Numerai Token Sale Raises $11 Million From VC Firms Paradigm, Placeholder

Few companies in 2019 have managed to attract venture capitalists to private token sales without giving up equity.

The hedge fund and predictions market startup Numerai just closed an $11 million round in March led by Paradigm and Placeholder strictly by selling NMR tokens, first launched through an airdrop in 2017.

According to Numerai founder Richard Craib, every week roughly 1,000 people stake these ethereum-based tokens to buy and sell market predictions on the startup's data marketplace.

Craib told CoinDesk the funding will primarily go toward hiring engineers to help launch Erasure, the decentralized offspring of Numerai's existing marketplace, so that anyone can load data related to a wide range of markets beyond stocks and traditional assets.

Monegro went on to say that Erasure will take the idea Numerai developed with its own fund - essentially crowdsourcing insights incentivized by token rewards - and use it to "Break open the investment market" by allowing any party to buy or sell predictions on a public blockchain network scheduled for launch later this year.

Now, by purchasing NMR, both Placeholder and Paradigm have invested directly in the Erasure protocol rather than its parent startup.

Paradigm co-founder Fred Ehrsam told CoinDesk he was drawn to the opportunity because Numerai has an existing track record of enabling people to directly monetize data.

Stepping back, data sellers already use NMR tokens to stake their tokenized reputations, which discourages subpar predictions.

With Erasure, more people will be able to participate in the above process, selling their predictions to any investment fund participating in the public network.

Once Erasure launches, Craib said people could upload any market predictions they want.