[ANN] Swarm Fund 1.0 - [OFFLINE THREAD]

[jay_pilch]

I don't understand one thing about this.

This startup is intended to give "crowdfunders" equity in return for investing in their startup idea...

So shouldn't people who "crowdfund" your startup receive equity in your startup in return?  This is what you stand for, however, I don't see any reference to you actually practicing what you're preaching.

I apologize if a missed a point and this is what you are actually doing.

Correct me if I'm wrong but my understanding is that

1. The swarm platform is for startups to "crowdfund" their ideas

2. People who "crowdfund" into the swarm startup, receive dividends/equity from all startups that use the swarm platform

Also, are there plans for an audit somewhere down the line? Cheers

[BitSlapper]

I don't understand one thing about this.

This startup is intended to give "crowdfunders" equity in return for investing in their startup idea...

So shouldn't people who "crowdfund" your startup receive equity in your startup in return?  This is what you stand for, however, I don't see any reference to you actually practicing what you're preaching.

I apologize if a missed a point and this is what you are actually doing.

Correct me if I'm wrong but my understanding is that

1. The swarm platform is for startups to "crowdfund" their ideas

2. People who "crowdfund" into the swarm startup, receive dividends/equity from all startups that use the swarm platform

Also, are there plans for an audit somewhere down the line? Cheers

Hmmm well I think it goes more like this...


1. Take 4,200 BTC, about $2.7 Million USD, from crypto users for "Round 1" funding.

2. Take another 17,500 BTC, about $11.2 Million USD, from crypto users for "Round 2" funding.


Just needed to point out they want almost $14 MILLION USD to make a kickstarter clone that uses one form of crypto rather than cash...

Facebook only received $500,000 in it's first round of funding by the way. The "Rounds" were at least a year apart not a month...


ok now we can continue...
 


3. Give said users a 100% pre-mined coin.

4. Try to make a Kickstarter website that only uses this new SWARM coin and hope the crypto community uses it, because no one else will.

5. If someone happens to use the site to get funded then give a very small percent of the funding money raised to people that hold the coin. This will just be more SWARM coin by the way.

6. The funded user gets the majority of the SWARM coin but that's all.

7. The funded user DUMPS all of their SWARM on the first exchange they can find to fund the project, crippling the SWARM price on the market.

8. Devs DUMP all the rest of the pre-mine they have since their shares are quickly becoming worth 1 Satoshi a piece.

9. All users that bought into this "investment" cry on the forums that they were scammed.

10. All others user point out that they told you so by linking to old posts.


There you go the 10 phases of this coin, if it even reaches phase 5. If not it will skip to phase 8 and continue.

[jay_pilch]

I don't understand one thing about this.

This startup is intended to give "crowdfunders" equity in return for investing in their startup idea...

So shouldn't people who "crowdfund" your startup receive equity in your startup in return?  This is what you stand for, however, I don't see any reference to you actually practicing what you're preaching.

I apologize if a missed a point and this is what you are actually doing.

Correct me if I'm wrong but my understanding is that

1. The swarm platform is for startups to "crowdfund" their ideas

2. People who "crowdfund" into the swarm startup, receive dividends/equity from all startups that use the swarm platform

Also, are there plans for an audit somewhere down the line? Cheers

Hmmm well I think it goes more like this...


1. Take 4,200 BTC, about $2.7 Million USD, from crypto users for "Round 1" funding.

2. Take another 17,500 BTC, about $11.2 Million USD, from crypto users for "Round 2" funding.


Just needed to point out they want almost $14 MILLION USD to make a kickstarter clone that uses one form of crypto rather than cash...

Facebook only received $500,000 in it's first round of funding by the way. The "Rounds" were at least a year apart not a month...


ok now we can continue...
 


3. Give said users a 100% pre-mined coin.

4. Try to make a Kickstarter website that only uses this new SWARM coin and hope the crypto community uses it, because no one else will.

5. If someone happens to use the site to get funded then give a very small percent of the funding money raised to people that hold the coin. This will just be more SWARM coin by the way.

6. The funded user gets the majority of the SWARM coin but that's all.

7. The funded user DUMPS all of their SWARM on the first exchange they can find to fund the project, crippling the SWARM price on the market.

