Factom’s Two Employees Press On Despite Lead Investor’s Call to Liquidate

After years of being unable to shut a Sequence B, enterprise blockchain firm Factom, Inc. slashed its workers from 10 to simply two.

The corporate isn’t going into receivership, nevertheless, as its lead investor, FastForward Improvements, claimed final week, mentioned Factom COO Jay Smith. 

“They’ll be placing out a correction,” mentioned Smith. “This has been a long-running argument between us and FastForward.”

FastForward didn’t reply to a number of requests for remark.

FastForward had been pressuring Factom to place a decision earlier than Factom’s board of administrators to have the corporate go into receivership. Smith mentioned he put the decision ahead understanding that the board would vote “no” on it. He claims FastForward jumped the gun in issuing a press launch. 

Learn extra: Factom Inc. ‘Faces Liquidation’ After Buyers Refuse Request for Extra Funding

“There was a miscommunication and FastForward heard that we have been going to place this proposal to the shareholders,” Smith mentioned. “As a result of they’re a public firm, something that has a major influence on the valuation, they’ve timelines to publish that. They printed out the press launch, and we didn’t get an opportunity to see it. … There wasn’t any malicious intent on anyone’s half.”

Except for Smith, solely CEO Paul Snow is employed by the corporate.

The agency says it’s now renegotiating the monetary engineering of the Sequence B increase, proposing options corresponding to having FastForward’s word be transformed into frequent inventory as soon as the increase reaches a high-enough threshold. Smith mentioned the quantity of management FastForward had in Factom was scaring off different traders.

Based in 2014, Factom performed one of many earliest token choices, elevating $1.1 million in 2015 by promoting “factoid” tokens. Customers don’t want factoids, nevertheless, to function the Factom protocol, which is separate from Factom, Inc. and decentralized amongst 27 totally different authority node operators (ANOs). The protocol is commonly used for recording information. 

At the moment, Factom, Inc. makes most of its cash from contracting its companies with the united statesDepartment of Homeland Safety (DHS) and different entities. For DHS, Factom’s know-how secures information from Border Patrol cameras and sensors. Factom can be a part of a undertaking securing information from the nationwide energy grid for the U.S. Vitality Division.

Regardless of these high-profile contracts, the corporate didn’t have the money movement to have the ability to survive the market downturn with out cuts, Smith mentioned.

After the information of Factom’s alleged receivership broke, DHS referred to as a gathering with the blockchain firm to make sure that its undertaking would proceed, in accordance with Smith. Factom expects to obtain three extra contracts with DHS for round $600,000 every, Smith added.

Learn extra: Factom Blockchain Undertaking Wins Grant to Shield US Border Patrol Information

Whereas the current market downturn has slowed Factom’s pipeline of initiatives, Smith mentioned the disaster has a silver lining.

“The pandemic has identified quite a lot of issues with the provision chain that we’re a reasonably good resolution to,” he mentioned. 

One former Factom worker who spoke on the situation of anonymity claimed that management adjustments on the firm made it an unexciting funding alternative. Peter Kirby changed Paul Snow as CEO in 2015 and Snow then “took again the reins” in 2017 as chief govt for the second time. Snow mentioned the adjustments in all probability trigger “a little bit of disruption” however weren’t the hardest problem the corporate confronted.

Snow mentioned essentially the most troublesome impediment for Factom was its lack of ability to interrupt into the mortgage market. It had averted titling, which is advanced and centered on mortgage origination. Nevertheless, “The longer it took to place options in place, the extra the established order established itself and proved to be too costly to enter the market,” Snow mentioned. 

Wanting ahead, Factom plans to deal with information integrity and information group, which Snow mentioned will likely be vital for provide chain and internet-of-things safety. The corporate plans to unveil new instruments for managing information on its blockchain protocol sooner or later. 

No matter what occurs to Factom, Inc., nevertheless, the Factom protocol will stay on due to its decentralized nature, Snow mentioned.

Learn extra: UK Banking Pilot Goals to Streamline Compliance Utilizing Factom Blockchain

“The protocol goes to run whether or not Factom, Inc. continues or if we get reorganized or if we discover an eleventh-hour funding,” Smith mentioned.

Different authority node operators (ANOs) on the protocol agree with him.

“Factom, Inc. hasn’t completed a lot in a very long time,” David Chapman, CEO of ANO Factomize, mentioned. “Most individuals which were following the Factom Protocol carefully are banking on different [ANOs] delivering.”