It was the 28th of February 2012, and Joshua Shen, an investment associate with a large banking group, found himself saddled with a project that blurred the lines between his professional and personal lives in an unexpected manner. His Chief Investment Officer had sent to him a fact sheet on a proposed private placement subscription to the shares in Cordlife Group for a private banking client, and tasked him to prepare a valuation report on the company so that he could decide whether to recommend the private placement to the client. Cordlife was not your typical firm: instead of selling everyday consumable goods and services, it was an umbilical cord tissue bank, in the business of life itself. Joshua was familiar with the company: he and his wife had just banked their first-born's cord cells with them. But, more often than not, a good product does not necessarily mean a good company, and a good company does not necessarily mean a good stock. How does one value such a business? Should he recommend the investment to the client, and on what basis?
Over the fall of 2017, Filecoin, a blockchain-based cloud storage startup, raised more than US$233 million from more than 2,000 investors. It achieved this largely through the novel funding mechanism, initial coin offering (ICO) and in the absence of an actual product or service. This case chronicles the genesis and development of Filecoin, with a focus on the background and mechanics of its ICO. It also introduces students to the technical core of its storage protocol and how blockchain technology, through Filecoin tokens, could monetise that feature. The case also highlights the regulatory implications concerning ICOs. This case could be used as an illustration of the application of blockchain technology to an existing business (e.g., cloud storage) and its consequences. It may also be used to discuss the dynamics of a "token economy", (i.e., creating and developing a market based on tokens) and the issues confronting organisations that employ blockchain technology. The issues may also include, but are not limited to, those concerning ICOs, such as regulations, incentives, and disincentives. Instructors may also find this case useful to discuss the IT strategy and viability of a blockchain-based, file-sharing business.