As investors face an ever-growing slew of challenges, there is finally some respite to be had with technology revolutionizing the way investments are made. Startups are surging around the world due to novel advertising avenues and the unprecedented connectivity of the internet age. For startups, working with a financial services company is one of the best ways to discover new opportunities they may never have even heard of, but they face a shared problem with investors: connecting with the right people at the right time.
A company called Corl could potentially be a long-awaited upgrade for this tricky industry. Through the power of blockchain technology, Corl’s whitepaper outlines their plan to improve on older investment models.
It works like this: with strict funding requirements, a select group of nascent businesses will be successfully screened with qualitative risk assessments by Corl. They’ll pay a monthly percentage of revenue in exchange for upfront capital, until a predetermined payment amount is met. Simply put, Corl provides revenue sharing to companies with big potential, with a continuous asset-based revenue stream supplied to investors in the form of Ether.
Merging Crowdfunding, Blockchain and Revenue Sharing
Corl’s service involves a non-traditional funding style, merging three concepts: crowdfunding, blockchain and revenue-sharing. They want to bring revenue-sharing investments to companies underserved by traditional financing. Companies with small (sub 20) staff have the hardest time with funding, and they make up 98% of the total capital raising market. Basically, they’ll make investing in early-stage companies a breeze.
Traditional ‘equity’ investments do not allow for continuous monthly payments, while Corl allocates around 10% of revenue to be paid monthly to initial funders. In their process, investors can sit back and enjoy their cash flow. With underutilised and innovative funding strategies, they promise to keep company founders satisfied in reaching their business objectives.
One of the big problems companies in their infancy face is a lack of working capital, so a project like Corl and its intelligently-determined revenue sharing would be a good idea for business growth. Other big problems companies face are late and slow investor-payments, suffered by around 80% of new businesses. This can be destructive for startups, regardless of their initial promise.
Why Corl is Using Blockchain
With blockchain, Corl will maintain strongly communicated payment policies between parties, facilitated by Ethereum’s smart contracts. Companies should not be required to ‘incentivize’ punctual payments after investors have committed their capital. On the same note, late bill payments by business themselves can be just as problematic. This is usually a cash flow problem, so a system that can tie up this loose end by automatically executing 100% of financial transactions with blockchain is tailor made both sides. The management of cash flow can be simplified as well, with stats made easy by technology. The entire process will be monitored by immutable, sharable records on the public blockchain ledger to curb any actions that transgress pre-set budgets or conditions, mitigating unexpected expenses through intelligent monitoring.
While young businesses are prone to difficulties in predicting future revenues, investors can rest easy with Corl’s comprehensive screening of who they work with. Corl wants companies to grow at their own pace, and on their own terms. Rather than work with companies that need remodeling, each team will be vetted to ensure they have the right tools to flourish, and with this in mind, they’ll be granted full creative freedom without nosy overseers taking control of the product. Corl wants to create fully symbiotic relationships between investors and companies.
A vetting process is key to working only with startups who’ve proven their operations are in order and show promise. Money isn’t everything, and sometimes people forget the idea and team behind a company’s product is more important than the amount of money raised. The main reason startups fail in the overwhelming majority of cases is due to money problems, and not just lack thereof. As Inc Magazine says, “raising money is a full time job”, and bulking up too much in a short amount of time can just be taxing for the oversight of business operations. In fact, most of the train wrecks from the dot com bubble were the result of excess capital.
In an article from Tech In Asia, an author describes some of the biggest funding problems entrepreneurs face. These include being strong-armed into unfavorable terms and conditions by investors and the imposition of short term rules that cloud long term goals. Perhaps most important is a lack of risk-taking by investors, who tend to opt for hackneyed, overplayed models instead of startups that will electrify new markets. Corl wants to stop distributors of capital from playing roulette with their investments, ie. by attempting to nail every available shiny new company on the market.
One of the most impressive things about this company is their authenticity.
Although ICO’s are a fantastic way to raise money from a diverse team of investors, there are always questions about how token distribution aligns with the philosophies of blockchain – namely, the distribution of power and resources among a network instead of tightly controlled by a small minority at the top.
In an interview with South Korea’s largest newspaper, the JoonAng Ilbo, Ethereum founder Vitalik Buterin had some words about ICO’s. Buterin is arguably the most important man in the tech game today. He is quoted saying: “Even though ICO’s are happening on a decentralized platform, the ICO’s are hardly decentralized; they inherently involve many people trusting a single development team with potentially over $200 million of funding.” He goes on to explain how there isn’t nearly enough good information for most people to know where to distribute their investment capital. Impressively, Corl ties up both of these issues, using Buterin’s blockchain invention no less.
Funding is more important now than ever, with startups enjoying relatively lower operating costs and widespread access to global markets. Over $2 billion was funneled into ICO’s last year, yet the funding market today is centralized and fragmented. If you want to learn more about Corl’s comprehensive solutions to common problems in investing, you can join the conversation on Slack, or join their Telegram!