8. Devs DUMP all the rest of the pre-mine they have since their shares are quickly becoming worth 1 Satoshi a piece.

9. All users that bought into this "investment" cry on the forums that they were scammed.

10. All others user point out that they told you so by linking to old posts.


There you go the 10 phases of this coin, if it even reaches phase 5. If not it will skip to phase 8 and continue.

I guess that is one way to perceive it.

It may be true that they are not risking a large proportion of their finances as compared to investors. There is a degree of opportunity cost though.

However, they have been relatively transparent with their planned use of finances. So investors are making an informed decision.

Personally, irrelevant to what the future market cap of the company/swarmcoins is, I think a platform with 'cryptoequity' and due diligence is exactly what the cryptocurrency community needs for growth.

But I do acknowledge that your scenario is possible.

[fractastical]

We've actually just published a proposal on our new blog that addresses the most common point of critique. We are allowing all SWARMPRE holders to vote on the future of Swarm.

See the following:

One consistent aspect of the feedback received thus far is that you think our fundraising goals are too high given the current status of project completion.

We’ve discussed this as a team and PROPOSE to close the fundraising at the end of Round 1 (4500 BTC) and focus on the development of the platform.

Here are the specifics of our proposal:

To stop the fund raise when the 4500 BTC target is achieved
Swarm founders commit to release a working product with the funds raised in this round.
When the Swarm platform is developed, should further funds be required to deploy it, a proposal to unlock and sell further coins will be delivered to SWARMPRE holders for vote.
The voting system described below, will demonstrate just a little of the capability of SWARM cryptoequity.

On FRIDAY JULY 4, we will issue SWARMVOTEONE coin to all holders of SWARMPRE.

You will receive SWARMVOTEONE in proportion to your holding of SWARMPRE.

A YES vote means you are in favour of halting the crowdfunding after the first round, until a vote is taken to once more open funding.

A NO votemeans you would prefer SWARM to continue with a round two funding immediately after the closure of Round 1.

 

To vote “YES” to this proposal
send all of your SWARMVOTEONE to this address: 14B8L2LZBFD89EFT8CRCBQWIYKBP8G8XWJ

To vote “NO” to this proposal
send all of your SWARMVOTEONE to this address:  199SUQEQZ4AFTE2SE1ALLHGYXH8FUVMBMJ

 

YOUR COINS MUST BE RECEIVED BY THE VOTING ADDRESS BY MIDNIGHT JULY 6th (GMT).

On July 7th if the balance of SWARMPROPOSAL1 is greater in the YES address than the NO address we will adopt the proposal.

http://blog.swarmcorp.com/2014/06/29/swarm-proposal-1/

[fractastical]

Hmmm well I think it goes more like this...

Facebook only received $500,000 in it's first round of funding by the way. The "Rounds" were at least a year apart not a month...

Good point. It's a bit complicated in that traditional fundraising models allow multiple raises with dilution of shares.  With a locked cryptoasset, you have the security that no new coins will be issued, but you generally have only one shot to fundraise.

That said, we've just launched a new proposal (http://blog.swarmcorp.com/2014/06/29/swarm-proposal-1/) to postpone the second round until we have a fully operational product.

This is more line with the distributed governance whitepaper I released in January, in that it includes multiple rounds and blockchain-based voting.

Keep in mind that the funds for the second round were to fund related coins, not simply to build the product. We also anticipate substantially above average legal fees given the complexity of cryptoequity.
 
 

ok now we can continue...
 

Don't think any of the rest of what you wrote is applicable. Among other things we aren't forcing people to take investment via Swarm.

[crazy_rabbit]

We've actually just published a proposal on our new blog that addresses the most common point of critique. We are allowing all SWARMPRE holders to vote on the future of Swarm.

If you are not planning to distribute all 100M SWARM at the 4500 BTC target...  this voting will complicate the situation even more.

I thought swarm were proportionally distributed if they don't hit the target.

[fractastical]

I don't understand one thing about this.

This startup is intended to give "crowdfunders" equity in return for investing in their startup idea...

