= FairCoop Startup to develop P2P equity crowdfunding, liquidity fund, coop investments fund and FairCoop developments funding, i.e. "A Decentralized Platform for Cooperative Investments".
- 1 Description
- 2 Discussion
- 3 Characteristics
- 4 Financing
- 4.1 FairCoop developments to be funded
- 4.2 The P2P equity crowdinvestment platform
- 4.3 Liquidity Fund
- 4.4 Coopshares Investment Fund (CIF)
- 4.5 Crowd investment Coopshares campaign
- 4.6 Crowdinvestment campaign goal
- 4.7 Get Faircoin for the Faircoin-Euro Hybrid Investment Fund (FEHIF)
- 4.8 Building the Coopshares Platform
- 4.9 Coopshares Dividends and Losses
- 5 Governance
"One of the greatest problems faced by cooperatives, social enterprises and peer to peer production projects is the lack of access to sufficient funding and investors.
The one-sided perception held by mainstream investors that cooperatives or social enterprises cannot and/or are not allowed to be profitable, the scarcity of available and acceptable tools that facilitate investing in cooperatives and the legal difficulties behind investing in a coop without becoming a member are the main reasons behind this situation.
Even ethical and cooperative banks are reluctant to invest in (cooperative) projects that are just getting started or they invest too small amounts severely hampering starting or growing anything larger than the smallest or least capital-intensive enterprises. Lack of investments is one of the biggest reasons to why corporations dominate the global economy. Nevertheless, as many of small projects are flourishing, more and more people are turning to cooperative ways of organizing, driving up the demand for greater projects and better fitting investment solutions.
In response to this challenge BotC is actively supporting and participating in cutting edge innovative solutions, e.g. CoopShares*, for building (out) the broader based services required in the fast growing social and individual sovereignty based Commons ecosphere now enabled by recent evolution of Commons principles. Besides funding its own growth via crowdfunded equity solutions and offering investors funding options via CoopShares, BotC is committed to offer a platform of services for CoopShares social equity funding and trading.
In addtion in BotC, a share is defined as the unit of participation. The amount you choose to invest in BotC will form your share of the BotC social capital. The total of social shares capital is used to fund BotC projects. The selection of the actual projects and the amount to be invested in each of them is decided in open assemblies by all participating members where every member has one vote, regardless of how many shares they control.
Once the platform CoopShares is created, cooperativists will also be able to use it to buy or sell shares to each other, improving the liquidity of the shares in coops, which usually is very problematic." (https://bankofthecommons.coop/coopshares/)
"Our plan is to create Coopshares, a decentralised cooperative destined to provide FairCoop and the global open cooperative ecosystem with sources for funding and liquidity to make it easier and less risky for everyone to be involved in the transition to the new social economy that is going to be born after the era of capitalism.
Coopshares will be a key resource for the Fairstarts plan, used to build a network of incubators and accelerators focused on open cooperativism and P2P/Commons production. (see: https://fair.coop/fairstarts-a-network-of-incubators-for-a-collaborative-economy-and-P2P-production/ )
Access to investments and different ways of funding is probably the biggest problem that cooperatives, social enterprises and peer-to-peer production projects have generally faced.
The legal difficulties of investing in a coop if you are not a member, the scarcity of tools existing to do it, or the perception of most investors that a coop or a social enterprise is not a good way to make money are some of the difficulties that coop entrepreneurs have against them.
The ethical and cooperative banks are helping in this area, but they don't invest in risky projects that are just beginning, or they loan only small amounts, which makes only small projects possible - and this is one of the reasons why corporations dominate the global economy, although every day more people are turning to cooperative ways of organising.
There is a great deal of discussion around P2P innovation, decentralisation and funding, but the innovations have not yet arrived that enable us to create a functional way of investing in innovative coops and not-for-profit enterprises that are aiming to change the world.
FairCoop, as an open global cooperative focused on the use of P2P money with the intention of building a new economic system, would seem to be a logical agent (amongst others) to provide leadership towards the solution of this challenging problem, and Coopshares is a key proposal to make it possible.
- Liquidity provider for monetary markets based in Faircoin. The aim is to bring liquidity and stability to the Faircoin open markets and make it easier for investors to get in and get out of Faircoin and related tokens.
- Liquidity provider for cashout services, creating resilence for cashin and cashout of Faircoin, in projects like Fairtoearth, Fairmarket and Coopshares itself.
- Develop and sustain a crowdfunding cryptoequity for the FairCoop ecosystem as a key resource of the Fairstarts project.
- Create a Cooperative Investment Fund for projects presented at Coopshares.
- Provide funding for the development of the FairCoop ecosystem in a way that gives investors ample possibilities to recover and eventually profit from their investment in the project.
FairCoop developments to be funded
This funding drive aims to be the key to FairCoop developments within the next 12 months.
