Bitcoin Forum

HI,

What is the best way to get in investors involved in a new project, yet give them ample protection? I am not talking about a large ICO/STO, but rather just to get a minimal viable product off the ground (a new BATM project, starting with a single unit). Yes, of course there are risks - ANY new project carries investment risk, but is there a best practice or process for investor transparency at a micro-level?

Seems easy enough and we were planning on doing it the traditional way however we have been thwarted by two separate banks (iaccount.cc first took off with our money, a significant amount which hurt quite a bit, and just as we were back on our feet to start with a few units, epayments.com then froze all their customer accounts!!!).

I have gone from a "speculator" to someone who wholeheartedly believes WE SHOULD ALL BE USING CRYPTO and avoiding banks.

Anyway, could someone guide me on the best/fair/transparent way to fund a "test" project using BTC? Hopefully completely avoiding bank interference?

Thanks.

Think about it from investors point of view - why should they give their bitcoins to strangers, even if they present some very good business plan, if there's always a huge risk that it's just a scam? Banks have legal power to take back what is owed to them, but in Bitcoin there's no such opportunity. If banks don't give you loans, seek angel investors or VC, try some fiat crowdfunding platforms like Kickstarter.

Also, there's a board  (https://bitcointalk.org/index.php?board=78.0)on this forum for pitching your projects to potential investors, you can try your luck there.

Yeah, I do understand your points. I see it a lot, "why would... bitcoin to strangers", however any early stage investment has that risk (VC/ICO, etc.) and there is no real protection for the investors in those cases either. It is high risk/high reward - just wondering if there was a way to eliminate the "scam" part (some type of transparency).

I think there should be a way for people to invest in "micro-rounds" (or micro crowdfunding), or something like that where people could invest and then get proof the money was used the right way, and if they are satisfied, move to a second, third, fourth round, etc. Or something that is kept 100% in crypto/blockchain/smart contracts, etc.? I thought blockchain/smart contracts were supposed to make it all easy and transparent!  ???

I know there are some places like KICKICO or similar (not sure they work) but I was looking for something more like a "micro-kick" ICO.

Anyway, seems like the VC/Angel/Fiat route is the one we will have to stick with. Thanks for the input.

The track record of crypto businesses is genuinely disgusting. No way would I ever, ever, ever, ever put money into a crypto business. Almost every single one has failed or disappeared. If a hardened crypto fan feels that way do not expect any conventional funding route to feel differently.

The few crypto businesses that do make money tend to attract heavyweight funding completely separate from banks or pipsqueak investors.

As mentioned above there's a section here to look into funding. You will get much further offering collateral. There's a lot of money swilling around. Plenty of it will be demanding.

I would recommend that you raise the necessary funds among yourselves first. I believe you are a group. Go to people who personally know and trust you. And then make even a short yet stellar track record and perhaps you may present your extension plan to angel investors or even here. It is hard to attract investors nowadays for a project starting from scratch. What you are asking is a funding for your test, which may turn out good or bad.

Also, those epayments and bank accounts will probably be opened back for you or at least give you back your funds after complying certain requirements. They must have been blocked for certain reasons not really illegal. So I guess you don't really need to ask for investments from random people. You just need to iron things out with your bank accounts to get back your funds. That situation is not yet a dead end, I suppose.

Exactly. Only few lunatics will agree to fund certain projects using btc. With losing ability of ICOs or new project to provide a strong project that never fades out. I am afraid no one in their right mind would give or invest.

Problem here is the assurance of those who will that they can get at least something in return or constant insurance that their money would not be wasted test run project can be good and somehow progress but not all will be on that position.

Angel Investors do invest with new projects but their technical requirements and standard are too high.

