a much better and more efficient way of crowdfunding equity
Blockchain is still very new to the general public. The majority of people think that this is just a type of online currency. We will use the blockchain to help solve problems with crowd funding. More specifically crowd equity funds. There are many different crowdfunding platforms out there today. One of the first and most famous is Kickstarter. On Kickstarter, people invest in ideas they like, and in each investment group you are offered a gift, usually the better the more you invest. The prize will be worth less than the investment amount. If you really believe in the idea that you are investing, why not become part of it? With EQ Tokens, any investment you make in a company will give you equity in that company and allows the distribution of dividends and the ability to sell your equity at any time. If you had invested $ 10 in Uber in 2009 when they were valued at $ 3.7 million, your $ 10 investment will now be worth more than $ 250,000 because they are now worth more than $ 100b. Imagine if you invested the $ 10 in Kickstarter and got some new Uber key chain as a gift ???
So why is raising money using blockchain better than the current method?
- Costs – The crowdfunding method currently has quite high costs. This is due to the fact that crowdfunding companies rarely can handle financial transactions themselves and often have to pay third parties for this service. By using cryptocurrency, we will be able to easily handle all transactions on our own, continuing financial savings to our customers.
- Equity – The majority of crowdfunding companies cannot offer equity in return for investment because it is too difficult to track precisely who owns what and easily sell shares. By using an Ethereum smart contract, we can easily divide a portion of 20% in the company into billions of small shares that can be traced back to individual Ethereum wallets to enable the distribution of profits (dividends) or the sale of tokens.
- Ownership – Since the first day of creating a token for a new project, you have 100% ownership of your token. You can send them to whoever you want, exchange them for whatever you want or even store them in an offline location to keep them safe. This type of freedom and ownership only comes with blockchain.
The Future of Crowdfunding
EQ Token will use blockchain technology as a way of crowdfunding equity that is far better and more efficient. The benefits of using a blockchain from an investor’s perspective are:
- Small investments can be easily tracked and provided with a proportionate portion in the company through the use of tokens
- Profit sharing can be distributed evenly and easily to all investors
- Investors can also be given voting rights that can be verified by the number of tokens they have in their online wallet (this feature will come later)
- This token can be sold privately to other investors or sold on our own token exchange at any time.
Benefits for company listings on our crowdfunding platform are:
- The company register will pay a small fee (used to validate listings, <$ 350) and the collection of money / verification is done by our service.
- They can offer a portion of their company, which we will legally hold. We can then convert this to 100,000,000 tokens to be sold to investors
- Each quarterly / annual profit portion is then given to us which we can distribute equally to all token holders
- If there is a failed crowdfunding project where the goal is not achieved within the allowed time frame, we can return the investment received
- Some of the main crowdfunding options currently on the market are now all listed below with their main strengths and weaknesses.
- One of our biggest selling points is the fact that we can offer equity to investors. There are several alternatives currently on the market that can also offer equity. These are listed below:
- Crowdcube is one of the few equity crowdfunding websites out there today but they take 1.5% of the investment you make and 8% of the total amount invested. Crowdcube does not distribute dividends or allows you to easily sell your equity whenever you want. Equity is only paid when the company is sold or goes public.
- Seedrs is another equity crowdfunding website that charges a 7.5% fee. Seedrs allows dividend payments but will charge 7.5% for this payment. Seedrs allows the sale of shares to other investors but you must pair up with someone on the Seedrs website to transfer your equity.
We will charge a registration fee for each project of $ 200- $ 300. This is to review each project, evaluate the business, and give the project a risk rating.
- We will charge a 4% fee for each fully funded project.
- We will have 3% tokens from each project.
- We will charge a 2% fee for all dividends.
- We will charge a 0.25% fee for each token trade on our website.
The above means that if a project has raised $ 200,000, the business that collects money will receive $ 192,000 and the investor will receive a share of 97,000,000 tokens. This costing method will share the burden, on the more popular crowdfunding sites, the funds received by the business will be under $ 185,000.
My projection for the first 12 months after launch is that we will raise a total of $ 4 million for business, which means that our revenue from this year is $ 160,000.Based on current trends in the crowdfunding business and our fast expansion plans for late 2021 / early 2022, I expect a 100-200% increase in revenue in the 2nd 12 months. This business will grow exponentially because its success is based on how many people know it. Kickstarter revenue increased by 3-400% every year for the first 4 years after starting and Crowdcube revenue increased by 640% between 2014 and 2018. We will invest heavily in expansion during the first few years so expect to see the same rate of growth.We do not expect to see income from dividends during the first 3-5 years of new business, but there is the possibility of some dividends from existing businesses in the 2nd 12 months. Earnings from this will not exceed $ 3,000 – $ 5,000 in the first 2 years.The costs of token trading on our token exchange are also expected to start low in the first year but grow quite fast. This is based on the fact that every year we expect a large increase in funded projects as well as the fact that in year 3, people will still trade tokens from projects created in the first 2 years and a greater number of projects created in year 3.
Each project listed on our website must pay an administration fee of $ 200- $ 300 to register the project. These costs cover the initial project review so we can provide a basic risk / reward score. Each project will offer an initial% of their business in exchange for a certain amount of money. Every investment in the project will be held by us until the project is fully funded. If the project does not reach its target within the agreed timeframe, all investments will be returned. If a project reaches its funding goal, we will keep the fund until all legal checks / agreements are completed. The funds will then be traded in exchange for an agreed% from the company. The token will then be created and distributed to all investors.When the company reaches the stage where they can take profits, they will send% of the profits owed to their token holders to us and we will be able to distribute this amount equally among all token holders. If the company has been sold, part of the sale to the token holder will be sent to us and we will distribute it evenly among all token holders. We can also issue a voting feature to allow token holders to vote on every major decision of the company. For example if the token holder owns 20% of a company and there is a major shareholder vote, we can have all the voting holders. If 35% of token holders choose yes, 50% of token holders choose no and the rest do not vote, then this can be conveyed back to the company because 7% of the 20% of our shares voted yes, 10% chose no and 3% abstained from voting. This will then be accounted for by the votes of 80% of other equity owners in the business. This feature must be introduced in year 3.
First 12 Months
The first 12 months after we receive our initial funding will involve recruiting our core team and opening the Token EQ office. This will include website designers, software engineers with cryptocurrency experience and marketing managers. One of the main challenges during the first year was ensuring that we created and released a great service that operates within the boundaries of UK and EU laws relating to crypto currency regulations. The EQ20 token itself is not a security token but a token that we will make for other businesses with our services. We need to ensure that we comply with UK and EU regulations regarding the sale of security tokens. The main focus during the first year is to have the right legal framework to ensure that when we fund business, our investors are protected.