All the company’s diamonds are currently grown in just two prototype reactors. But with so many opportunities to explore, LakeDiamond is seeking to raise CHF60 million for constructing 50 commercially operational reactors to increase its output. Rather than offering shares in the company through an IPO, it is using the innovative approach of an Initial Coin Offering (ICO), which sells investors cryptocurrency tokens through a blockchain ledger. Each token costs 55 cents and buys one minute of production on the reactors.
After the ICO, the value of the tokens will fluctuate depending on demand for the diamonds, the purity required and the performance of the reactors. The low minimum investment is much less than the minimum needed for most IPOs and is therefore attractive to a greater range of investors. After launching the ICO in late 2018, the company has already raised enough to judge that the project is viable.
The LakeDiamond team is particularly keen to retain production in Switzerland, where the company has benefited greatly from its partnership with EPFL. The cooperation of the Swiss financial regulator FINMA in establishing the rules for the ICO has also been helpful – as is the involvement in the ICO of Swissquote, a listed bank that is the first to distribute tokens through an ICO and provide storage in an electronic wallet.
Alex Kummerman, LakeDiamond Chief Investment Officer, says that the pragmatic FINMA approach to the ICO is just one aspect of the friendly business environment that Switzerland has offered LakeDiamond. ‘There is a five-year tax holiday for start-ups, which is renewable for another five years. The Crypto Valley initiative centred in and around the canton of Zug has hosted hundreds of start-ups in the blockchain sector and developed great expertise. And EPFL has a technology transfer office that establishes links between its researchers and industry.
‘Being located in Switzerland is very helpful, particularly for a high-tech company. Swiss technology brands have a great reputation internationally – their quality has a very positive image around the world. So it is a great country to launch innovative products like ours.’