I think that raising funds might be an option, but I would not set the hopes high. After all, there've been and still are too many scams. And besides, why would people want to invest in an ATM project? There are some ATMs out there around the world, and I've never seen anyone raising money to put another one. You could try to raise money on Kickstarter, I guess, but there's a very tricky part here: investors would be interested in withdrawal fees being very high since it would mean bigger profit for them (or not?), whereas potential users would not like it and ATMs are in fact famous for overly expensive fees. Since this is mainly the community of potential users rather than investors, it would not be easy to find sympathetic people for this project, I believe.

I supported what you said but I'm a crypto investor will be interested not even when halving is coming. However, i think the OP and his team need to prove their genuinely through getting a license because if they had licensed their previous fund won't have been frozen. Besides, it will boost some investors confidence. In the meantime, you can also make use of indiegogo (https://www.indiegogo.com/) maybe will be lucky.



 

calling it not an ICO doesn't change anything. the problem with ICOs and any other name you want to use for a fund raising is that they don't do anything at all. basically they choose the easiest way of receiving money by doing nothing (no service, no business, no product,...).
similarly if you just want to explore your ideas by spending a little of your money and effort but with other people's money, it is never going to work.

gamblers invest in the above while investors only invest in real businesses with real service or product. for example a casino with real customers (players) and certain clear amount of money they handle and have a good track record of making profit that wants to expand and needs investors can easily raise funds.

If you ever find investors that are willing to invest BTC in your project,you will have to sign contracts with them clarifying profit shares,refund policies(if the project fails),liabilities,and all the other legal stuff that gives the investors some sort of guarantee that you are not a scammer(and if you are a scammer,they could sue you,because you broke that contract).If you are not willing to sign such contracts,then begging for cryptocurrency donations and crowfunding(which is kinda similar to asking for donations) are your only options.

I am all for the disruption of the Banking system, but ICO's have received a lot of bad publicity in the past and now even Social media are banning advertising that are linked to ICO's.

It might help if you include some kind of reputable Escrow system that can validate the progress of the actual project, before further funding is provided for the project. This Escrow service must have a untainted reputation and they must be in a position to audit the progress of the project, before they payout the next funding cycle. < 100% transparency >  

Can you give us a bit more detail about your project, just to satisfy our curiosity? How will your BATM project be better than the others out there and how will it help to disrupt the current Banking system?  What expertise/experience do you have in this industry?  

Don't you have funds from your pocket to start with? I think that's the best that you can do now or try to get some loan and get it run all by yourself. Having a startup business is hard and it's even harder because it's related to crypto.

The struggle you have faced of gathering funds from investors is normal because of the past years that we had. I still see some angel investors who are willing to take the risk together with the developers as long as the project was proposed properly.

Unfortunately you cannot avoid banks entirely but there are certain things you can do.

*You can add funds from one wallet to another wallet directly , this way you won't have to go through banks

*You can actually do cash to bitcoins transaction , considering you do have cash with you and it is free from the bank market , you can find such people online or on sites like local Bitcoin , there people actually sometimes prefer transactions to be made in cash.

*People can use paper wallets for funding , but the safe keeping will be all time difficult

Get your project going first. Don't even bother asking for a single cent until you have a working product like you said, the BATM, you need ONE of it first off your own money to show people what can be done with ONE and then imagine 10.

Or, do market research, a lot of it. And start being small. You have a job, earn money then take a small loan, and then show the bank your business proposal. They will loan you the money.

I know, ironic right to ask banks to kill themselves?

Yes, I concur here, which is why I was hoping there was some new project to fix this (escrow, round by round, based on proof of work) - something for the MVP world.

There are many platforms that offers loans and you can look for an investor personally but that's not going to get much attraction. You can get a loan with collateral in several platforms.
Crypto lacks platforms like kickstarter or gofundme and one of the obvious reasons is the anonymity people look for in crypto and the large degree of scam being originated on crypto.

Hi, thanks. There are a lot of valid points here.