So shouldn't people who "crowdfund" your startup receive equity in your startup in return?  This is what you stand for, however, I don't see any reference to you actually practicing what you're preaching.

I apologize if a missed a point and this is what you are actually doing.

"Equity" is a term that has a very specific legal meaning in many jurisdictions which includes a specific set of rights attached to a pre-existing legal framework. What we are providing is "cryptoequity" a programmable set of rights that is customizable depending on the project. This does include some degree of giveback as specified in our manifesto.

Correct me if I'm wrong but my understanding is that

1. The swarm platform is for startups to "crowdfund" their ideas

2. People who "crowdfund" into the swarm startup, receive dividends/equity from all startups that use the swarm platform

This is basically correct, although it is worth noting that the 'dividend' feature of Counterparty which we are using does not necessarily correspond to dividends in the traditional sense. The type of giveback to the people who fund the project probably will likely substantially depend on the type of project (and on legal jurisdiction).

Also, are there plans for an audit somewhere down the line? Cheers

We will be issuing our June report soon. I have no plans for an external audit but I'm very open to suggestions as to how to do this.

[fractastical]

If you are not planning to distribute all 100M SWARM at the 4500 BTC target...  this voting will complicate the situation even more.

I thought swarm were proportionally distributed if they don't hit the target.

I suppose this is really up to SWARMPRE holders at this point.

Would you prefer us to set a lower cap and reserve coins for a future round (to be approved by coin holders)? This would allow us to worry less about marketing in the next couple weeks and stay focused on building product.

Or would you prefer that we try to raise as much as possible now and not leave any future funding option open? This might result in a short term benefit to SWARMPRE holders but could limit the future coin potential.

It's not necessarily an easy decision but it was the primary point of critique that has come up on bitcointalk and other places.

Frankly, I'm also personally tired of fundraising and am looking forward to getting back to building product.

[fractastical]

...and reserve coins for a future round (to be approved by coin holders)?

This ^^^ is why I said it would complicate the situation even more...  the amount of reserve coins for a future round should be determined/announced before this voting IMHO.

This is fairly clear.

100,000,000 - 24,000,000 SWARMPRE - 4,000,000 founder - 4,000,000 bounties = 68,000,000 available for future rounds.

[IamNotSure]

Although I'm confident in the success of the project, all this requires clarification & clear communication to avoid an MSC/Maidsafe like debacle.

Also, focus on the product, you have enough funds now to get things started.

[fractastical]

Although I'm confident in the success of the project, all this requires clarification & clear communication to avoid an MSC/Maidsafe like debacle.

What aspect of our materials do you think are weak? What sort of clarifications and clear communication would you like?

[IamNotSure]

Although I'm confident in the success of the project, all this requires clarification & clear communication to avoid an MSC/Maidsafe like debacle.

What aspect of our materials do you think are week? What sort of clarifications and clear communication would you like?

I read the last pages and it's clearer now. But for someone who is new to the project it might get confusing (multiple rounds of fundraising, then a vote to end it, etc.)

[BitSlapper]

Hmmm well I think it goes more like this...

Facebook only received $500,000 in it's first round of funding by the way. The "Rounds" were at least a year apart not a month...

Good point. It's a bit complicated in that traditional fundraising models allow multiple raises with dilution of shares.  With a locked cryptoasset, you have the security that no new coins will be issued, but you generally have only one shot to fundraise.

That said, we've just launched a new proposal (http://blog.swarmcorp.com/2014/06/29/swarm-proposal-1/) to postpone the second round until we have a fully operational product.

This is more line with the distributed governance whitepaper I released in January, in that it includes multiple rounds and blockchain-based voting.

Keep in mind that the funds for the second round were to fund related coins, not simply to build the product. We also anticipate substantially above average legal fees given the complexity of cryptoequity.
 
 

ok now we can continue...
 

Don't think any of the rest of what you wrote is applicable. Among other things we aren't forcing people to take investment via Swarm.

Really? So...


3. Give said users a 100% pre-mined coin.

4. Try to make a Kickstarter website that only uses this new SWARM coin and hope the crypto community uses it, because no one else will.

So this isn't true or applicable?


What about this?

