[CRYPTOSTOCKS] Vircurex [VCX] - Going public

[Kumala]

Note:
This listing will only become effective if at least 10,000 shares are sold. If the 10,000 shares are not sold by 28th February 2013 then all shares will be purchased back at the face value of 0.25 BTC per share and this contract will be null and void.

Overview
Vircurex is a privately owned trading platform for virtual currencies, it supports buying and selling of Bitcoins and many of its derivatives. The platform offers:
 - trading (buying/selling)
 - underwriting options
 - coupons
 - full trading API

Virtual currencies can be purchased using Euro or USD. Additional currencies are planned.

Objectives of the listing
To facilitate the further development of the platform, ensure ongoing operation as well as constantly enhance the functionality we decided to raise capital by selling 30% of our equity.

Some plans - but not limited to - are:
 - incorporation of Vircurex,
 - integrating other payment processors
 - advertisement campaigns
 - infrastructure upgrades

The Listing
A total of 45,000 shares at a face value of 0.25BTC each will be issued. 30% of these will be made publicly available.
If all shares are sold, 3,375 BTC will be divided into
   1,500 BTC onetime payment to license the platform and transfer the ownership of the complete infrastructure from its current owner
        300 BTC for advertisement costs over the next 3 years
   1,575 BTC to cover all operational costs over the next 3 years

Investment / Assets / Licenses
The listed security (and subsequently the legally incorporated entity) will
- own the source code, its customer base as well as wallet balances
- own the domain name

Operation costs / Revenue / Profit
Current monthly revenue from trading activities as well as advertisements is ~11 BTC.
The security listings proceedings will cover all operational expenses for the period of 3 years, hence all revenues will be net profit and paid out as dividends during that period.

Dividend
The monthly net profit will be paid out as dividend, typically in the first week of the month. All issued shares are entitled to the dividend payment.

Currency Exchange Risks
All expenses are paid in USD, thus to limit the possible risk of currency fluctuations, all proceedings from the listing will be converted to USD immediately. The funds will be held in a bank account and will not be used for anything other than paying the operational costs of the platform.

Share Buyback
The security issuer has the right to buy back the shares at 25% above the 30 day average trading price.

Special conditions
The security issuer will not be entitled to dividends for a period of 12 months after the listing.

Forward Looking Statement
Next 12 Months
Assuming a current 11 BTC monthly revenue and a quarter on quarter growth rate of 10% then the security will offer a 4% to 5% dividend yield. We believe a 10% growth quarter on quarter is a conservative number, in addition, most operational costs are fixed costs, hence any further growth will reflect in an over proportional increase of the dividend yield.

After 3 years
The trading platform will have to generate sufficient revenue to for it to continue its operation beyond 3 years. With the average monthly operations costs of 50BTC and the current trading fee of 0.5%, the exchange will require a daily trading volume of ~170BTC to break even.

Communication and Publications
All important announcements will be made on
 - the exchange that Vircurex will be listed on
 - bitcointalk.org

The list is subject to change depending on the development of the various forums.

Risks
You must consider this investment a high risk investment with a high probability that the expected returns will not materialize or even a total loss if the investment. Operating a virtual currency trading platform incurs the risks of:
- double spend attacks on weak virtual currencies
- security breaches (e.g. 0 Day vulnerabilities)
- legal actions by governments against our service offering
- availability of key personnel to operate the platform
- continuation of the virtual currency networks (blockchains)

Each potential investor need to consult with their financial advisor as to whether or not this investment is suitable for their specific risk profile.

Link to the listing on Cryptostocks.com:  https://cryptostocks.com/securities/34

[MPOE-PR]

Interesting stuff!

1,500 BTC onetime payment to license the platform and transfer the ownership of the complete infrastructure from its current owner

Is that current owner you or some other arrangement?

A total of 45,000 shares at a face value of 0.25BTC each will be issued. 30% of these will be made publicly available.

What happens to the other 70%?

I think you may be confusing things. Are you doing an MPEx style IPO where the owner sells some of his own shares (in which case you're not required to say what you'll do with your own money, and also it's not natural or sensible to spend it on the company)? As it is phrased this sounds a lot like the GLBSE style IPO.

1,575 BTC to cover all operational costs over the next 3 years

What happens if fixed costs increase significantly during that 3 year timeframe?

Current monthly revenue from trading activities as well as advertisements is ~11 BTC.

So tentatively 0.1% return per month, if indeed operation was costless. If operation costs 1,575 BTC over 3 years that comes to ~45 BTC a month, which would mean this is currently bleeding. Along those lines, much more detailed discussion of how you plan to turn around the enterprise may be a good idea (or why you even think there's any chance of such, for that matter).

