With the new funding, the startup indicated it intends to hire at least one mobile app developer, a software engineer with IoT experience and a business manager to sell products and build relationships with manufacturers of locks, bikes, automobiles and more.
Discussions over the investment began in earnest about six months ago, according to Tual, who added that the unnamed investor also wished not to be identified as either a firm or an individual, but that details would likely be revealed as part of a larger unveiling in the future.
“They wish to conduct their business in a way that will be part of a much greater strategy when it comes to blockchain and other fields.”
Life after The DAO
While it’s been a while since Slock.it was regularly in the headlines, the team has remained active behind the scenes.
According to Tual, the company has even been profitable since the collapse of The DAO, and has been charging consulting fees, including for projects such as a ‘Democratic Mobility System‘ for German utility company Innogy SE.
The two firms have also partnered with the Oxygen Initiative, EBG Compleo, and Wallbe to build Share&Charge, a sharable charging station set to launch in April on both Apple and Android.
However, the revenue generated from the partnerships has not been sufficient to allow the company to build out its own flagship product, the USN –aimed to let users write elaborate leases for a wide range of internet-connected objects, in a similar way to how Airbnb lets users sublet their own property.
The startup isn’t only concerned with raising funds, though, and Slock.it CTO Christoph Jentzsch last year revealed his plans for Charity DAO, designed to be a philanthropic implementation of The DAO concept.
According to Tual, the team learned lessons from the collapse of The DAO, and will build the resulting improvements into the USN. These include the implementation of what has been described as ‘backdoors’, but which Tual called “escape mechanisms”, designed to cease the execution of a smart contract in certain extreme cases.
Panels of “guardians” will also be implemented to help oversee contract credentials and problems with the smart contract compiler or even with the programming language itself.
Tual took pains to provide assurance that security was at the top of the development check list, telling CoinDesk:
“There’s going to be top-notch security around the stuff and who’s in a better place to do it than [us]?”
Prior to the rise of smart contracts, systems engineers tended to embrace the philosophy of ‘fail-fast’, meaning that products should be released early and frequently to test them ‘in the wild’.
But, as The DAO perfectly illustrated, the intended immutability of the ethereum blockchain is not compatible with learning as you go.
The collapse of The DAO ultimately led to the creation of ‘ethereum classic’, a rival currency to ether, and built up some resentment of the team in the ethereum community.
Shortly after the collapse, some leading figures in the space even called for the Slock.it team to be ostracized. However, others did credit the team for sticking around to help pick up the mess that ensued.
Tual is pragmatic about the criticisms, and again stressed the lessons the team has learned in areas ranging from building on blockchain more generally, to writing smart contracts and trusting (or not) the compilers that process them.
“There will always be some people who make trollish comments about stuff online, and that’s the fun of the internet. The reality is there was a huge amount of work that we did to get this project.”
Image courtesy of Slock.it
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.