In the mean time, this is how far I could go translating the article
http://www.forbes.ru/tehnologii/344785-blokcheyn-dlya-himsyrya-pochemu-ico-vyglyadit-luchshe-venchurnyh-investiciyARTICLE
To build a plant for the production of zirconium dioxide, Chelyabinsk entrepreneurs decided not to give investors 80% of the future business, but to conduct an "IPO on the block"
In the past few years, crowdfunding has become a popular tool for raising funds. People around the world are investing in various start-ups, handicrafts using 3D printing or developing potentially interesting, but most often useless products. In the wake of the popularity of collective financing, for example, a company like Pebble was created, which was able to organize and start its own industrial production of smart watches. But Pebble - an exception to the general practice: in the minds of the masses crowdfunding has long been a semi-entertaining instrument through which it is possible to pre-order some trinket invented by another inventor. So people collected hundreds of thousands of dollars for hand flamethrowers, beer dispensers, quadrocopters and other toys for adults. Only a few successful projects were able to go into mass production: most often people who got involved in the next initiative either received a raw, somehow created product, or watched their money dissolve into the night together with the authors of the project.
On the other hand, in parallel with crowdfunding on head lifted technology blockade, the excitement around bitcoin in 2012-2013 can be compared to the next Gold Rush, when sellers of "kicks" -video cards earned more than "prospectors" themselves.
Back in 2011, 1 BTC was worth about $ 30, but already in 2013, the Cryptocurrency became rapidly rising. By November 2013, its value has increased more than 20 times and reached $ 700 per coin, and on November 17 it set a record of $ 1242 per 1 BTC. After that, the bitcoin course began to fever, he fell several times, but in 2016 bitcoin resumed its growth and again broke the mark first $ 1000, and then - $ 2000. Experts believe that, after an agiotage four years ago, a reassessment of bitcoins occurred. Out of the exclusively speculative and shadowed tool of darknet, investors saw a promising means of payment in the main cryptocurrency, and the development of the blocking technology itself, on which crypto currencies are based, and attention to it from such giants as Microsoft, only strengthened the view that it has a future.
Both of these phenomena - crypto-currencies and block-banking - existed in the world parallel to the real sector of the economy: on the territory of gadgets and in cyber space. To argue about providing bitcoin and other crypto-currencies solely at the cost of their extraction and demand for themselves and at all can be for hours, but I'm not here for this. I want to ask a question: did you ever wonder why industrial production is the lot of giants or the state? After all, it is to this sphere, on whose shoulders the rest of the world stands, for an ordinary man the doors are open only as a wage worker.
How was the idea of placing on the ICO born?
The very idea of raising money through the ICO was born by chance. With Andrei Nikonorov, my friend and project partner, we have known each other for a long time. Often crossed in one of the Moscow cigar clubs. Just at one of these meetings at the club, we discussed who is working on what, and realized that we can be useful to each other. Andrey specializes in consulting in the field of the use of blocking technology. And I was just looking for the possibility of starting the production of zirconia by the technology I have. I did not want to attract venture investors because of the prospect of losing control over the business. The option of raising money through crowdfunding or ICO, which Said Andrew, seemed to me very promising.
Zirconium dioxide is a raw material popular in modern industry, which is used in the production of refractory materials, in metallurgy, glass, ceramics and nuclear industry. For example, due to its refractory properties (melting point 2715 ° C), ZrO2 is used in the construction of nuclear reactors. Pure zirconium melts at a temperature of 1855 ° C, that is, the polymer has almost twice the best refractory properties than pure metal. For comparison, the melting temperature of tungsten is 3422 ° C, molybdenum - 2623 ° C, niobium - 2477 ° C. But in order to meet the needs of modern industry in refractory materials, synthetic polymers are needed - refractory metals do not trite at all. They also do not have the necessary mechanical and chemical properties.
This raw material has been used successfully in industry for a long time. However, for its production, the sand extracted from the bowels with the content of metals is used. Then it is subjected to multiple expensive processing, which yields the finished product at the output. Our technology offers to abandon the extraction of sand and independently synthesize the product with the content of zircon (ZrSiO4) and simple zirconium oxide - ZrO2. The purity of the final product ranges from 66% to 75%. At the same time, the material obtained is not subject to phase transitions, which increases its chemical resistance by a factor of 2.5-3 compared with the currently available zirconia.
In order to open a conditional candle factory worth $ 1 million, you need exactly this amount. No other way. In industry in general, everything is simple: in the evening money - in the morning chairs. Nobody will build a shop for you or ship expensive equipment in debt, even if you turn sand into gold. In the modern world, there are several standard ways to raise funds, except for investing your own: take a loan from a bank or find an investor. And each of them has its pros and cons.
Banks do not claim your business, but give large loans only on the security of assets, and in Russian realities, the market value of these assets should double the amount of the loan without taking into account interest. On the other hand, there are investors, business angels - they are called differently. But in order to "repulse" their investments, including in previously failed projects, they demand from 50 to, as in our case, 80% of the share in business, in fact, hiring you as a manager.
