Cappasity (CAPP) Rating
Cappasity is a decentralized AR/VR ecosystem for 3D content exchange.
Cappasity is a well-known AR/VR and 3D market participant. The Company was founded in 2013 with the aim of developing a technological standard and an easy and scalable platform for creation, embedding and analysis 3D and AR/VR content.
|AVERAGE SCOPE 0.22||INVEST||OUTLOOK POSITIVE|
In accordance with the opinion of the founders of the company and main players of the market, AR/VR/3D industry was faced with the following problems:
- The lack of developed and optimized infrastructure, tools & platforms, content.
- The lack of compelling content. In accordance with the results of the survey conducted by Perkins Coie and Upload, 38% of the respondents named inadequate content the main challenge facing VR/AR industry. The survey involved more than 650 respondents including IT, startup founders, executives of technology companies and investors.
- Barriers to content distribution:
- The disunity of different platforms intentionally retained by the leading IT companies.
- The existing marketplaces’ domination over content makers which is reflected by unreasonable commissions imposed on the content stock.
- Low protection from the original content resale and copyright infringement
Thus, in order to solve these problems, the company is launching the decentralized and trustless ecosystem based on blockchain, which should be content-centric for AR/VR/3D content. All the community actors will be able to create, sell, buy and lease AR/VR/3D content, using Cappasity utility token (CAPP). All the transaction between interested parties will be secured by well-designed smart contracts.
The basic principles of the platform:
- Copyright and commercial rights protection.
- Transparency and decentralization.
The general scheme of the Ecosystem operation:
- Content makers. Ecosystem participants who create AR/VR/3D content for the Marketplace and upload it to the Ecosystem’s databases.
- Content moderators. Ecosystem participants who check the content for appropriateness and consistency. They control the implementation of the rules of the platform and identify violators.
- Developers. App and web developers having a need for AR/VR/3D content with the purpose of app creation or content integration on a website. Also, they may produce tools and apps using Cappasity platform and list the created products to the Marketplace application store.
- Businesses. Corporation who consume AR/VR/3D content through the Cappasity’s embedding tools.
- Consumers. Anyone having a need for AR/VR/3D content.
- Storage service providers. Database already on the market or any active community members willing to use their servers for content database hosting.
Ecosystem key elements:
- Marketplace – an area, where community participants can buy, sell or rent AR/VR/3D content.
- Sandbox – an area for preview and testing AR/VR/3D content before purchase.
- Blockchain and smart contracts. Once a transaction is done, it cannot be reversed and it will be processed according to a smart contract protocol. Blockchain transaction will contain such facts as copyright information, content owner and author (it different), transfer of the right for commercial use, as well as purchase and license details.
- Storage. AR/VR/3D content and apps will be stored in a decentralized manner by a number of peer databases and multiple P2P servers as a part of a Bittorrent – like system – a geographically distributed network of servers and data centers. Data storage providers will have the opportunity to add their nodes to the Ecosystem’s decentralized database and earn service fee from Marketplace
- Software tools & SDK. Cappasity platform software tools, SDK for AR/VR/3D content generation embedding as well as data import from popular third-party utilities (Autodesk, Rhino, 3ds, MAX etc.) will be available to the developer community. Developers will be free to build their own apps on top of it, embed 3D objects and models integrate their own products with the available tools.
- CAPPfunds for ecosystem development.
- Cappasity Innovation Fund – an endowment providing the developer community with periodic grants for innovative apps.
- Reward Fund for Users – an endowment providing the makers of the most popular content with weekly rewards.
- AR/VR/3D content.
- AR/VT/3D apps.
The Cappasity is going to generate revenue by fees from each transaction conducted on the platform: the content creator gets 85-95% and the rest is held by the platform. The main target of received fees is a maintenance of supporting infrastructure.
The Company represent a detailed project with an already running platform. Transparent ecosystem attracts potential participants and investors. However, the Company has not yet reported a financial plan: there is no clear forecast of revenue drivers and operating expenses of the company in the future.
