Start-up investments are illiquid and lack exit opportunities for retail investors. Swiss-based start-up Arcton is solving this by launching the first public market for start-up shares. Arcton is a crowd-investing platform with a liquid secondary market where retail investors can trade anytime.
They leverage blockchain technology within the newly created Swiss legal framework (DLT Act) for security tokens to help start-ups raise funds on their platform and use Decentralized Exchanges to create a liquid secondary market. The company aims to help start-ups raise $300M within the next four years.
Arcton CEO, Merens Derungs, said: “On our platform investing in start-ups is as easy as buying or selling a listed share on a stock exchange. What makes us truly unique is liquidity; on our platform, investors don’t have to wait ten years for an exit to happen but can sell tomorrow on a liquid secondary market.”
when, where, why?
Arcton is set to launch five start-ups in Q1 2023 and has invented a unique research-based crowdfunding structure to speed up the fundraising process of start-ups. Arcton’s innovative solution is based on years of research on Merens Derungs, CEO of Arcton, Ph.D. thesis on Security Tokens and the newly created DLT Act. They efficiently solve the problem of illiquid and low accessibility to start-up investments for retail investors.
The recent introduction of the DLT Act in Switzerland has paved the ground for tokenizing shares of companies making them more liquid and accessible to investors.
The unique framework developed by Artcon enables them to operate their crowdfunding platform and issue securities in Switzerland and Europe. They effectively can tokenize shares of any European start-up and reduce the holding period of an investment by using the already existing infrastructure of Decentralized Exchanges, like Uniswap, creating liquid 24/7 secondary markets for trading security tokens of each start-up.
Decentralized Exchanges are an efficient and functional technology to create automated markets for less liquid asset classes like start-up shares.
Decentralized Exchanges break down the siloed and segmented liquidity of traditional crowdfunding platforms. Conventional crowdfunding platforms have a restricted discovery mechanism for start-up share prices, and investors can trade shares only on specific days. DEXs, on the contrary, are accessible worldwide simply by connecting a digital wallet.
Early-stage and retail investors are the most affected as they need to lock up their capital for an extensive period before making a return on their investments. The length of a company’s investment horizon to its initial public offering (IPO) is now a median of 8.2 years. Compared to the short 3.1 years from initial investment to IPO in 2000.
Arcton is challenging the status quo of how crowdfunding has been done until now. Based in Zurich,the Swiss start-up has completed the incubation program of the most prestigious fintech incubator in Switzerland, F10 Incubator & Accelerator. They are now bringing crowdfunding to a new level.
The vision of Arcton is to make start-up investments accessible to anyone and solve the illiquidity problem of start-up shares for retail investors by delivering a platform where anyone can invest in start-ups as easily as buying and selling a publicly traded stock.
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