I say "we" sometimes but this is really a side project so I am handling 99% of the load here. I will get the funds, that is not the real concern (probably as you mentioned from people I know) but the idea was to get "proof of concept" that everyone would get paid fairly. Testing not only the machine viability, but the transparency part. If I fund it myself, I will be limited on expansion and even if it works, I have to "prove" it to any outside investors. On the other hand, if I had a 100 users x €100 on a single unit, they would have proof it works and could expand quickly.

Just to clarify the "banks", they were not "our" funds frozen, it was "all" customer accounts. In the case of i-account.cc they took off with the funds (simple fraud). I still have hope for ePayments.com but we were led to believe i-account was upgrading as well so it is a very similar situation.

If I had the possibility of a limited self funded proof of concept versus having to slog around getting the money together for a biggie from the off I'd do the self funded one. Any form of track record no matter how modest is vastly more compelling than a proposal still marooned on a scrap of paper. But that's just me.

Thanks. Yes, I can get the funds and I understand the skepticism of "throwing" money away, however it is micro-funds with no real risk (or to say if the investor is worried about losing a few hundred euro or even a few thousand, that is not the investor I am seeking as they wouldn't have capital to expand).

Again, I am not worried about finding the capital, I only ask the best way it could be done to PROVE the fairness/transparency/security, etc. because of how the ICO market tanked. Basically a way to eliminate all these common concerns for why people say it can't work/ or won't work (escrow/series of rounds, etc.).

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Thanks. The escrow/audit for next round/100% transparency - is the exact system I am looking for. Prior to 2017 I suggested all ICO's should be run this way but at that time I was told people wanted fast returns and it would take too much time.

As far as the other questions - to be honest I am not sure if we are "better" than the other BATM projects. I think we improve on other projects in the areas of: strategy, research, location, learning from failed projects - possibly the right market at the right time, but there are still many risks. My expertise comes from the VC side with market strategy - so this is really based off a growing market; Bitcoin ATMs have grown by more than 12x since January 1st, 2016, up 3x from January 1st, 2018. Installations are doubling over year on year basis averaging 11% ROI on a monthly basis. The global crypto ATM market is projected to grow at a CAGR of 46.60% to reach US$183.779 million by 2024 (based on a report so I understand this is a prediction). So there are a lot of risks/threats still out there, but someone is making a lot of money in this industry.

But I am 100% NOT a Bitcoin technical expert or programmer so I still have a lot of questions and research to do. But I will go ahead and get my feet wet here soon in the next month or two (with few machines) so I appreciate any input. Thanks again.

A lot of disappointment has caused many people to despair crypto investment and I must tell you that there are many people like you that have a good project but they are handicapped by lack of money. So I will advise you to solicit assistance from friends and family and also you could try crowdfunding and source for donation. I do not think most investors can be perturbed by what you have said you discover because we have seen many well documented and a resourceful crypto project that could not even raise 50% of the softcap

I wonder who can entrust a stranger funds to get project execution because of what is going on in the industry, many things have happened which taught many lessons concerning startups business or projects. There have been many project failures which lead to investors losing their many in the process, sometimes half of the funds refunded back to investors.

Kindly find another means to get fund for your start-up because, building a project from the start should be done partly from initiators or inventor fund raise for the project. Although, I wishes you and the project a successful end.

Banks will not win this war. Their system is already falling apart and in the future they will only collapse.

Thanks to everyone. I knew there was a lot of skepticism out there from the ICO's, but I really didn't realize how risk-averse most people seem to be now.

In private equity, the most you can do is look at the big picture, find the downside and protect your downside (mitigate risk). At the VC stage, EVERY project looks the same and it is IMPOSSIBLE to know who the big winner will be. Ex. Candy Crush vs. Bluejelli (two gaming apps, the first with 1,000x return, the second a complete dud). But there are 4 ways to mitigate risk: Risk Acceptance, Risk Limitation, Risk Transference & Risk avoidance (the most expensive of all risk mitigation options). You can limit risk by limiting allocation, which is why I am seeking a process to micro-fund the project to create a provable model (which could transfer to unrelated projects, for example, a microfarm).

