Start-up shares are currently an illiquid asset class. There is no secondary market for start-up shares. In our opinion, the underlying reasons are missing technology and legal hurdles. This problem affects every investor and every start-up; investors are stuck with their investments for up to ten years and start-ups must pay an illiquidity premium of 30% when raising capital.
In addition, for start-ups fundraising is a huge challenge. First, capital is scarce with start-ups competing fiercely for it. Second, the current fundraising process is notoriously slow, whereas start-ups need speed above everything else.
A marketplace that brings together start-ups and crowd investors solves these problems. Start-ups can use this marketplace as a fundraising tool by offering their shares to the public. Crowd investors can use our marketplace to invest in start-ups as easily as buying a listed share.
Arcton is democratizing start-up investments, by building the first crowdinvesting platform with a liquid secondary market. Instead of a selected few, with Arcton everyone can invest in start-ups on a level-playing field with today’s professional investors. Instead of being locked in for ten years with their investment, investors can sell at any time on a liquid secondary market.
To bring this vision to reality, Arcton has invented a unique research-based structure for start-up investments, which leverages blockchain technology within the newly created Swiss legal framework for asset tokenization.
Affiliation: Prof. Hans Caspar von der Crone
Start date: 10/2021