This article is an excerpt. To hear the full interview, click on the Youtube link.
As blockchain continues to flourish inside and out of the financial sphere, new uses for the technology are being conceptualized nearly every day.
Finance Magnates spoke with Chainium CEO and co-founder Sascha Ragtschaa about how his platform is using blockchain to build a free platform to raise capital for private businesses.
What is Chainium?
“Chainium is an equity network,” Sascha explained. “We allow businesses to raise capital directly on our platform.”
“We tokenize the capital and the equity, and we allow investors directly to purchase equity or shares… What we’re creating at the moment is a true global digital share [stock] certificate that can be sold or traded on our platform.”
The difference between Chainium and other similar platforms is that Chainium is “primarily targeting larger private businesses” around the globe that have “already had ten, twenty, thirty years” of operations. Chainium is seeking businesses who have “capital-raising needs” who may want to be listed on stock exchanges but can’t afford it.
“They can [raise capital] through our platform,” Sascha said.
He explained that “there are a lot of businesses [around the globe] that simply don’t want to go through an IPO because they feel that fees are too high, that there are too much regulation and compliance [requirements] that effectively slow down business.” Chainium’s platform is free for businesses to use.
“We’re helping these businesses that want to raise capital to go through a different funding mechanism than having to go through their local banks,” Sascha said.
— Chainium (@ChainiumIO) March 1, 2018
“We don’t typically focus on startups, although technically they could use our platform [to raise capital],” he added.
Chainium for Investors
On the Chainium platform, “every equity or share offer has its own token [through the] protocol that Chainium has built” However, “the whole tokenization process–all of the ‘ICO’ kind of stuff–isn’t visible to the end user.”
Sascha explained that the Chainium app (which is available now as a prototype) has been designed so that anyone can use it. “It doesn’t talk about tokens, it doesn’t talk about blockchain,” he said. “You just see business offers, and you can acquire them. You don’t even need cryptocurrency–you can just use your credit card.”
“Our aim has always been to [make it easy to] use blockchain technology,” Sascha said, comparing Chainium’s accessibility with the Robinhood application.
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“Lot of Interest” from Private Businesses, but Chainium Must be Built First
In terms of partnerships, “we haven’t really signed anything yet, because we want to build [the platform] first before we go into direct cooperations with other companies and all that,” Sascha said.
However, “we already have a lot of interest from traditional brokers, to get into blockchain and to effectively have equity tokens supporting their traditional stock market listings.”
Sascha said that the market that Chainium seems to have the most functionality for is traditional businesses who need to raise capital. “I get calls almost on a weekly basis from Canadian firms, Indian firms, firms in China, Germany, et cetera, because they want to list their equity on our platform.”
Interoperability on Chainium
“We have our own blockchain,” Sascha explained. “We’re not using someone else’s, like Ethereum or HyperLedger…we’re building our own equity blockchain. This allows us to put a ‘true’ digital share on the blockchain.”
Although the Chainium blockchain isn’t operable yet, Sascha said that in the future, Chainium will “provide APIs that will link its services to other frameworks,” hopefully by early 2019. In the future, “we’re trying to open up [Chainium] to as many services as possible.”
When will Chainium be operable? “We’re building the platform now, and the testnet will be available in the middle of the year,” Sascha said. He said that if all goes according to plan, clients will be operating on the platform by the end of 2018.
Who is Sascha Ragtschaa?
Prior to the creation of Chainium, Sascha explained that he “was the CIO for the largest share registry company in the world,” managing clients like Walmart, Shell, and BP.
“We were, effectively, middle-men,” said Sascha. “If you wanted to list your company through an IPO, you had to register with us. Clients all around the world were using our services.”
“The team and I left the organization and branched out [to create Chainium] because we saw an easier and simpler way to [raise capital] using blockchain technology.”
Sascha explained that the platform is being designed to facilitate communication between shareholders and companies and to encourage transparency. “Once you’re listed on our platform, you’ll have a lot of investors that need to be kept updated. You’ll need to communicate with them to give them annual results.”
— Chainium (@ChainiumIO) February 27, 2018
“We Are Just A Facilitator”
Sascha explained that although any company can list their tokens on the Chainium platform, each company is given a rating based on the amount of information that they are willing to provide investors.
Companies that haven’t provided balance sheets or other financial statements will receive a rating of “1”–according to Sascha, these companies are “high risk, word of mouth” entities that ask their investors to trust them at face value.
A company rated “2” will have given a balance sheet and other financial documents to prove their claims. A company rated “3” or “4” will have been verified by Chainium’s team of auditors and other legal professionals.
“Companies have to comply with national and regional laws,” Sascha said. “However, at the end of the day, we are a network.”
“We do not want to interfere with what people are offering or buying…it’s a direct relationship, a direct contract between a company and an investor. We’re facilitating–we’re not giving investment advice… but we do provide guidelines, and we try to protect investors and business owners as much as we can. There’s always this caveat that we are just a facilitator.”