Considering the Company within the McKinsey Matrix, we determine competitive advantage at a medium level and market attractiveness at high level. Thanks to business model based on blockchain, the Cappasity has one direct competitor - VARcrypt, but the existence of such market players as Facebook/Oculus VR, Google, Microsoft HoloLens, Magic Leap, HTC Vive, Samsung Gear VR calls into question the further competitiveness of the Company. According to the IDC’s (International Data Corporation) research, the market of AR/VR technologies is going to grow with the CAGR of 113,2% and the worldwide AR/VR revenue is expected to be $215 billion in 2021 (in 2017 the revenue was about $11,4 billion).
GE McKinsey Matrix
|Grow Penetrate||Selective Harvest or Investment||Harvest for Cash Generation|
|Invest for Growth||Segment & Selective Investment||Controlled Harvest|
|Selective Investment/Divestment||Controlled Exit or Dis-Investment||Harvest foe Cash Generation|
Figure 1: McKinsey / GE Matrix | Source: ALFA Ratings
The Company declares that the maximum token supply is 10,000,000,000 of which 7,000,000,000 tokens for sale. Thus, the distribution of tokens is as follows:
- 70% - Purchasers.
- 18% - Founders.
- 12% - Early investors.
ICO is divided by two phases:
- Phase 1 has already finished with total supply of 438,686,537 CAPP ($58M according to the io) and circulating supply of 326,243,078 CAPP.
- Phase 2 consists of Closed Presale (February 22 – March 22) and Public Sale (March 22 - until the hard cap is reached or 28 days after the launch) with total hard cap of $20M.
In our opinion, there was a pretty good demand from the investor side at Phase 1 and we expect the same interest in Phase 2 and consider that the hard cap will be achieved. According to Cryptopia, token price has normal marketable fluctuation during the period, that probably indicate a stable and sustainable growth in the future.
According to analysts, the market volume of AR/VR is several billion dollars, but by 2020 will be $150 billion. This is a great opportunity for start-ups and investors.
Now, the main hype is created by a VR, but a big bet will be made on AR. Services, content and glasses of augmented reality are the key sources of cash flow generation.
The International Data Corporation holds a more critical point of view. Its analysts estimate expected revenue at the level of $215 billion by 2021, achieving the CAGR of 113,2%. Considering the spending by the region in 2017, the largest AR/VR spending was in United States ($3,2 billion), followed by Asia/Pacific excluding Japan ($3,0 billion) and Western Europe ($2,0 billon).
The first small peak was in Q1 2014, when Facebook bought Oculus. The next two peaks were in Q4 2014 and Q1 2016. These jumps are caused by large investments (about $1.5 billion) in Magic Leap. Investors are Google, JPMorgan, Alibaba, Kleiner Perkins, Andreessen Horowitz, and Fidelity. We are confident that AR/VT industry is going to rise.
Potential VR revenue level is set about $30 billion by 2020, AR – $120 billion.
Analysts at Goldman Sachs identify nine use cases for AR/VR technology: the most profitable positions include videogames, live events and video entertainment (totaling $18,9 billion, 390 millions users); retail, retail estate, engineering ($8,9 billion, 35 million users); education, healthcare, and military (about $7,2 billion, 18,4 million users).
In our opinion, the AR/VR industry has a high potential for various industries transformation and development. Most of the developments could be observed in computer/mobile technological sector. For example, in medicine and military virtual trainings help to avoid mistakes in real life. From the other side, there is also a risk that consumers will not be ready for such a rapid change and the forecasted demand will be less.
Despite the fact, that blockchain technologies are used in all major sectors of the economy every day, the project currently has one direct competitor – VARcrypt – blockchain platform, which help to distribute AR and VR content, legacy film, television, music, software and gaming content.
