New Blockchain Deal Seeks to Expand Delaware's Business Appeal

Delaware's Blockchain Initiative has revealed big ambitions to attract new businesses from across the globe to the tiny US state.

AccessTimeIconApr 24, 2017 at 11:00 a.m. UTC
Updated Mar 6, 2023 at 3:06 p.m. UTC
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There are more businesses incorporated in Delaware than there are people – a balance the state's leadership hopes blockchain can help change.

Already the location to more than 1 million incorporated businesses, many of which actually conduct their business elsewhere around the world, Delaware believes blockchain has a significant enough global pull that it could inspire companies to set up brick-and-mortar offices in the state.

To that end, Delaware representatives have exclusively revealed to CoinDesk a new partnership with European strategy firm Spitzberg Partners – one designed to leverage the expertise of the firm, as well as its own technological and regulatory development around blockchain, as a means to entice international businesses to set up shop in the state.

Delaware recently reduced its revenue projections for the year. Yet, the injection of capital that could arise from the project has the potential to make a significant impact, according to Andrea Tinianow, the director of state-run business development initiative Delaware Global.

She told CoinDesk:

"People know about Delaware because companies incorporate here. But, we want people to know that it's more than just where to incorporate, they can do business here and if it's distributed ledger, even better."

Initially revealed at CoinDesk's Consensus 2016 conference in New York, the Delaware Blockchain Initiative has grown from an effort to build a stock trading solution with New York-based Symbiont to include a number of regulatory measures crafted with the help of law firm Cooley LLP.

Tinianow said the state of Delaware is already being approached by companies all over the world interested in incorporating in Delaware to take advantage of its historically light regulatory touch and its progressive stance on blockchain and other financial technology.

Germany-based Spitzberg Partners, she went on, is already working with its clients to help "create awareness" of what they consider the benefits of opening a physical presence in the state, including the absence of state income tax and a chancery court that not only doesn’t use juries, but has proven to be rather knowledgeable regarding blockchain tech.

Tinianow said:

"This is the first chapter. I think there’s a lot of exciting things that lie ahead."

European connections

Already, ties exist between Delaware and Spitzberg Partners, which was co-founded by Karl-Theodor zu Guttenberg, Germany's former Minister of Economics and Technology.

In 2015, the then-state governor, Jack Alan Markell, conducted a trade mission to Germany in search of bilateral trade opportunities, and later helped open Factory Berlin Delaware – a co-working space modeled after an existing German initiative.

To help continue that trend as part of the new partnership with Delaware Global, Ulf Gartzke, Spitzberg's co-founder and managing partner, told CoinDesk his firm will introduce the state to "corporate decision makers from around the world".

"Our role will be to identify companies that are prime candidates to expand to the US," said Gartzke. "And of course, blockchain in one very important part. But we are also looking at other industry verticals."

Spitzberg's public partners include Toronto-based merchant bank Acasta Capital, Munich-based Ming Labs (which has offices in Shanghai and Singapore), and Zurich-based Mountain Partners.

The firm also has relationships with the Wall Street Blockchain Alliance in New York and distributed financial technology firm Ripple, which has been seeking to grow its presence in Japan and elsewhere from its base in San Francisco.

Going public?

But there's another reason the partnership could end up having an impact not just on Delaware’s local economy, but on the future of public companies.

Part of Spitzberg's role will be to play a match-maker of sorts, finding startups around the world that might want access to more than just Delaware's blockchain-friendly regulations.

The availability of US capital also plays an important role to Delaware's appeal, and the state has been working with Symbiont to develop a blockchain-based way to sell shares in a company.

So, starting in tech hubs like Hamburg, Berlin and Munich, Spitzberg’s Steven Ehrlich says his firm will be looking for mature startups interested in being among the first to go public on a blockchain.

"There’s going to have to be a critical mass of them before companies start issuing shares and stuff like that," said Ehrlich, conceding that it's likely to be more of a "medium to long-term play".

Tinianow was positive about the prospect, however, concluding:

"It’s really not about Delaware, we just want to be the launching pad."

Delaware road sign image via Shutterstock


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