Colu, an Israeli blockchain startup building hyperlocal digital currencies, is pushing a $50 million token sale. The company has already pocketed $12 million in venture funding from backers like Digit
Colu, an Israeli blockchain startup building hyperlocal digital currencies, is pushing a $50 million token sale. The company has already pocketed $12 million in venture funding from backers like Digital Currency Group, Spark Capital, and Aleph Ventures, but leadership opted for a different route this time.
"We could have raised VC funding, but we decided to issue a token," said CEO Amos Meiri. "We knew we needed to raise a big round, or find a business model that will help us create a network effect [and scale up rapidly]. The Colu Local Network token (CLN) model provides both."
The token will debut through the ICO. Colu built it to get communities to participate and spend money within their own economies. Over time, the startup plans to add currency swaps, payment processing, lending, and identity verification features atop the core token.
Meiri elaborated on how the system works: "With the new model, users of Colu's digital wallet will be able to make purchases with fiat money and enjoy the added value of being rewarded in community currencies (cryptocurrencies). These currencies are built on an open financial infrastructure that represents the community's financial state. The better the community does, the higher the demand for the specific community currency, and the higher its value. This collaborative responsibility and reward mechanism encourages every network member to promote the network, creating a strong network effect, thereby spreading the success of the community among all its stakeholders."
Founded in 2014, Colu has spent years building technology to issue community-specific cryptocurrencies on blockchain rails. Four pilot communities began testing the Colu Local Wallet in January 2017, using the mobile app to find shops, connect with neighbors, and conduct peer-to-peer transactions.
The CLN token functions as a collective index across all community currencies, letting towns and organizations enter the market with new digital currencies backed by instant liquidity. The capital from the ICO will fund expansion into new cities and countries, with the US in the pipeline.
Regarding demand, Meiri stated: "We have hundreds of communities around the world approaching us on a daily basis looking to issue their own community currency on top of Colu (municipalities, BID's, universities, etc)."
Spark Ventures, Aleph Ventures, Tom Glocer (the former chief executive of Thomson Reuters), and Prof. Dan Ariely all committed to participate in the token presale. Bradley Tusk, an entrepreneur and Uber's political strategist, has also joined Colu as an adviser.
