Israeli digital currency startup Colu is looking to raise US$50 million in an initial coin offering (ICO).
In an interview with CoinJournal CEO and co-founder, Amos Meiri explained the reason for the decision.
“We could have raised VC funding, but we decided to issue a token. 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 ICO will see the introduction of CLN. The three-year-old startup, which uses blockchain technology to create digital, localized cryptocurrencies for communities, says the token will incentivize communities to engage and consume locally and enable several new utilities such as currency exchange, payments, lending services and KYC – functionalities that will be added into the ecosystem over time, the company said.
Colu says users of their digital wallet will be able to make purchases with fiat money and enjoy the added value of being rewarded in community currencies (cryptocurrencies) with the new model.
The Colu Local Wallet provides users with access to “community currencies” intended to be the closest digital equivalent of physical cash. The app allows users to connect, discover new shops, and trade with their peers.
The currencies are built on an open financial infrastructure that represents the community’s financial state. Therefore the better the community does, the higher the value and the higher the demand for the specific community currency.
As a result, this reward mechanism creates a strong network effect by encouraging every network member to promote the network, thereby spreading the success of the community among all its stakeholders
According to the digital currency startup, hundreds of communities around the world approach the startup on a daily basis looking to issue their own community currency on top of Colu’s.
Colu will use the capital raised through the ICO to help bolster its efforts to expand to new communities and new countries including the US.
CLN will represent an index value of the community currencies issued on the network. This will enable communities to raise capital and provide new currencies in local markets with instant liquidity.