Hive aims to provide invoice financing to small and medium enterprises through the Blockchain in order to compete with FinTech startups like Kabbage.
I caught up with Jure Soklic to talk about Hive, their upcoming ICO and some of the challenges his team has faced in developing this project.
Adam: Hi Jure, thanks for joining me! Can you tell me a bit about where the idea for Hive began?
Jure: The original idea for Hive Project was developed over 2 years ago, but there was always a critical piece missing. Finding a way to provide small companies with the liquidity they need was difficult because the manual work involved in conducting the process and the credit assessments required made it prohibitively expensive. However, with the advances made with blockchain technology, we can now automatize that process.
Adam: Can you tell us a bit more about how Hive works and why the Blockchain technology is such a key component for it?
Jure: There are numerous competitive advantages to using blockchain technology. We eliminate the risk of invoices being duplicated, which is the major problem, especially with small businesses. Since every invoice is unique and can be assessed by a credit scoring algorithm, blockchain technology provides automatization and transparency to the whole invoice financing process. In short, blockchain technology cuts costs, improves data quality, reduces manual work and eliminates errors.
Adam: And how do you go about doing this?
Jure: Hive uses blockchain technology to give every issued invoice a unique fingerprint. This enables businesses to automate the invoicing process and make it available to the general public. We create a central data room for all invoices, with a record kept of the issuer, owner and payer. Invoices can therefore be offered to the market for trading. This will rapidly increase the liquidity available to small businesses and create a central database of invoices available for scoring and auditing. In addition to bridging the liquidity gap for small businesses, the technology provided by Hive will help credit checks to be made on companies and facilitate rapid and real-time auditing.
Adam: Can you give our readers an idea the size of the problem you’re solving? How much do businesses currently pay for invoice debt financing, and what will that look like with Hive?
Jure: First of all, even getting this finance at all is extremely difficult at the moment. Nobody wants to take the risk and have to carry out all that manual work for such little commission. That is why there is a huge liquidity gap. Our commission and the invoice amount will be determined on the basis of the credit scoring data in our system. For example, if you are newly registered on our system, you will be able to get financing of USD 500 max with 25% commission. As long as payments are made on time, every subsequent transaction limit will be extended and the commission rate will gradually fall to an eventual rate of 2.5%)
Adam: So it seems Hive faces a “double-sided market problem” where it needs to attract two types of customers ‘SMEs’ and ‘Investors’. How are you approaching this problem to make sure you have enough users on both sides?
Jure: This is a classic “chicken and egg” scenario. In cases such as these, you need to pick a side. That is why we will launch a fund to be used to purchase the invoices (sent to Hive via ERPs). We believe that liquidity is essential in order to build the market place quickly.
Adam: This is where the ICO comes in then, the ICO purchases are the first round of debt investors and I imagine will earn a return on their investment?
Jure: ICO participants will earn from the profits generated. Participants in the Hive platform will need to use HVNs to be able to finance the invoices or obtain data. This is the commission that will be shared with the ICO participants.
Adam: What would you say are the biggest challenges you’ve faced in putting together both this technology and the ICO?
Jure: Our biggest challenges are yet to come. Some countries have legislation which requires special licenses to enter a market for invoice financing. We are already overcoming this by partnering up with licensed financial institutions from the “old economy”, where we have invested long hours of negotiations for warranties.
Adam: Jure, thanks for your time today and giving us insights into the Hive project. Anything else you want potential readers to know?
Jure: Hive tokens (HVN) will be listed on several exchanges, and so there is an opportunity for early exit. However, we are convinced that savvy investors will understand that the returns are likely to be even healthier over the long term.
Adam: Thanks Jure.
Disclaimer: Nothing in this post should be considered financial or investment advice. Investing in cryptocurrencies is risky and may or may not be legal in your jurisdiction. The author was in no way compensated for this publication. All forward looking claims were made by the company covered in their marketing material. It is unclear if concepts like Hive and other ICOs are considered securities. You should consult an attorney familiar with your jurisdiction before being involved.
Disclosure: This post original was featured on my Medium blog in June 2017. It was re-published to TokenBeat on December 3rd 2017.