[Kumala]

Some clarifications on the questions:

1500BTC license / business transfer:
The onetime fee/investment of the business to acquire a license to use Vircurex as well as handover the platform with all data, and yes, Vircurex is currently privtely owned by myself. This listing is about transforming this venture to the next level.

30% /  70%  Share Ownership:
I am selling 30% of the shares to the public, thus 70% remain my property which I intend to keep. Not sure what the reference to GLBSE is about, but this is a common approach for many startups, you issue shares for a fraction of your enterprise, while retaining control by holding the majority of the shares. With myself being a major shareholder, I will naturally take all decisions in the best interest of the company.

Costs:
The states costs of 1575BTC over 3 years is the upper limit I foresee, assuming that the Exchange develops within the foreseen parameters. Should it go beyond our expectations then the increased revenue will be managed to pay for the increase hosting costs. A large scale of the costs are fixed costs (server hosting, yearly fee for up-keeping a legal entity, SSL certificates, eMail service, remote site backup service, etc.).  The calculations were made based on a BTC price of 20USD.

Business development:
Obviously the 11BTC will not suffice to run a full blown legal entity, hence various plans are in the working:
a) Incorporating Vircurex: We cannot deal with payment processors (e.g. BitInstant) as of today because their prerequisite is a legal entity.
b) Expanding funding options beyond our current options (e.g. Liberty Reserve, BitInstant, etc.)
c) Marketing /Ads, thus the budget for that
d) Expanding the supported currencies, again here a) is important
These are just to name a few.

As stated, a breakeven is at ~170 BTC trading volume per day, I believe that to be a reachable target long before the 3 years.

[MPOE-PR]

30% /  70%  Share Ownership:
I am selling 30% of the shares to the public, thus 70% remain my property which I intend to keep. Not sure what the reference to GLBSE is about, but this is a common approach for many startups, you issue shares for a fraction of your enterprise, while retaining control by holding the majority of the shares. With myself being a major shareholder, I will naturally take all decisions in the best interest of the company.

The only thing that's not either common or ever heard of is for the seller to then use the proceeds of his sale to buy the company presents.

Either it's a sale by the owner, in which case the resulting 45k x 0.25 x .3 = 3,375 BTC is yours to keep and does not get piped back into Vircurex, or it's a mutual subscription thing, in which case however many shares sell constitute 100% of the company and if you want 70% you'd better bring 7,875 BTC - in cash. In this latter case the share sale proceeds, whatever they may be, are to be used by Vircurex and only by Vircurex.

The Global Scam Exchange reference is due to the apparent confusion between those two distinct and immiscible modes of operation. On GLBSE people did a blend of both, resulting in such splendor as DMC etc.

In any event, the only point that still needs addressing is, to quote the link before,

On a more general note : the time of cowboy style, "one man and his hopes" fiat-BTC exchanges has passed. The exchange market is moving into a new phase. There is room on it for MtGox, on account of its old age and well known brand, and for people like the Frenchies doing that bitcoin-central partner-with-a-bank thing. All other exchanges are going out, and things being what they are the majority of them will be going out uncleanly.

Because of this, keeping money in any other fiat-BTC exchanges than those two is pretty much cruisin' for a bruisin'. Spot sellers may still be safe for a while, select ones may even be safe forever (as they're a subset of the OTC style marketplace), but for better or worse cowboy exchanges are a thing of the past.

So, short sweet and to the point: why do you think you can compete with MtGox and Bitcoin-central on an ongoing basis? Note that you wanting to compete is not a good enough reason, and neither is competition being in general a good thing much of a reason - this is business. Absent an excellent answer to that question, it would probably be wiser to close the thing now while it's relatively painless to do rather than close it in six to sixteen months and leave behind a shitstorm. No matter how attractive a coupla k BTC may seem in the present tense.

[Deprived]

30% /  70%  Share Ownership:
I am selling 30% of the shares to the public, thus 70% remain my property which I intend to keep. Not sure what the reference to GLBSE is about, but this is a common approach for many startups, you issue shares for a fraction of your enterprise, while retaining control by holding the majority of the shares. With myself being a major shareholder, I will naturally take all decisions in the best interest of the company.

The only thing that's not either common or ever heard of is for the seller to then use the proceeds of his sale to buy the company presents.

Either it's a sale by the owner, in which case the resulting 45k x 0.25 x .3 = 3,375 BTC is yours to keep and does not get piped back into Vircurex, or it's a mutual subscription thing, in which case however many shares sell constitute 100% of the company and if you want 70% you'd better bring 7,875 BTC - in cash. In this latter case the share sale proceeds, whatever they may be, are to be used by Vircurex and only by Vircurex.

The Global Scam Exchange reference is due to the apparent confusion between those two distinct and immiscible modes of operation. On GLBSE people did a blend of both, resulting in such splendor as DMC etc.

Quite.

If the 1500 BTC is to buy the licences/software/right to run the exchange etc - then what are your 70% of shares in return for?  70% of profits AND equity seems a lot for a management fee.

