Swiss start-ups choose a new way of doing business

Initial Coin Offering (ICO), an unregulated means of raising funds for cryptocurrency ventures, is experiencing a kind of gold rush, with Swiss companies among the first to get on board. (SRF/swissinfo.ch)

An increasing number of startups use ICOs to bypass the rigorous and highly regulated capital-raising process required by venture capitalists or banks. ICO describes the limited period in which a company sells a predefined number of its own tokens to the public, typically in exchange for major cryptocurrencies (mostly Bitcoins and Ether). The tokens are issued using blockchain technology, an incorruptible digital ledger of economic transactions.

Figures published by the consulting group PwC External linkin September 2017 show that worldwide, startups received virtual capital of at least $4.6 billion (CHF4.5 billion) in 2017. That’s more than 20 times as much as the year before. Switzerland has several successful ICOs inside its borders. Out of the six largest ICOs, PwC says four are hosted here. 

The value of the Bitcoin surged by more than 900% in 2017, proof that virtual currencies have caught the imagination of investors. But cryptocurrencies are subject to fluctuations and can fall prey to scammers and money launderers.