LifeWithBlockchain: CarmaChain - An executive Summary of a unique business model

CarmaChain – Maximize the Good! This young company aims to build a transparent and traceable bridge between the gifted and the needy. Powered by a pioneering validation process based on blockchain technology. The idea behind CarmaChain is that every charity project actually maximizes its purpose.

The company mediates between charity organizations and donors by increasing trust, transparency and traceability of donations. The business idea is based on the fact, that known organizations face a rising lack of trust or entangle themselves in scandals. Donors are increasingly afraid of spending their money for good purposes, as they often don’t know what happens with their donation. This is why the donation volume decreased in recent years. On the other side, poverty, catastrophes and lacking education are still the main problems in numerous countries around the globe. Thousands of people are reliant on the help of the privileged. CarmaChain wants to solve this imbalance by providing a platform plug-in service based on distributed ledger technology, where every donor can exactly retrace his or her money.

After implementing the plug-in service on the website of a charity organization, projects can be published on that service. Once decided for the service, the client is officially “CarmaChain certified”, which signals trust and shall be perceived as sign of transparency and collaboration. Donors can then decide for which project they want to donate their money. Before that, CarmaChain and its client divide the project in single milestones based on measurable KPIs, that have to be fulfilled on the way to the completion of the project.
What makes CarmaChain stand out of the crowd, is the independent validation network of people, who are incentivized by money and other validators to neutrally give honest answers. Donors can experience how the project of their choice slowly grows and is built step by step. CarmaChain verifies every step locally by using a human validator network in the country where the project is realized.
Validators are hired via an app and a small amount of money (depending on the local currency) for the validation, which is processed by a smart contract. Via GPS tracking it can be retraced if the validator was actually on-site at the right place and did fulfill his or her task. A minimum of ten people have to verify the KPI for the specific milestone in order to guarantee no wrong decisions. By approval, the company can go on with the realization of the next milestone. By disapproval, CarmaChain and its clients carry out intensive debates about the causes and agree on the next steps.

It probably gets obvious by now, that building a huge validator network around the world is not an easy job. CarmaChain wants to access the local networks of the charity organizations themselves, as well as run marketing campaigns in public places, e.g. a shopping mall or universities. It can be assumed that the company also benefits from positive word-of-mouth. The business case suggests a 4€ compensation for every validation in the equivalent currency. This equals half of the average daily salary in some of the affected countries.

CarmaChain’s unique validation process.

CarmaChain has two main customer groups, whereas only one actually generates revenue for the company. On the one hand, the charity organizations pay for the implementation of the service as well as the skill transfer and further maintenance (~8.000€). In addition, every milestone validation costs money from which also the local validators are paid. It is assumed, that every large-scale project has around 150 sub-steps a year, each step is charged 200€ (thereof 40€ [4€x10] for the validators). On the other side, the donors benefit from full transparency and are likely to be loyal and increase the number of donations. This again, enhances more and more projects and keeps the company sustainable.

The market opportunities for CarmaChain are quite high. It is estimated, that there are around 10 mio. non-governmental organizations active around the globe (Source: nonprofitaction.org). For our total addressable market (TAM) this means, that we have a profit volume of 80bn€ for only the implementation of the plug-in. Based on the differences in size and donation volume of these charity organizations, the serviceable addressable market (SAM), i.e. organzations, which are big enough to profit from the service plug-in, will be around 10%. This leads to a SAM volume of 8bn€. Focusing on the European area first, the serviceable obtainable market (SOM) is divided into three main hubs (EMEA, APAC & AMERICAS), meaning one third of the SAM will be obtainable within the first years (~3bn€.).

As we are not a competitor, but rather a strong partner for charity organizations and essentially every organization with a donating website is a possible client. CarmaChain is simply integrated in the website and not running in parallel. After some implementation experience, the scalability is very high and increasing expertise makes implementation easy and fast. It is not expected that the number of aid projects is decreasing in the upcoming years, which guarantees a continuous revenue stream for the company. The strong collaboration with charity organizations distinguishes CarmaChain from most of the already existing competitors. Alice, Moeda, Binance Charity and some others - acting in the same business area - are mainly disruptive service providers, whereas CarmaChain positions itself as sustaining for current business models.

CarmaChain conducted a survey of 75 people, finding out if this business model is desirable and relevant for the public. The results showed that donation volume would increase if people know exactly how their money is used and for which projects. Charity organizations themselves also showed high interest in the idea to get back their reliable and trustworthy image.

To create visibility and addressability of the target group, social media and known influencers are used to show the simplicity of the system and to trigger the donating behavior within the population.

In the future, a second validation process based on local data is planned to be developed. Therefore, strong cooperations with local authorities and governments are negotiated. Data from e.g. air quality can then be used to prove the success of single measures in the area on top of human validation.

MVP of the validator app.

The four founders from the Technical University of Munich are highly skilled in the business areas of networking, financing, customer relationship management and legal requirements. Furthermore, IT consultancy is required and can be covered in-house or by a strong partnership along further rollouts.

In general, to start the business CarmaChain employs five full-time employees, rents office space, covers marketing/networking costs and technical supplies (~24.000€/month). The platform and app development as well as the acquisition of the technical equipment is calculated with 100.000€. CarmaChain can cover its costs with ten large-scale projects. Therefore, one big client is required. The goal is, to be able to cover the costs after four months. The company needs financial investments of around 200.000€ (four months running costs + initial set up) in the beginning.
By supporting CarmChain a multitude of stakeholders benefit from this business idea.

Let’s give organizations trust, donors transparency and needy people treasures.

For further information please contact: @amelie.huber, @paulinakemper, @julia-h & @simone14.