[Deprived]

Also, where are the historical accounts?  Your post makes reference to current growth - but you appear to have forgotten to add the link to the records demonstrating that growth.

I assume the current assets/liabilities are also detailed at the link you forgot to add.

[Monster Tent]

It seems like you want other people to come up with 100% of the funds and you take 70% for free.

Are you putting in any money at all ?

[K1773R]

It seems like you want other people to come up with 100% of the funds and you take 70% for free.

Are you putting in any money at all ?

he already did?!

[Kumala]

The chain of arguments is getting too complicated, lets me "streamline it":
I am forming a company (Vircurex Ltx?) which will acquire the current trading platform and its business from its current owner (for 1500BTC). I am offering to sell 30% of the company shares to the public (Face value being sold 3375BTC). 70% I will be holding. For the first one year, I will not be collecting any dividends, all of those go to the 30% shareholders.

As for the valuation 30%/70%/3375BTC:  As with any startup, the valuation of the company depends very much on its the outlook of its future business. And that is something each and every investor needs to judge by himself.

why do you think you can compete with MtGox and Bitcoin-central on an ongoing basis?

Each exchange is focusing on different services, both quoted exchanges are primarily focusing on BTC trading which of course Vircurex is providing too in addition to the other virtual currencies (currently only Bitcoin deviates, but I am also looking into Lindens) which in its depth is unique on the market.

I assume the current assets/liabilities are also detailed at the link you forgot to add.

On the asset side we have:
 - Domain name
 - License for the platform
 - 4700 registered users, 2020 who have logged on in the last 3 months, 1060 who have logged on in the last 4 weeks, 880 who have a BTC balance on their account.

Let me reiterate, the vision is to create a fully transparent community driven exchange supporting Bitcoins, the Alts and possibly other virtual currencies. I'll be publishing all details of the monthly expenses and revenues on the Vircurex's page.

But like with any other investment, don't invest what you can't afford to loose.  If you are not planning to invest (yet) then support the continuous Alt-Chain exchange platform buying a share or two.

[Deprived]

The chain of arguments is getting too complicated, lets me "streamline it":
I am forming a company (Vircurex Ltx?) which will acquire the current trading platform and its business from its current owner (for 1500BTC). I am offering to sell 30% of the company shares to the public (Face value being sold 3375BTC). 70% I will be holding. For the first one year, I will not be collecting any dividends, all of those go to the 30% shareholders.

If the 1500 BTC buys the current trading platform and business, what are YOU putting in for your 70% of shares?

If the 30% are worth 3375 BTC then your 70% are worth 7875 BTC.

As the existing business is being bought for 1500 I'm not seeing what you're personally bringing to the table to justify you getting 7875 BTC-worth of shares immediately.  Is ALL shareholders get in return for your 70% you running the business?

Though as you're forming a new company maybe I'm just misreading it - and you're putting in 7875 BTC yourself at the same face-value as the shares being sold to the public?  If so then it's an unusual way to do things but acceptable - though why you'd need 10k+ BTC to run an exchange I'm not sure: your post doesn't explain what that cash would be used for.

[Deprived]

Note:
This listing will only become effective if at least 10,000 shares are sold. If the 10,000 shares are not sold by 28th February 2013 then all shares will be purchased back at the face value of 0.25 BTC per share and this contract will be null and void.

Currency Exchange Risks
All expenses are paid in USD, thus to limit the possible risk of currency fluctuations, all proceedings from the listing will be converted to USD immediately. The funds will be held in a bank account and will not be used for anything other than paying the operational costs of the platform.

Emboldening is mine.

If you convert immediately but then don't sell 10,000 shares are you personally making up the difference if BTC rises vs USD in the interim? (Or keeping the profit  if it falls vs USD)?

Or does "immediately" actually mean "immediately - but not until after at least 10,000 shares have been sold"?

[Kumala]

With immediately I mean, once we have sold the shares, right after that I will convert it (BTC-E, MTGox, Vircurex, whereever to get it converted). To make this clear, all profits (or be it cost savings) wherever they might come from will be made public and will come to the benefit of VCX.

[Sukrim]

Same thing here:
If you will even convert all your expenses ans income to USD, why list on an BTC-only marketplace?

Also, I strongly recommend anyone thinking to "invest" (= throwing money at the OP) how much of an incentive the OP even has, if ALL money he needs for 3(!) years is coming from the 30% share and he won't see any return on that for 12 months. Also he dictates the initial prices, if you think he's worth less, there's no way for you to take part in this.

This is just another "I have a great idea, give me money/developers/time/human ressources/a botnet/... and I'll make it happen - and you who had all the risk and invested all the ressources even get 30% of the profit!" scheme.