FairCoin 2.0 will be an important blockchain-based innovation to allow the Faircoin blockchain to function, secured with 'proof of cooperation', and bring to the world a really functional alternative to the current unfair systems that are based on competition between nodes: 'proof of work' and 'proof of stake'.
Coopshares Platform: The platform would be able to use the best of some already existing cryptoequity platforms, in order to rebuild links to the Faircoin blockchain and support the new model of cooperative P2P equity explained here in point 5.
Fairstarts development: With Coopshares, other tools for sharing skills and knowledge will need to be built, and also direct support and collaboration with local incubators will be key in developing the Fairstarts network. Also some expertise in coordination and development will be necessary to make it possible.
A short presentation of the project is here: https://fair.coop/fairstarts-a-network-of-incubators-for-a-collaborative-economy-and-P2P-production/
Fairmarket consolidation: Fairmarket has already launched the alpha testing version. See here http://market.fair.coop. After that the functional beta will be released. In this way we will arrive at the final version of the full-featured marketplace needed to build the post-capitalist network economy that all of us deserve.
FairCoop ecosystem developments: There is endless work to be done in updating FairCoop, extending the network, making new connections, improving the existing tools and energising the participatory process until it becomes strong enough to launch the Fairfunds. Improvements to tools, sustaining and taking care of the whole ecosystem, extending and promoting local nodes around all the world; this important work also deserves some funding.
Faircredit: Faircredit is the most anticipated monetary tool of the FairCoop ecosystem.
We have a very complex development process awaiting us in order to build an innovative decentralised monetary system; not only for the FairCoop ecosystem, but also as a practical example on how to recover the sovereignty of the people related to the access to credit as a commons.
We need a committed team with substantial expertise to make the achievement of this goal possible.
This text is still current: http://www.fair.coop/faircredit, but a new one will be created when we have the means to make that possible.
The P2P equity crowdinvestment platform
One of the two main aims is to create a P2P equity (aka crypto-equity) crowdinvestment platform focused on cooperatives, social enterprises, and P2P production projects. It will be endorsed by FairCoop and based on Faircoin. This is an opportunity to give a powerful new tool to groups that are engaged in building a better world and usually have problems accessing investor funds and venture capital.
This P2P equity could facilitate two ways of incentivising investments, dependent on whether each coop/social startup is able to provide incomes and share dividends or not.
There will be the following two options:
A. If it is a "for benefit" coop and has incomes:
– The crypto-equity could provide financial share dividends to the coop's investors
B. If the startup is only for the commons and doesn't receive income from goods or services.
– The crypto-equity could share reputation points to the coop's investors. So in this second case it would be related to the open value system based on reputation that is in the pipeline (other social startups and research networks exist who are working on these developments).
At the same time this crypto-equity could facilitate decentralized governance if the projects prefer to be organised by this way.
FairCoop could emerge as an alternative when compared to other crypto-equity options; creating the possibility of investment in coop projects without the gambling component of asset trading that exists in the wider cryptocurrency environment.
The way choosen to do that could be to make cashin and cashout of every equity token linked to the growth and shrinkage of the number of shares, instead of the value of every share. So, in an equity market people could:
- buy shares - and the equity fund receives Faircoin.
- sell shares - and the equity fund pays out in Faircoin.
- if you want to sell and there is someone wanting to buy, you can trade so the equity fund doesn't need to alter the overall number of shares.
Therefore the number of Faircoins that the equity fund owns (measured as their marketcap in Faircoin), changes directly dependent on the number of people willing to buy or sell.
Because the coop needs to have a reserve for re-purchasing shares the plan would be to keep a reserve of about 10% within the P2P equity crowdfunding platform. Also the liquidity fund - explained in next point - will help to cover additional reserves if needed.
Using this mechanism the investors' profit could come from the increase in value of the equity tokens, and it could also come from dividends if the coop makes a profit.
And, when the coops are unable to distribute dividends the investors could receive reputation points instead, in order to make investment in these kinds of projects worthwhile.
In order to make Faircoin a suitable tool for savings and payments on the internet we need to find easy ways to both buy Faircoins and make withdrawals in fiat currencies.
Resources like FairToEarth, Fairmarket, ability to buy in local shops etc., will be dependent on this liquidity. At the same time, it is important for the project to have a significant amount of liquidity because the P2P equity tokens will be based on Faircoin.
The overall confidence in the ethical shops joining the Fairmarket and the FairToEarth users who will be able to exchange money when required will depend on having these services working 100% properly.
Also the liquidity fund will help to provide a stable market of Faircoins for the open trading exchanges like Bittrex, helping FairCoop and Getfaircoin.net to guarantee price stability, which is an important feature in the use of Fairmarket to sell goods or services, and also for the trade in equities using Coopshares.