As for competitors with other business model not based on blockchain, we can identify the following: Facebook/Oculus VR, Google, Microsoft HoloLens, Magic Leap, HTC Vive, Samsung Gear VR, WorldViz, Bricks & Goggles. All of them are interested in developing AR/VR technologies, so they can be potential direct competitors for the Cappasity. Such giants as Facebook, Google and Microsoft have more resources and opportunities for the expansion.
Konstantin Popov – founder and CEO of Cappasity. Konstantin is an expert in 3D technologies, SaaS solutions and mobile applications. One of the top innovators of 2016 by Intel Software. Also, Konstantin won the TOP-10 Award at IDF 2015. He studied at Moscow Power Engineering Institute (Technical University); his specialty was Applied Mechanics, Robots and Robotic system.
Konstantin was founder and co-founder of several companies, before he started developing Cappasity. The companies specialized on video games creation for platforms such as PC, Sony PSP, Microsoft Xbox 360, Sony PlayStation 3, Apple iOS, Google Android. One of them, Biart Studio LLC was the first Russian games development company that signed a contract with Microsoft. Also, Konstantin as known as the President of Russian Association of Developers and Publishers of Game Industry and Interactive Technologies. Konstantin is a public person, he regularly posts his activities in social networks (Facebook and Instagram), which have a total 5758 followers and friends.
Alex Chegaev – Co-Founder and CTO of Cappasity. Alex doesn’t has social network profiles included LinkedIn. There is a little information about him in open sources. He was listed as a programmer in Manual of “Depth Hunter”, developed by the Biart, the Company that was founded by Konstantin Popov in 2005. In accordance with the ico.cappasity.com website, Alex has a good experience in 3D technologies, blockchain.
Marianna Alshina – Co-Founder and CBDO of Cappasity. She graduated Lancaster University with the Bachelor’s degree of Business Studies, Business Administration and Management. Marianna obtained additional education at University of Greenwich. According to LinkedIn, she had one year work experience before joined the Cappasity in January 2015.
Natalie Reyes – Chief Sales Officer. Natalie graduated Moscow State Linguistic University in 2015 with the Bachelor’s degree; her specialty was Applied Linguistics. According to LinkedIn, she speaks four languages: Chinese, English, German, and Russian. There is no information in open sources about Natalie’s relevant work experience, except of volunteer work (assistant and interpreter to Speaker) at Moscow Urban Forum in October 2015.
Julia Kasiyanova – Business Development Manager. Julia studied at University of Greenwich and obtained Bachelor’s degree of Arts and Marketing. Then, she graduated King’s College London (MSc, International Management). Julia speaks English, French and Russian languages. She worked for international companies in different industries.
The project team consists of specialists without much work experience in the areas for which they are responsible, with the exception of Konstantin Popov.
Jonathan Millet - CEO of NewsBTC.com – Bitcoin News outlets, founded in October 2013. Jonathan is also a Bitcoin Investor.
Jayanand Sagar – CTO of NewsBTC.com. He has a strong expertise in blockchain and crypto industry.
Frank Holz is a qualified economic engineer. He works as a long serving consultant for Daimler-Benz, Mercedes-Benz and Vodafone. Since 1996 he has been working in the games industry. In 2008 Frank founded IEM Consulting, one of the leading international consulting companies in the games market. He is also CEO of Gawooni, which is developing and publishing mobile- and online games.
Anders Larsson - Crypto Investor, Blockchain Advisor, Founder of allcoinWiki and Telecom CTO. Anders works for Ericsson as a VP and Head of Network Products. He has a relevant experience in blockchain industry.
Joakim Holmer – Crypto Investor, Trusted Advisor and Co-Founder of allcoinWiki.
Yu Cao is working on startup sourcing at LVMH Digital. She helps LVMH Group and Brands to identify and evaluate relevant startups for their businesses
Jim Theberge has a good experience as a top manager for big companies: Verizon and Intel.
Henry Ines – a global executive and trusted advisor with a big work experience in various areas such as investment, business development, corporate finance, management consultancy & cross border experiences.
