Israeli startup Colu raises $9.6 million to advance blockchain-based local currency

Rage Review : Israeli blockchain startup Colu has shifted its focus to local currency issuance after raising $9.6 million in funding due to a change in its business model. The purpose of this financing is to bring technology to more users. CEO Amos Meiri said that the company has currently developed a specific use case that best meets user needs. Colu has created local currencies on its platform and will issue local currencies in other cities around the world (including Amsterdam and Silicon Valley), which are favored by users and merchants. Such a solution can make blockchain-based currencies possible and can be immediately applied to the market.

Translation: Nicole

Israeli blockchain startup Colu has raised $9.6 million in funding as it shifts its business model to focus on issuing local currencies.

Aleph, Spark Capital, Digital Currency Group and former Thomson Reuters CEO Tom Glocer funded the Series A round following a seed round in early 2015 when the startup was focused on building its underlying technology.

Colu has been focusing on developing colored coins, a high-level protocol on the bitcoin network that allows it to be extended to represent other assets, and CEO Amos Meiri said the company has now identified a specific use case that best meets user needs.

Meiri told CoinDesk:

“There are many other use cases for colored coins, such as in the music field, the Internet of Things field, but then 60% of the use cases we see are for local currencies. This is where our market is.”

Meiri specifically cited the example of bitcoin startup Bitt using Colu’s technology to launch the Barbadian dollar on the bitcoin blockchain as a turning point in the project.

The results were successful, and now Colu is launching two similar projects in the Latvian community.

Colu has created local currencies on its platform, which are popular among users and merchants. Meiri also revealed that Colu can use technology to build services more conveniently.

He said:

“We have a wallet, we have a dashboard that allows local economic directors to issue distributed currencies, gain access to economic data, and manage data from elsewhere.”

The company said it would launch a local currency in other cities around the world, including Amsterdam and Silicon Valley.

In a statement, investors said such a strategy would allow Colu to keep up with the trend of the "new digital economy".

Spark Capital partner Santo Politi said in a statement:

“Their scaling solution makes blockchain-based currencies possible and immediately available to the market.”

Tools and Services

Such positioning may be surprising, given the recent traction facing blockchain platform Ethereum, which was developed in part to make it easier to issue digital currencies.

However, Meiri sought to position the project as being beyond Colu’s target market, as it provides tools for currency issuance and “not just code.”

Meiri pointed to recent events with Ethereum, including an ongoing debate over how easy it is for users to create advanced smart contracts with blockchain technology, as potential indicators that the theory about the market is correct.

Amos Meiri

He said:

“The only blockchain you can really rely on right now is the Bitcoin blockchain. It’s the only solution that’s really been implemented and works for specific use cases.”

Meiri also said that in order to provide this service, a combination of permissioned and public blockchains is necessary, which can provide a better platform for users like issuing local currencies.

Central banks play a role

The announcement comes as other currency issuers (central banks) have begun to show interest in blockchain technology.

While Meiri isn’t shy about suggesting that the project will eventually enable and even support larger use cases, he says the current focus should be on developing the technology on a small scale.

He said:

"We are not waiting for the central bank. If we wait, it will take 3-5 years."

However, Meiri said Colu has revealed that it is working with strategic partners that can scale up its local currency from a single neighborhood to an entire city.

More immediately, Meiri said, the funding will help expand Colu’s team from 23 employees today to more than 30 by the end of the year, as it brings the technology to more users.

Meiri concluded:

“For us, this round of funding is about bringing technology to users.”