Equity crowdfunding has long been credited for its ability to bring previously unavailable investment options to the masses.
One of the benefits of the blockchain is increased transparency and security of data.
Combine the two and you have a safe and secure way to help people generate wealth, Bloomio marketing head Francesco De Santis said. By leveraging the blockchain Bloomio’s goal is to deliver the highest financial standards to equity crowdfunding.
Mr. De Santis said Bloomio was founded in Zug, Switzerland early in 2017 by Emile Osumba, Maxim Lyadvinsky and Alexey Raevsky as a way for people to invest in startups in a simple and reliable manner.
Mr. Osumba brings strong banking experience at institutions including JPMorgan Chase, HSBC and PricewaterhouseCoopers. Mr. Raevsky founded Zecurion and brings encryption and blockchain skills while Mr. Lyadvinsky co-founded Acronis and has a background in fundraising and scaling startups.
The trio saw two specific pain points. The first was many startups struggled to get the funding they needed in order to scale their business. The second was the best opportunities were gobbled up by angel investors and venture capitalists before others even heard about them.
“The idea was if you could spread the base of people who could invest you could improve the experience for all involved,” Mr. De Santis explained.
The average Bloomio investor commits between $1,000-$20,000 but can invest as little as $50 in a single company, Mr. De Santis said. That allows participating companies access to a much wider pool of investors, who can easily diversify.
Those investors, who receive tokens in the companies, participate for a wider variety of reasons, Mr. De Santis explained.
“They’re investing and being a part of something,” Mr. De Santis said. “They want to bring change to the world and how business is done. They want to be part of that.”
Such investors bring passion and a stronger commitment to the companies they support. They become brand ambassadors and want to learn more about the companies they invest in.
Those investors are only presented with companies which have undergone a unique screening process, Mr. De Santis added. Every company undergoes due diligence conducted by two external parties. If both recommend the company, it is listed. If they disagree, a third entity is recruited to break the stalemate.
“We thought if we had a team internally there may be a conflict of interest,” Mr. De Santis said. “If we got a commission one could say our judgement might not be unbiased.
“It is an (added) cost but it is an assurance for our investors.”
Bloomio has plans to provide extra value to investors by introducing a secondary market where investors can trade their tokens. That added liquidity should draw more investors, who are freed of having to wait for an exit before having a realistic opportunity to divest.
When a company wants to be listed on Bloomio, Bloomio undertakes the due diligence process and develops a valuation of the company. The company then determines what percentage of equity they want to offer and that determines how many tokens are made available for campaigns normally lasting one-four weeks.
The blockchain fosters transparency by allowing for immutable record keeping and easy asset transfer, Mr. De Santis said.
“There are two main advantages. It allows the tokenization of equity and the possibility to trade them on a secondary market, (thereby) addressing liquidity concerns, and with the transparency and immutability, general ledgers are the safest way to process financial transactions.”