Mark Friedler – an advisor to international accelerator, blockchain companies and startups. Mark was a Partner in consulting firm specializing in strategic revenue and business development, go-to-market strategy, marketing and monetization services for B2B SaaS/PaaS services, mobile apps, games, payments, retail, E-Commerce, big data and ad tech. He worked as an interim president of B2B rideshare company ICars and Senior Director at Oracle Marketing Cloud and Data Cloud.
Jeff Smith – experienced advisor to technological start-ups. Studied at Stanford University (Market Strategy for Technology Companies), University of California (Leadership in Sustainability and Environmental), Thunderbird school of Global Management (International Finance).
Leo Batalov – a partner at DLA Piper. Also, Leo worked as a partner at Orrick, Herrington & Sutcliffe LLP and was a Member of Investment Selection Committee at The Russian Venture Company. He advises on corporate finance transactions, mergers and acquisitions, venture capital transactions, private equity transactions and general corporate matters, focusing on the technology and emerging growth sectors.
DLA Piper – is a global law firm with lawyers located in more than 40 countries throughout the Americas, Europe, the Middle East, Africa and Asia Pacific, positioning us to help clients with their legal needs around the world.
Although there are advisors whose skills and experience can help the project in several spheres, the extent of their involvement in the project in unclear.
There is no information about current and potential partners. In our opinion, there can be only one explanation: the Company does not plan to work with partners. The Cappasity has been operating on the market since 2013 and has enough experience to develop the project independently. In addition, the Company has a positive reputation in the media and support of blockchain society. Thus, the absence of partners cannot be a negative factor.
There is no information about future marketing strategy in open sources, although, according to the ico.cappasity.com website, 27% of attracted funds are allocated for sales & marketing. Cappasity published in different media such as Chipin, Coinspeaker, ICOAlert, ICOWatchlist, Huffpost, Cointelegraph, Venture Beat and a number of others.
Cappasity actively promoting its project via social networks and various specialized forums. The main resource for ICO promotion is Facebook: 27,493 subscribers, 27,128 likes. 7,843 people read Cappasity’s twitter and the Company have posted 1,828 tweets. The Cappasity YouTube channel has 1,041 subscribers and 188,159 views. Instagram profile has 303 followers and 61 posts. Created channel on Telegram is rapidly gaining users and already has 9,436 members.
A total of 46,116 users are actively interested in the development of the Cappasity. The authors of the project fully answer any questions from potential investors and future participants of Cappasity Ecosystem.
We checked the citation number of “Cappasity” in Google, which was 348,000. We also analyzed the dynamics of the search query “Cappasity” in Google Trends.
There was gradually increasing of interest in the project since December 2017 and the peak of activities was recorded in January 2018. In our opinion, it was driven by the fact, that there was a month left until ICO. One of the most attraction driver to promote Phase 2 of the ICO is the bonuses system, that the Cappasity implements, and CAPP token airdrop.
There are two types of bonuses:
- Early bird bonus (10%). To claim this bonus you need to participate in Phase 2 and contribute to the raising of first $10M.
- Community bonus is going to be launched in March, 2018 (maximum up to 7%).
CAPP token airdrop is realized by offering 7–25% in additional CAPP tokens to everyone who hold at least 1,000 CAPP tokens in their wallet (for detailed information please refer to ico.cappasity.com website). Well-designed reward system is a good marketing approach to increase the number of potential investors.
We did not identify significant risks related to the Cappasity during our analysis. The project is based on an already existing platform and has a well-designed and full transparent Roadmap with clear goals. The company has already raised $1,85M from angels investors since 2014 and shows the gradual development. In addition, the Cappasity will conduct one of the first regulated ICOs in full compliance with the rules of SEC. Nevertheless, two risks exists independently of how successfully the project will be implemented:
1. Inherent risk of Crypto industry.
2. Risk of low demand on short-term distance, due to the fact, that participants of AR/VR/3D market will not be ready for drastic changes in the digital technology industry. As a consequence, there will be the lack of income, which is directly related to the amount and volume of transactions conducted on the Cappasity’s platform