6. The funded user gets the majority of the SWARM coin but that's all.

7. The funded user DUMPS all of their SWARM on the first exchange they can find to fund the project, crippling the SWARM price on the market.


How is someone supposed to fund their project or business on SWARM alone? Without dumping all of their newly obtained SWARM coins in exchange for BTC which can actually be exchanged for cash then how exactly are they supposed to move forward with their plans?

If it's the case that they don't actually need BTC or FIAT to fund a business or project and they will only need SWARM then why don't you just use SWARM to fund the SWARM site?


I may have been a little harsh and somewhat sarcastic in the list of items I proposed but that doesn't make them irrelevant.

Simply ignoring the rest of the items because you don't want to answer how a system like yours actually raises a value of a coin rather than causes massive dumping every time a project or business is funded doesn't make them "not applicable".


Of course no one is FORCED to invest in this. No one is forced to invest in anything here but plenty of people are still scammed or buy into an idea which wasn't fully thought out.

If you weren't asking for such a ridiculous amount of money to begin with then maybe I could give you the benefit of the doubt and assume you just didn't think this idea fully through before proposing it to potential investors.

However, since you were still looking for upwards of $14 Million USD before my post and now since have revised it to staying with $2.7 Million USD to launch the website it seems even more questionable.

How could you possibly be able to launch with that much less in funding now? One does not simply overestimate $11.3 Million USD in funding for a business.

Even if the "Legal Fees" where over estimated your not providing actual shares of a company to crowd funders, which is where massive legal fees would come from.
 
Your providing a percentage of a Crypto Coin, you made, that was collected as fees from a user launching a project on your site, correct? You've completely avoided the legal issue in the USA with crowd funding.


Don't ignore valid concerns raised, that is a clear sign of a scam. Every scam that has come through this forum uses the  "No one is forced to invest" line instead of answering glaring problems.

[fractastical]

3. Give said users a 100% pre-mined coin.

4. Try to make a Kickstarter website that only uses this new SWARM coin and hope the crypto community uses it, because no one else will.

So this isn't true or applicable?
 

Correct.

What about this?

6. The funded user gets the majority of the SWARM coin but that's all.

7. The funded user DUMPS all of their SWARM on the first exchange they can find to fund the project, crippling the SWARM price on the market.
 

Also not applicable. People will not be taking funds primarily in SWARM.

How is someone supposed to fund their project or business on SWARM alone?
 

They aren't.

Without dumping all of their newly obtained SWARM coins in exchange for BTC which can actually be exchanged for cash then how exactly are they supposed to move forward with their plans?

If it's the case that they don't actually need BTC or FIAT to fund a business or project and they will only need SWARM then why don't you just use SWARM to fund the SWARM site?

This would indeed be idiotic and we wouldn't do this to anyone... even ourselves.

I may have been a little harsh and somewhat sarcastic in the list of items I proposed but that doesn't make them irrelevant.

Simply ignoring the rest of the items because you don't want to answer how a system like yours actually raises a value of a coin rather than causes massive dumping every time a project or business is funded doesn't make them "not applicable".

It's really not applicable because SWARM is not the primary token for actually executing the crowdsale, that will be Bitcoin and/or fiat. SWARM grants other privileges that are detailed in our manifesto.

If you weren't asking for such a ridiculous amount of money to begin with then maybe I could give you the benefit of the doubt and assume you just didn't think this idea fully through before proposing it to potential investors.

I actually agree that for a normal startup this would be a ridiculous amount of money, but compared with setting up a VC fund it's quite small. VC funds start at $50mm or so and even $50mm would be small.

Now I'm entirely sympathetic to the viewpoint that we shouldn't be attempting to fund startups but simply providing the infrastructure. The more I've gotten involved with this the more I'm convinced that the overhead of managing that process is not desirable at present given the immediate technical needs and already complex legal space.

That said, this was our original model and our fundraiser was structured around those goals.

Don't ignore valid concerns raised, that is a clear sign of a scam. Every scam that has come through this forum uses the  "No one is forced to invest" line instead of answering glaring problems.

I actually think all of your concerns were and are completely valid, it's just that you misunderstood the value of SWARM and this caused other mistaken conclusions.