[Kumala]

If you will even convert all your expenses ans income to USD, why list on an BTC-only marketplace?

Only the expenses will be converted, as most of the services that we require cannot be purchased (yet) in Bitcoin, e.g. incorporation.  The income will of course be paid out in BTC.

This is just another "I have a great idea, give me money/developers/time/human ressources/a botnet/... and I'll make it happen - and you who had all the risk and invested all the ressources even get 30% of the profit!" scheme.

Selected members of this community seem to have the impression that running an online Bitcoin Exchange is a fully automated platform where all I need to do is collect my income once a month. The shocking truth is that this is not the case. It is a very time consuming business, daily monitoring of security logs, backup validation, user inquiries, account reviews, AML/KYC activities, further code developments and improvements, marketing, etc.

how much of an incentive the OP even has

Yes, whilst the 30% of the shareholder bring in the cash for the initial period, the operators of the platform bring in amounts of time and personal committment that can't even be expressed in $. The operators have the utmost interest to make this a success, as they will be looking back at months and years of invested time. For the typical average investor, the risk is limited to the Bitcoins he decided to invest.
As quoted in other posts, if this investment is too risky for the average investor, buy only one or two shares for 0.25BTC to support the Alt-Chain Exchange.

[RandomQ]

Does the Company have any Unpaid debts or Liabilities?

What is the current average operating costs?

Does the Company have any assets?

Doing some very simple math I'm seeing a possible .0144 BTC dividend payments over 12 months given no growth.

I'll give some good growth for the company and say .02 dividend payments over 12 months.

After 12 months that dividend payment is going to cut because instead of paying 13,500 possible shares its going to be paying 45,000.

After 12 months the dividend payment would put the ROI @10-20 years? Unless you are going to be seeing 25-50% growth.

Please don't take this as a flame, I'm just trying to crunch some numbers and understand how you are setting the value.

Also I understand USD/BTC rate plays a big role in this since operating costs would be in USD

[Kumala]

Please don't take this as a flame, I'm just trying to crunch some numbers and understand how you are setting the value.

No worries, full disclosure and transparency.

Does the Company have any Unpaid debts or Liabilities?

No.

What is the current average operating costs?

The current costs are not comparable with the planned setup after the listing. First of all, there will be the incorporation which will cost money to establish and maintain, then we have the various development activities that are required afterwords to incorporate payment processors. Also support for Linden Dollars is planned, that as well will require efforts and funds.

Does the Company have any assets?

The systems are run on a VPS, thus no server infrastructure is required. All development infrastructure will be provided by myself, no assets required either.
The assets owned are primarily intangible assets (domain name, license for the platform).

Doing some very simple math I'm seeing a possible .0144 BTC dividend payments over 12 months given no growth.

I'll give some good growth for the company and say .02 dividend payments over 12 months.

After 12 months that dividend payment is going to cut because instead of paying 13,500 possible shares its going to be paying 45,000.

After 12 months the dividend payment would put the ROI @10-20 years? Unless you are going to be seeing 25-50% growth.

This is understandably most difficult to predict. Yes, assuming a quarter on quarter growth of merely 10% you get 4% yield. The 10% growth is my expected bottom line, with the incorporation and thus access to more financial services as well as selected marketing activities and a more agressive referral system we should be able to grow way beyond that rate. If we are to make a dividend yield of 4% to 8% then we are very well within the parameters of a mature market.

Also I understand USD/BTC rate plays a big role in this since operating costs would be in USD

Yes, and thats why we intent to convert all BTC right away after the listing into USD to eliminate any future currency fluctuations.

[HorseRider]

Hi Kumala,

When are you going to work full time on this project, under what kind of conditions? thanks.

[Kumala]

Haha, this is a full time job, just answering the threads already takes up 50% of my time. The other half, well I'll be putting up a "Developer's log" so you guys can see whats going on and whats going to happen.

[Sukrim]

All in all you need ~60-70k USD for buying licenses + operating the exchange for a few years. Why do you need to sell a part of this company (if you are even legally allowed to - I didn't yet see under which jurisdiction this will run) just to get a sum that is not THAT impressive. Why go through all that hassle if you could just walk to the next bank, deposit your firstborn or so and get a credit with probably even better rates than what you intend to give to your "investors" (= 100% money providers) here? If you didn't go to banks, why? If you did, what did they say to reject your idea? Please also show us the materials you showed (or would show) to a bank to get a loan of ~75k USD.

[Kumala]

Update on the listing.

We have two positive news for the listing of Vircurex.

1. The license fee costs for the platform has been reduced by 200BTC.
2. The cost of BTC/USD has changed in a favourable way, i.e. we will require to raise less BTCs.

Assuming the BTC/USD remains at its current level, we'll adjust he listing as follows:

   Total number of shares issued:   31,000 shares
   Total publicly listed/traded shares:    9,300 shares