Starting Business using ICO and Tokens

[chrisryanwill]

So I was wondering. What are the possibilities and issues that would come with trying to start a brick and mortar business using tokens as owner shares?
I'm picturing buying like a Jimmy Johns or like a McDonalds. Raising all the costs with an ICO and then using the Tokens as 100% ownership.

I am thinking about a future where if a town has a desire for a Starbucks they could raise funds from locals. This would allow the local public to share ownership of a local business.

I may just be underthinking this but I think it would be pretty cool. Imagine a billboard with options like a Dairy Queen, Starbucks, hobby lobby blah blah blah. whoever raises the funds will build on the lot. Unsuccessful ideas refund money. Profits can be paid out by share. Maybe even set up voting shares to act like stockholders with voting shares.

Local Micro Investment=Democratized capitolism :-)

[Enre]

I'm sure that if it were a registered business you'd require some form of approval from the SEC to give people legal shares of your company

[physicist]

There is a landmark Supreme Court case that is the usual test to see if an offering falls under SEC regulation.
It defines an offering of stocks as four fold:

1. an investment of money due to
2. an expectation of profits arising from a
3. common enterprise which
4. depends solely on the efforts of a promoter or third party.

https://en.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.

You can call them coins, tokens, shares of stock or whatever. These are the rules that apply.
Methinks you would have the SEC breathing down your neck. Plus how would you guarantee a refund?
Easier just to play by the regular rules on that one.

[rahmat92]

It's not easy to start a business ...
I think to start a business using ICO and Tokens must go through various procedures or stages that you have to deal with some related people or even with some related companies / departments.

[ArdiPrabowo]

if you want open bussiness with ico and new altcoin (token)
your business plan must good, plan project , roadmap must detail, and good dev team
without iam write is very dificult can interest investor buy youre coin

[WallSinger]

Only one thing : if you think to have a great idea, don't talk about her in forums... If it's a real project "making of" is ok (you need advertising), but if is only an idea be careful, someone could rub...

[chrisryanwill]

Hell man I am totally ok with someone stealing my idea. Maybe I would want a couple shares 😋

But I feel like this might be an Uber situation. You can't wait for the laws to come to you so just do it, call it something else and then when they come to fight you, you are a large employer.
Better to ask forgiveness than permission.

Plus the beauty of this is that there would be enough market for everyone. Right now VCs look for things like 100% return on their investment in a couple years.
The everyday person would never expect that. So right now you have people getting VC money and all their profitability is syphoned off.
This way of getting many people to carry the risk they could earn 10% return and be ecstatic.

I swear if one person did it the next week all kinds of properties would get sold by token. Better yet that would increase the value of ether.
I was originally thinking go huge and buy a sports team. But then I thought if you were to try and buy say the buffalo bills you would basically soak up 8% of all ether.
I think we will see micro investors publicly purchasing properties. We have already seen it on large terms.

Originally individuals owned sports teams. Now it is VC capital  firms. 

[physicist]

Better to ask forgiveness than permission.

That is an attitude one can respect. Good luck.

[User365]

Near where I live somebody did something simmilar to this.

His company (he produces shoes from leather, they are 100% handmade) didn´t work out because he had to pay the interest for the loan he needed for starting his company.

Ok so what does he do? He goes to various banks and asks for another loanto cover his first loan, but gets denied everywhere. Then he has an idea, how about crowdfunding? (pretty much where you are now, except you are starting up and not trying to rescue your business, and he did not know about cryptos, but that is not relevant now).

Ok so he found a lot of people who crowdfunded his business. All fine, is it ? First yes, all was fine (payed back loan from the bank, and crowdfunders didn´t take any interest), but when the banks and local authorities found out, they sued him for this because they thought it was forbidden to fund a company like this.

In the end, he won the case (i think it was 3 years) and now he has (as far as I know) payed back all investors and runs his business. You see for him it came to a good end, but it was laborious.

I think if you are brave enough to go throught this, you should prepare for the court, but if you win -> you are happy (running your business, hopefully), a bunch of other people will be because you creaded a precedent, and it will be easier for others to follow your example.

[nevadasauce]

Near where I live somebody did something simmilar to this.

His company (he produces shoes from leather, they are 100% handmade) didn´t work out because he had to pay the interest for the loan he needed for starting his company.

Ok so what does he do? He goes to various banks and asks for another loanto cover his first loan, but gets denied everywhere. Then he has an idea, how about crowdfunding? (pretty much where you are now, except you are starting up and not trying to rescue your business, and he did not know about cryptos, but that is not relevant now).

Ok so he found a lot of people who crowdfunded his business. All fine, is it ? First yes, all was fine (payed back loan from the bank, and crowdfunders didn´t take any interest), but when the banks and local authorities found out, they sued him for this because they thought it was forbidden to fund a company like this.

In the end, he won the case (i think it was 3 years) and now he has (as far as I know) payed back all investors and runs his business. You see for him it came to a good end, but it was laborious.

I think if you are brave enough to go throught this, you should prepare for the court, but if you win -> you are happy (running your business, hopefully), a bunch of other people will be because you creaded a precedent, and it will be easier for others to follow your example.

Seems like with an ICO, the OP is describing a scenario that might be even more suspicious to a local government. Crowdfunding is one thing, but crowdfunding with cryptos could be even more difficult legally until the idea gets more recognition; not because there's actually anything wrong with it, but because people just don't understand it yet.

[kwaasteniet]

The way the OP describes it will one day become a standard. unfortunately the U.S. makes a poor testing ground right now because of the SEC.

There are ways to do it legally in the U.S. but you need to file a bunch of paperwork.

[Vod]

Better to ask forgiveness than permission.

No, It's EASIER to ask forgiveness than permission.  It's not better.

[jasong]

Cool idea in theory, but the SEC won't let it happen if they can help it.

[Beerwizzard]

The idea of local crowdfunding of Starbucks is definetely cool. I never thought abiut it in such "local" way
Here are the poblems that I see (I might be wrong and the list is definetely not full):
1. Your token won't have a legal power in your country. Mostly they are not "legalized" like shares so such business should be built on trust.
2. That will function only as a new way of crowdfunding. With a small amount of tokens you won't be able to influence the business.
3. To promote this idea to your neighbours you should prove them that Starbucks in your location will bring some profits. Opening a coffee shop is not such expansive as building a factory, someone might just notice your promotion and open another coffee shop before you even start your ICO. Or someone may just buy the bigest part of tokens and get this business almost for half price.

[JPnotmorgan]

Security token not a coin, and a loan not a token.
So you will have IRS, and SEC coming after your project

[Rahar02]

So I was wondering. What are the possibilities and issues that would come with trying to start a brick and mortar business using tokens as owner shares?

Is it the idea; to start a brick and mortar business? Or it just an example?
Do you think people will interested to buy your tokens?
For people in your neighborhood maybe easier to convince that your business will run smoothly, but how about calculation of the shares?
Basically, I am asking about the real project.
The most important thing about crowdfunding is gain the trust of people to invest in your business, to become a share holder.

[Zimbabwecoin]

The only limitations are convincing people to buy in, and not getting in trouble with the law