As for the funding goals, I actually wish in retrospect we set a smaller target that we could meet quickly and get back to my preferred business of product development. That said, we picked our number based on the early advice of Bitangels/DApp fund/etc. and we are stuck with that particular number.

The best I can do at this point is make sure we manage the funds received responsibly and deliver on our pledge to deliver an amazing product on schedule.

Of course, we do have an active proposal to cap the amount at a certain smaller amount.

[BitSlapper]

@fractastical

Thank you for clearing up some of my concerns.

I do wish you and anyone who invest in this the best but the ~ $900,000 USD you've already raised should be plenty to get a site like this off of the ground. At least enough to build something on par with what kickstarter was when it first launched.

The sheer amount of money your asking for to build this should raise red flags to any informed investor, especially any software engineer like me. However, many here are not informed and choose not to be.

I would have already invested Bitcoin, that I'd be willing to lose, if it were a reasonable amount of funds in the beginning.

As with the Facebook example that first round was $500,000 and that wasn't the IPO that was a small group of VC's investing for 10% of the company. No matter how many shares were dolled out at the IPO they still would have received 10% worth. On top of that Facebook already had a globally recognized site up and running with over 100,000 users.


The initial idea is great but it seems poorly planned, especially in the financing aspect.

Even if you have nothing but the purest intentions, the amount of money sitting in your accounts makes it very enticing just to claim that you've run into issues and can no longer move forward with the project. This happens constantly in real world funding and is the reason it's so difficult to get VC funding for startups, especially ones that have no viable product yet.

[fractastical]

Thank you for clearing up some of my concerns.

My pleasure. I do what I can.

I do wish you and anyone who invest in this the best but the ~ $900,000 USD you've already raised should be plenty to get a site like this off of the ground.

I agree. Among other things that's why we created this proposal to cap the amount.  

The initial idea is great but it seems poorly planned, especially in the financing aspect.

Could be. I was probably unduly influenced by Marc Andreessen's comment to "Raise as much money as possible" as well as advice from those who had conducted previous crowdsales. I also wanted to be significantly better capitalized than our competitors.

[fractastical]

Among other things that's why we created this proposal to cap the amount.  

You have NOT presented a proposal to cap the amount...  that would entail all 100M SWARM to be distributed at the 4500 BTC target.


Edit:  Just to be clear...  I am NOT against having a second phase of fundraising.

Let me be more clear. A proposal to cap the current fundraising cycle at 4500BTC while leaving open the possibility of a future funding round (to be approved via the same voting mechanism).

 

[jaybny]

seriously, this is by far the worst of the worst shit coins. 4200BTCs, for a thin layer on top of counterparty? Berlin event sponsored by bitcoin scam foundation.

[fragout]

Let me be more clear. A proposal to cap the current fundraising cycle at 4500BTC while leaving open the possibility of a future funding round (to be approved via the same voting mechanism).

Let's make it even clearer...  SWARM holders vote Yes...  what will happen to the remaining 68M SWARM if there is never a future funding round? 

As i understand it from previous posts. The 100 million swarmcoins (less 8% reserves) will be divided among the current investors when the fundraiser ends.

The 8 million swarm reserves is subtracted and the remainder of 92 million SWARM is distributed prorata to all SWARMPRE holders. So if we only sell 46 million SWARMPRE then each purchaser will get 2 SWARM for each SWARMPRE (i.e. 92 / 46 = 2).

[jaybny]

Seriously, this all can be accomplished with Open Transactions. All you do is "add section to the corporate bylaws, that the company is owned by the bitcoin addresses in the open transaction ledger"

All SWARM is doing is selling equity in the startup, while kickstarter is pre-selling the actual product that will be produced by the startup. Seems to me that the founders of SWARM, will have the upside of VC/Angel investor equity, without the risk. 

Legally, I don't see how this will fly, unless this is marketed only to "accredited investors".  There is nothing distributed, decentralized, or trust-less about this. There is no block-chain behind the counterparty assets. Even worse the counterparty distributed exchange is severely flawed.

Bitshares is what your trying to reproduce. Its distributed, decentralized, trust-less and cannot be shut-down by anyone, just like bitcoin.