Hans Fraikin (left) and James Spence (right) of the Libra Project - the world's first private democratised and tokenised green utility. Chris Whiteoak / The National
When Abu Dhabi renewable energy company Libra Project first set up in 2017, its founders never imagined that two years down the line they would be mistaken for one of the biggest companies in the world.
Libra Project plans to develop, fund and operate renewable energy power plants that provide clean electricity in developing parts of the world by using blockchain to reduce the cost of funding. The start-up’s goal to improve 100 million lives by 2030 will be funded by selling a security token that allows investors to choose which projects to build based on their positive impact as well as profits.
How often does one of the biggest companies in the world create a spin-off that happens to have the same name as your brand.
Hans Fraikin, Libra Project
So when Facebook unveiled its digital coin Libra on June 18, a reserve-backed digital currency pegged to a basket of government-issued currencies set to go live in 2020, it left Libra Project's founders in a spin.
Both Facebook and Libra Associatoin, a membership organisation founded by Facebook's subsidiary Calibra and 27 other organisations that will govern the cryptocurrency, declined to comment.
As well as sharing a name, Facebook’s Libra will allow customers to make purchases or send money with zero fees, while Libra Project will roll out its fully compliant digital token later this year – similarities that caused confusion.
Hans Fraikin, founder and chief executive of Libra Project, says while some team members considered Facebook’s concept “a threat”, he saw it “as an opportunity – an incredible piece of serendipity if not cosmic luck”.
“How often does one of the biggest companies in the world create a spin-off that happens to have the same name as your brand that you registered in the UK, the US and Europe a year and a half before? The way I saw it was that all of a sudden this increased our brand value exponentially.”
James Spence, founding partner of the venture, says Libra Project's website experienced a 2,000 per cent spike in the first three days after Facebook's announcement. While some visitors registered names and contact details, the company was also trolled by anti-Facebook campaigners.
“We don’t want people to affiliate us with Facebook,” says Mr Spence. “They have some trust issues, so we’ve had to reach out to our partners and assure them that we are not Facebook. We are the Libra Project, we own our name and have registered and they should have no concerns about doing business with us.”
Libra Project was first set in motion when Mr Spence and co-founder and chief technology officer Alexander Alzamora brainstormed ideas on how to fund renewable energy projects.
Mr Alzamora, who has worked in the sector for 10 years, was finding traditional fundraising mechanisms challenging, prompting Mr Spence, with a background in financial services, to suggest a different way to drive capital to projects.
“We looked at the traditional fund model and did not like the middle man mentality – with the lack of choice and the decisions being made for profit rather than for the actual impact they are going to make,” says Mr Spence. “We then looked at using blockchain as a way to give a vote to the token holders about which projects would be built."
Mr Spence says any impact delivered by the projects is transmitted transparently onto blockchain along with the financial transactions and the returns. The impact will be measured by using Internet of Things devices that capture data such as levels of air pollution at a project’s source.
The clean tech impact investor will operate in line with the United Nation’s Sustainable Development Goals, by building biomass, solar, waste heat recovery and waste-to-energy projects in the Asia Pacific and Middle East and Africa regions - growth areas for energy consumption.
In Southeast Asia, for example, the population is set to increase to 715 million people in 2025 from 615 million in 2014, according to United Nations Conference on Trade and Development. In turn, electricity demand will grow 4 per cent annually, doubling demand from today according to the International Renewable Energy Agency ’s 2018 ASEAN Remap report, as governments increasingly look for renewable options.
One initiative, Libra Project, is considering is a waste heat recovery system at a Philippines cement plant. When the plant is active, it prevents 35,000 people living in nearby villages from accessing power, Mr Spence says.
“By putting a waste heat recovery system on that cement plant – that’s funded by the tokenisation system – instead of becoming a consumer of electricity off the grid, it becomes a generator of clean energy electricity and it’s self-sufficient,” says Mr Spence. “We are selling electricity to the cement plant and the investors own the equipment providing that electricity and they own the revenue coming back.”Mr Fraikin ran his own film production company in London before joining Libra Project in 2018. Chris Whiteoak / The National
To fund the company, the founders reached out to friends and family for the Series A round of $500,000 (Dh1.8 billion) in 2018. While the holding company, Libra Project Asset Management, is registered in London, UK, the operation and maintenance arm to oversee the projects is registered in Abu Dhabi’s Masdar City and the Digital Securities issuance company is registered in Abu Dhabi Global Market (for the international market) and in Delaware (for the US market).
