KC Underweight Deal: Crypto Rewards for Social Networking

Key Stats:

Summary

As of June 14, 2019, Spintura has raised $11,500 of a minimum target of $10,000.

This week we’re diving into the pros and cons of Spintura currently raising on StartEngine. As always, the purpose of this analysis is to provide a realistic picture as to the potential for the startup in question to generate returns for investors and deliver on its concept for customers.

Spintura is a social media platform with a difference. It allows users to do many of the same functions found on multiple social media platforms including creating posts, sharing pictures, etc…However, the twist is that users will be rewarded for doing so. Spintura users will receive cryptocurrency, named SPINS, as an incentive for using the social media platform.

The process of sharing content on the platform of Spintura and receiving crypto rewards in return will be performed through the patent-pending tools of Spintura. The company revolves around the sharing interface, the crypto-based reward economy, and a marketplace that will allow influencers to earn through their content and feed.

The idea has its merits, however it’s worth keeping in mind that the company is in a very early stage. The success or failure of the concept is entirely dependent on the number of users it can acquire – no one wants to join a social network with few users. Moreover, Spintura is competing head-on with much larger and well-established players like Facebook, Instagram, and SnapChat.

What some might call escape velocity has yet to be reached. And for that reason, we advise investors to exercise caution before investing in the current crowdfunding raise of Spintura.

What follows is our in-depth reasoning for this conclusion.

Spintura: Raising on StartEngine

Overview

1. Still in the First Innings

The Spintura app has not hit the market, and the application and token are currently in development stage.

Spintura has only yet built the basic features of the app and an alpha version. The token and the additional features in the app are yet to be built. The company will require a lot of further steps and financing to release a functional product.

It is not until September 2019 that the company will be able to complete the analytical aspects and launch the beta version and SPIN token in the market.

There’s simply no way of gauging how the application will be received by the market and the team has not shown a willingness from potential users to actually utilize this social media platform.

2. Lack of a Market Niche

The success of a social networking platform is directly proportional to the number of active users. The innovation, technology, analytics, and rewards are of no use if there are not an adequate number of users to bring traction to the product.

At the same time, the process of acquiring a large number of users for any application is tricky to say the least. Especially in the beginning, an app must have a niche to attract and retain a good number of end-users.

For instance, Facebook started as a social media page at Harvard and eventually spread to other colleges. For years, a college email address was required to sign up. That’s how Facebook created a niche for itself and expanded from there.

In our estimation Spintura lacks a niche – a reason for users to flock to the platform. Achieving a sizable number of users will be an uphill slog if it fails to come up with some sort of ‘hook’.

3. High Valuation

Spintura does not have an operating history and reported a net loss for the prior fiscal year-end. Coupled with a total lack of users, a valuation of $6.3 million seems high in our view.

The management of the company itself established the valuation of Spintura in the absence of any measurable parameters. It is highly probable that investors risk overpaying for their investment as the company seems to be over-valued currently.

4. Competitive Landscape

Spintura is competing directly with gigantic players like Facebook, Instagram, SnapChat, and YouTube. All these platforms allow users to share and create content. Facebook currently has more than 2 billion users, while Instagram has 1 billion users.

Spintura plans to make itself stand out of the crowd through the crypto-rewards system; however, Facebook is also entering the same domain and plans to roll out its GlobalCoin by 2020, and has shown a real commitment to frankly rolling out many of the same crypto-features that Spintura is trying to create. This initiative in it of itself could wipe out any chance the company has of winning over users from Facebook.

The Facebook team also announced today plans to roll out its own cryptocurrency Libra which will act as an accepted currency across borders when transacting in any way on the Facebook platform or messenger app. (https://www.foxbusiness.com/markets/facebook-cryptocurrency-libra-unveiled).

Competing with one of the largest tech companies in the world on similar initiatives is a tough way to start a business.

5. Uncertainties

In addition to the risks and concerns discussed, Spintura also suffers from the inherent risks of an early-stage company. It goes without saying that any investment in Spintura will remain illiquid for a long period, and there is no surety if investors will ever be able to sell or transfer their securities

Rating

As a result of our research, we are assigning it’s crowdfunding round the rating of Underweight.

To review, the application and the reward token of Spintura are both in the development stage – we aren’t even sure of how the market will accept the final product. At the same time, Spintura does not seem to have a plan for targeting a specific niche and gain traction with users.

In the vast sea of social media platforms, Spintura is a small fish with a minimal defense against the competition. Among the giant players like Facebook and Instagram, the acceptance, success, and survival of Spintura are highly questionable.

If you have any questions regarding the underweight rating of Spintura, you can reach us at hello@kingscrowd.com.