The team behind Swarm Fund, a decentralised capital marketplace that provides cryptocurrency investors with access to institutional style investments, has raised USD5.5 million through its public token sale.
Swarm has appointed serial tech entrepreneur Philipp Pieper as its CEO. The firm has also had what it calls its first ‘liquid democracy’ vote.
During the sale, 8.2 million tokens were sold to members of the Swarm and to discourage so-called ‘pump and dump’ buyers, Swarm Fund’s architecture leverages a ‘drip’ liquidity system to initially lock tokens on the platform, and release them over time for trading.
Immediately following the close of the sale, Swarm initiated its first liquid democracy vote to determine the actual drip liquidity release schedule of Swarm (SWM) tokens. By July 16, 2018, the platform will reach full liquidity of all currently outstanding tokens.
The firm is focussed on offering a democratised opportunity to investors, giving the retail investor of all sizes access to institutional investment funds.
Pieper says: “We are building a regulatory compliant exchange for asset-backed tokens designed around true cooperative ownership. So, in the end, when someone buys security tokens of one of the assets on the platform, there is a real ownership of that entity.
“We are not another kind of middleman, but a platform that empowers funds to run their business while accessing new liquidity.” Pieper says. “In the unlikely event, we should ever go away, there still remains a clear ownership of the tokens and the ability to continue operating its governance independent of Swarm. This means that it is in our interest to listen more closely to what the community wants, so we put the governance into the hands of our investors.
“It’s about giving equal return opportunities to people globally, whether someone invests USD5 from Kenya or someone invests USD5 million from Wall St.”
Pieper says that normally that can’t happen because of the money angle or the legal logistics plus unreachable minimum requirements and long holding time limits.
“With us, you can invest whatever amount of money you want and within a year there are opportunities to find another purchaser and divest.”
The investors who have subscribed to the initial coin offering come from a blend of three different groups, Pieper says. The first is the tech investors who know the team behind Swarm and know their track record.
The second is the crypto insider who is looking for projects that have credibility within the crypto space because it offers a route to diversification.
“Individual crypto investors from all over the world put in from USD100 to USD100,000,” Pieper says. “Most crypto investors who have scored big have between 70-90 per cent of their net asset value in cryptocurrencies which is great when it’s up, but our asset classes have a real asset behind them with a different volatility profile. If it’s still within cryptocurrencies, investors can exchange without going into a fiat currency and creating a tax issue.”
Cryptocurrencies are estimated to have USD245 billion in assets at the moment and signs are that crypto investors are now seeking diversification. In terms of what Swarm will invest in, their partnerships will be with funds based on distressed real estate, technology companies and solar installations. January will bring more news of investment opportunities linked to Swarm.
“We are heads down on-boarding our first partner funds and so really executing exactly against what we communicated at the outset,” Pieper says. “There is a tremendous amount of innovation going on in the blockchain space – we are at the beginning of the protocol layer and going forward it doesn’t all have to reside on blockchain – the whole architecture of smart contracts is in its infancy.”
Pieper points out that there is a whole layer of additional service just evolving, such as custodial services, with the CoinBase announcement that they are going into custodial services.
“This is happening fast and it is bigger than Uber, Facebook and all the others combined before their IPOs,” Pieper says. “People will be astonished by the rate of innovation that will be happening over the next 12 months.”