To clarify a bit, I am not asking for any money (at least not yet, and maybe it will stay private, the project currently requires Qualified Investors which I don't expect to find here). I am just researching for a better process to do so if we do get to that point, or maybe even a process that could be used with my own private group of investors.

Anyway, it is all a big help with the ongoing research, especially suggestions like the verified escrow, using the securities board, etc. so thanks again.

Hi,

While we are not sure in which market you are looking to launch your project, you might want to look how we conducted our fundraise on here last year [now closed; for our next round we probably will consider a different approach due to scale]:

https://bitcointalk.org/index.php?topic=5198437.0

However, that said we had of course an easier situation due to the backing by Vietnam's leading Bitcoin Exchange BitcoinVN (http://www.bitcoinvn.io) which has been around since 2014 as well as operational experience of running Bitcoin ATM's since 2016; so the situation is not fully comparable to a "newcomer" starting out.

Still you might maybe find a few useful items / ideas on there.  :)

I see that you have preferred a specific type of investor and it's just the other way around, just like the investors, they have their prefer kind of project to invest and support.

As long as they find your project o be worth it, legit and beneficial, they'll start to reach you out.

Thanks. But it HAS to be that way for VC/PE. Most people here have good opinions and good intentions but some don't understand how VC/PE really works. It is not that we "choose" to have Qualified/Accredited investors, it is because regulations DEMAND this for legality (if I raise the capital in a traditional manner). Even with qualified investors, most Banks/EMIs do not allow any crypto related businesses. It can be done through some banks/jurisdictions but it takes extra licensing or a new incorporation (ie. Malta or similar). So I am seeking a way to a) avoid the hassle and restrictions of the bank; b) develop a new model that was worked for transparency/security for the investor as well.

The second part is interesting for me because you can see how many people are skeptical, and how many ICOs failed (I don't want to say they were all scams because I have seen a ton of legit companies fail in my day, 90% of startups don't make it to year 3) so if we developed a strict process, round by round, with a good escrow (or even to avoid the escrow, investors should keep money in their pocket until certain requirements are met).

The bank took a chunk of your money and you probably weren't able to say anything since you were suppose to know about their banking policy. If you didn't know about all these fees, then its your mistake and you are responsible for it. You are using their service and you are supposed to pay them, I don't see anything wrong over here.
I am not aware of any services that allows you to fund a project completely with bitcoin. Also, its quite impossible for you to avoid the bank completely. You will eventually have to use it when working on your project.

Hi, I should have mentioned our project is starting in Spain. After looking at your project launch it is almost exactly what we want to achieve and very inspiring. As you mention, you have some more clout than we do but it gives us a fresh look and good ideas from  a real project. And because we are "newcomers" I hope we could get some of your advice along the way? Help from people with real world experience is invaluable. Thanks again.

Yeah I think poster should look in to this. I mean no real investor would want to take such risk on blind fate, they don't know you so automatically they can't trust you completely especially where there isn't a channel where refund can be made

Hi, I had some posts removed by answering consecutive posts (sorry mods - I didn't know the rule  :-[ )

OP and his team's funds were not frozen - ePayments bank's funds were frozen by the FCA (UK regulator) - apparently due to OneCoin - article here: https://news.bitcoin.com/fca-suspends-epayments-onecoin/ (https://news.bitcoin.com/fca-suspends-epayments-onecoin/)


Also, RE; "you will have to sign contracts with them clarifying profit shares" - This is not a problem, an investor can also retain 100% ownership of the machines and we can provide a custom operating agreement to split profit for operating and maintenance. We are very flexible. Or a few owners could spread operating risk and each get a proportionate equity split, a traditional setup which is probably what we will end up doing.

Just surprised they have not worked this out through Bitcoin/blockchain to make it more transparent or automatic (smart contract purchase->operating->dividend).