The company has seven projects in the pipeline and is currently closing a deal on the acquisition of three biomass plants in Thailand, which will help approximately 10,000 homes in the area receive electricity with a carbon offset of 87,253.9 tonnes annually.
“We are launching globally but the US is the toughest financial market from a security point of view in line with SEC [US Securities and Exchange Commission] regulation,” says Mr Spence. “Once we have the sign-off in the US, that’s pretty good to take to the rest of the world. There will be a few changes for the UK, Europe and this market but the bulk of the work is done."
Libra Project hopes to roll out the digital token in the third quarter of this year, however, Mr Spence says Facebook’s Libra coin “delayed” the launch and the company's Series B funding while it took “a step back to assess the situation”.
“We’ve now decided we are good to move forward," Mr Spence says.
Of the $1.5m Libra Project is looking to raise, about $500,000 is already reserved, with about $925,000 left to sell at $100 a share, which offers investors equity in the holding company and a corresponding amount of tokens.
It was in January this year that Libra Project first heard that another entity was interested in their name. They were contacted by a law firm, which said it was representing an anonymous partner. The partner wanted to buy some of Libra Project’s domains.
“When we opened the company we registered 32 domain titles to try and secure our IP so that other people could not clone our site as we grew,” says Mr Spence.
“We told the lawyer we had certain domains we wanted to keep but there are others we might be willing to part with if the price was right as long as there was no conflict with what the other company was doing."
Facebook and Libra Association, which has one domain, Libra.org, as its official site, declined to comment on any past or future plans to purchase additional domains.
While Libra Project has not sold any domain names yet and is not considering legal action over the name, there has been some crossover.
Facebook’s coin is called Libra but many media outlets have referred to the venture as Libra project.
“That is causing some confusion for people trying to buy [our token] when we’re not selling it yet," says Mr Spence.
Last month Facebook said it would not proceed with the launch of its cryptocurrency until regulatory concerns are addressed, as the US Treasury Secretary Steve Mnuchin took the unusual step of saying he had serious concerns it could be used for illicit activity.
Ultimately, Libra Project hopes Facebook may want to tie up with them in the future.
Mr Spence adds: "I hope Facebook look at what we are doing and the environmental and social impact we are trying to create and come in to support us.”
Q&A: James Spence, founding partner of Libra Project James Spence, founding partner of Libra Project, says the company is targeting accredited investors to begin with. Chris Whiteoak / The National
What is the minimum investors can put in?
$100. That is a lot cheaper than most investments in impact – for those you will be asked to place $10,000 for 10 years.
How easily can you access your money?
It's like any digital security; if you need your money back tomorrow then you just sell it at the market price. And we won’t be charging a fee. A lot of platforms charge a 5 per cent bid spread on the buy and sell price – ours will be at the market rate.
So, there is no lock-in period?
When people first buy our digital security there will be a lockaway period; we can’t have people buying and selling coins until the projects are built. Once the project starts generating a revenue, we’ll put it out there for the retail market to resell. The length of the lock-in period is yet be fully discussed and disclosed.
What will that token buy?
You won’t specifically own assets in one project, you’ll own a share of the whole company — so multiple projects that are all generating a revenue. You are getting returns on your $100 share — as your percentage over the whole of the company.
What are the risks for investors?
We are looking at funding the first couple of projects alternatively so that we already have a working revenue model before the investors come in. That takes away a lot of the risk if we already have an income coming into the company.
Could investors lose their money?
With any investment in the world you can lose your money. But when you buy the security you own the physical assets. If there had to be a liquidation ... [the physical assets] would get sold and the investors would get priority for any disbursement.
What type of investors are you targeting?
We’re not going to the retail market yet. We’re going to accredited investors to start off … the retail market will take some time. It costs a lot to be signed off by all the regulators globally for the retail segment. By the time we get to that stage, we will already have most of the power projects built through the accredited investors.