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Tech deals are getting bigger and fewer than ever – can the blockchain come to the rescue?


It is no secret that the technology/IT sector is becoming more and more centralized as we’re approaching the end of the decade. Google’s Alphabet, Amazon, Apple, and Facebook consolidating an ever increasing share of the market has become somewhat like global warming: yes, the weather is crazy, and yes everybody knows that it’s going to get worse, but could you please pass the salt? By the way the gravy is excellent.

If you want to get a glimpse of how severe the situation is, just have a look at IPO activity. The past two years have been the slowest for technology offerings since 2009, and unsurprisingly so.

Why bother with the costly and arduous process of offering your company to the public, when behemoths of historic proportions are constantly looking towards the private equity market for their annual shopping rounds? In terms of budgets, they are the new “public”, controlling the existing user base and the revenue stream associated with it. This is how Facebook laid its hands on Instagram, Oculus, Whatsapp, and their like, and this is how Alphabet sucks up virtually anything that has an A and an I in its name.

At its essence, this isn’t supposed to be a problem. Outsourcing R&D by buying outside knowledge can be much more efficient than developing everything on your own. This can create mutual benefits for all involved and technological advancements for the end user. Nevertheless, in the current market the number of buyers is constantly shrinking, while sellers, often deprived of resources, have less and less wiggle room to negotiate. This results in a market that is entirely dominated by a few players, which regard the rest of the ecosystem as their private Research and Development department.

However, for every problem involving rampant centralization there appears to be a blockchain startup aiming to turn the tables on it. This case is not different.

Meet LEXIT – a blockchain-based marketplace on which entire companies, specialized departments, and their Intellectual Property (IP) can be bought, sold and licensed. This includes startups that wish to exit and companies that seek to sell or lease work-in-progress applications or projects they have pivoted on.

What LEXIT essentially does is lowers the barriers to enter the Mergers and Acquisition market to such a degree that buying and selling intellectual property may become an almost casual act, like listing a car on Craigslist, hence increasing the number of potential buyers significantly. If this will prevent the Apples and Googles of this world from eating the entire market alive remains to be seen. Amir Kaltak, LEXITs CEO surely thinks so.

“We’re not just getting more players on the field” Amir said when asked to comment on our raised eyebrows, “We’re also making it much easier to play”.

With “easier to play”, Amir mainly means lowering costs and speeding up processes. Where once transnational mediators, auditing giants, and investment bankers called the shots, now a decentralized marketplace, populated by independent service providers can do its magic.

If LEXIT could have it their way, best practices for new startups would include a shopping round at a token-supported, eBay-like marketplace, where CTOs could find building blocks for their ventures before hiring a single developer. Selling off unused code would be a quarterly practice, strictly enforced by Chief Financial Officers, and VCs would shred their failed startups to pieces and liquidate their assets.

“If you think ‘well that’s all just peanuts to the industry giants’, Amir says. “Go ask the CEO of Hilton how he liked his peanuts when random strangers on the internet started to rent their guest rooms to each other. He is probably allergic to peanuts by now.”

LEXIT plans on going live in late 2018, so we won’t have to wait long to see how Mark Zuckerberg digests peanuts. However, this specific project’s success aside, its ambitions are a sign of our day and age, characterized by huge challenges and ambitious solutions.

Before blockchain technology became a household term the way it is today, a bold idea such as an online M&A marketplace to challenge global consolidation tendencies would probably have been unthinkable. Today, thanks to distributed ledger technology, it is entirely plausible, as plausible as it is desperately needed.

The value added to the market by immutable records, direct p2p flow of value, and the power of tokenized business models cannot be overstated when it comes to “unthinkable ideas”. Sooner or later someone, somewhere will pull it off. If not Amir and his team, then someone else.         

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