There is another, less obvious option: to go for money to those who are interested in your products. However, other participants in the production chain will buy your technology or offer their own sites rather than give money to create an indirect, and in the future, direct competitor.
We went through all the above steps, with the amendment that we want to open a non-candle factory, but a plant for the production of a synthetic concentrate of zirconia (ZrO2). In our case, we are talking about the required amount of at least $ 3.5 million, which we could not get in the bank, since we do not have a decent collateral. Investors also demanded at least 80% of the share after the launch of the project, that is, they wanted to take away our business. We also received proposals from other sector players to move to, for example, Germany and start production of ZrO2 there, at their capacities. True, this option also meant the transfer of our technology, which is the main value.
The standard ways of seeking funding were either unavailable to us, or meant a loss of control over our own child. For this reason, we turned our attention to the ICO as a new trend in the area of collective financing.
ICO is a tool for attracting collective investment through the crowdscape model by issuing and selling their own cryptographic tokens (coins). If, in the case of crypto-currencies, they are provided with production costs, demand for themselves, or are tied to the exchange rate of any currency or gold, then for our ZrCoin tokens, the end product is the collateral: one coin is equal to one kilogram of our zirconia .
What exactly do we do?
The first stage is placement on the ICO on the basis of the Waves block-platform. During fundraising, we will offer potential investors to purchase ZrCoin coins at a price ranging from $ 1.40 to $ 1.55 per token. Each coin will be provided with one kilogram of zirconium dioxide ready for sale on the market.
During the ICO, we were able to collect the minimum required amount: now we already have $ 3.7 million at the disposal with a plan of $ 3.5 million. With this money we will build a processing plant in the Chelyabinsk region and purchase equipment for the production line. Since the end of the ICO before the start of production and sales, according to our estimates, it will take 6-8 months. One line will bring in 70 million Russian rubles of real income every month. After the start of sales of zirconia, we will begin to buy the token
The risks, of course, are
Like any project, ours is not deprived of risks for potential investors. However, it should be noted that they are all quite standard: a change in the exchange rate, delays in the construction of the shop, overlays with the supply of equipment for the line. Conventionally, it is possible to strike out fluctuations in the exchange rate: they are dangerous for us only if the Russian ruble is strengthened, which is not expected in the coming years.
We are not pioneers in placing tokens on the ICO - before us, this mechanism has been successfully used by many other companies. The most striking example is the placement of Chronobank, which was able to raise $ 5.4 million. Of the projects of the real sector, it is worth mentioning the farm "Kolionovo" (more about the news - in the Forbes material), which through the ICO raised about $ 500,000 for development, and another farm A cooperative company called "Family Capital". As can be seen from the amount of funds collected, ZrCoin is now the largest ICO, connected with the real sector of the economy.
For the average person, the mechanism of placement through the ICO may not be fully transparent and understandable. First of all, it is necessary to understand that this method is chosen because of near-zero investments for launching, the main expenses are related to the promotion of placement in the information space in order to attract the maximum number of investors.
The latter also carry risks with the lack of regulation of this area: if crowdfunding is subject to at least some control by the state and supervisory authorities, the blockage is the sphere to which the regulators have not yet reached. The safety of investors is guaranteed by the very site at which ICO passes, and the relationship between the investor and the authors outside the site is regulated by the offer contract that is posted on the project site and accepted by the investor at the time of the purchase of the tokens.
In addition to the novelty of the placement mechanism on the ICO, which can alert the investor, the ZrCoin project is the first of its kind. It is about raising funds for the needs of creating real production. Similar experience is only among investors in Kolionovo - but there the owner of the farm needed money to develop his business, which before ICO had successfully existed before, and not to start it from scratch. If we could not collect the necessary $ 3.5 million, then all the money would be returned to investors in full, but we have already managed to reach the target and we are ready to launch production.
Of course, going to the ICO, in case of failure, we risked not only a breakdown in the timing of the launch of the plant. Considerable personal funds of the project's founders were invested in the development of technology (it is about the amount of about $ 1 million), significant sums were spent for the promotion of the project at various sites in search of investors. Agreements with suppliers of equipment and raw materials for production would also be frustrated, since we preferred to conduct full training on all fronts. The failure of the ICO would entail a significant loss of time and money, but still not comparable to the loss of control over technology, if we immediately attracted classical investments.
It works
With all the advantages, disadvantages and risks, ICO has proved to be a real tool for raising funds for serious projects. ICO's big brother, crowdfunding, is perceived by society as something entertaining, for enthusiasts. The community of the world of detachment has shown that it is ready to treat with full seriousness both the technology itself and projects that are ready to develop with its help. Undoubtedly, this attitude of the public and the trust that was given to us is encouraging. Previously, no project that was located on the ICO, had no relation to the real sector of the economy, and even more so to the processing and chemical industries.
