Crypto payroll startup Toku raises $20 million
In Silicon Valley and other tech hubs, companies have long been familiar with the challenge of paying a global network of employees in cash and stock. But as the crypto industry matures, companies must now manage a new type of reward – digital tokens issued by blockchain projects.
That’s why Ken O’Friel, a Tokyo-based former equity trader, co-founded Toku, a startup that helps crypto companies meet a range of international tax obligations related to token-based salaries.
On Wednesday, Toku announced it had raised $20 million in a first round led by Blockchain Capital and other investors including law firm Orrick and founders of Protocol Labs and infrastructure company Alchemy.
“We realized that the hardest part isn’t the tokenomics or the software, it’s the compliance with the law,” O’Friel said wealth in an interview, stating that Toku has created a system to track crypto-related tax laws and regulations in dozens of countries.
O’Friel added that when he began building Toku at the end of the last bull market in early 2022, compliance was nowhere near on the list of concerns for the vast majority of crypto firms. But after FTX’s collapse and regulatory backlash, O’Friel says, many of the same companies are now treating compliance, including tax obligations, as a top priority.
Toku currently has around 30 clients, which O’Friel says are primarily “companies with lawyers,” including some decentralized autonomous organizations. These include well-known crypto names like Filecoin Foundation, Gitcoin, Gnosis, Hedera Hashgraph and PleasrDAO. For the coming year, Toku plans to attract clients from the venture capital industry as well.
Building the Toku platform, which entailed reviewing the tax laws of more than 100 countries, resulted in a “huge bill,” says O’Friel. However, he anticipates that these sunk costs will position the startup to be a leader in the still-burgeoning field of token-based compensation.
O’Friel co-founded Toku with Dominika Stobiecka, a veteran banker who spent a stint at the Federal Reserve and also worked at DAOs. The two met in Tokyo, where they brought together gaming CEO Michael Carter, who helped found the company and serves as Toku’s CEO.
Other investors contributing to the funding round include firms such as GMJP, OrangeDAO, Reverie, Quantstamp, and Next Web Capital, as well as angel investors such as Protocol Labs founder Juan Benet, Cameron, and Tyler Winklevoss.
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