Lastly, liquidity can be a source of profit for Coopshares due to trading, credit loans, and others.
We will build an investment fund that will distribute funds and the associated risk between a large number of projects that will crowdinvest themselves using the Coopshares P2P Equity Platform.
This will be a way to make sure that interesting projects will be funded having been chosen and accepted within the Coopshares Platform. The distribution made by the CIF will also decrease risk by simultaneously promoting many projects, in a similar way to that which investment funds work within the official financial system, but adapted towards the commons and based on open cooperative projects.
The Coopshares members will be able to decide which projects will be funded in a democratic way. Some rules will be necessary in order to manage the risk, for example not to invest more than 5% of the fund in any single project.
Will create different batches of open investment round campaigns, and people will be able to invest as much money as they wish.
There will be two crowd investment products:
A) Faircoin-Euro Hybrid Investment Fund (FEHIF)
If you invest in $ / € / Bitcoin, etc... your investment will be tied 50% to € and 50% to FAIR value.
These investments will be distributed as follows:
- 10% will be spent on development of the platform.
- 10% will be used as an investment fund for projects that promote themselves using the Coopshares platform. The Coopshares Investment Fund has been explained previously.
- 80% will be used for the Liquidity Fund.
B) Faircoin Investment Fund (FIF)
If you invest in Faircoin your investment will be tied 100% to FAIR.
These investments will be distributed in this way:
- 10% will be spent on development of the platform.
- 40% will be distributed to an investment fund for projects that are promoted within the Coopshares platform.
- 50% will be used for the liquidity fund
Crowdinvestment campaign goal
The goal of the first campaign that will be launched at the Ouishare Fest will be to setup Faircoin and FairCoop for the next stage of their development, accruing at least:
- €100,000 for FairCoop developments.
- €200,000 for the Coopshares Investment Fund
- €700,000 for a liquidity fund to add security to the FairCoop economic system.
And ensuring that Faircoin achieves a marketcap of at least €5 million - which means a value of €1M for the Fairfunds, and as part of that, €100,000 for the pooled fund.
Every year - if needed - a new crowdinvestment campaign would be launched.
Get Faircoin for the Faircoin-Euro Hybrid Investment Fund (FEHIF)
For this first crowdinvestment campaign, the investment will be 50% in Faircoin and 50% in Euros. This means that 50% of the funds will be converted to Faircoin. Because the market for selling Faircoin currently has a relatively low volume, this needs to be organised in a way that does not become a problem for FairCoop nor the investors.
To make this possible, the process will be as follows:
1. Someone invests in their local currency
2. 50% of those funds are converted to Bitcoin, then used to buy Faircoin. The other 50% remains in Euros.
3. After purchase we will notify you how many Faircoins have been bought with your investment.
The amount of Faircoins bought will depend on the Faircoin price but the crowd investment campaign will guarantee the highest price possible in the circumstances. This value will be defined before the launch.
Today the price is €1 = 40 FAIR, but given the demand expected for Coopshares we can only guarantee a price of €1 = 15 FAIR. This means that we will buy Faircoin at the lowest price possible, but no more expensive than €1 = 15 FAIR.
This limit, equal to or lower than €1 = 15 FAIR, will be guaranteed until a limit of €100,000 has been invested in the Coopshares FEHIF Fund.
When this amount is covered we will set up a new offer and a new limit after that depending on how the market has evolved.
We will constitute the Coopshares crypto-equity platform whereby all the funds are connected to one token each. The Coopshares funds products will both be traded there: FEHIF and FIF.
The value of each FEHIF share will be the average of the Euro and Faircoin value; meanwhile FIF value will be pegged to the Faircoin value.
The scheduled time by which to build this platform and begin operations will be November 2015. Therefore the funds invested in this first campaign need to remain in Coopshares, at least until the platform has been set up.
Coopshares will be the tool used to distribute dividends.
After taking into account incomes and expenses, the profits or losses of this investment fund will be distributed to the tokens holders as a dividend on a monthly basis. The first distribution will be at the launch of the Coopshares platform. After that it will be distributed every month.
The incomes coming from the growth of Faircoin not will be included as a dividend because the token will be pegged to Faircoin - so any growth of this value will be apparent upon cashout.
Predicted outgoing costs and incomes will be:
a - Costs for expenses in the FairCoop development (1/10 of total investment).
b – Profits or losses by trading on the money market for the function of market stability.
c – Profit by lending liquidity to the projects that need it (for example FairToEarth)
d – Profit or losses coming from Coops funded within Coopshares.
The human part: How this P2P startup will be organised
Coopshares could have a development team led by Enric Duran, and formed from the development and management teams already working in FairCoop. This team will be extended through different contacts and partners, and facilitated by the funding coming from the crowdinvestment campaign.
For the management of Coopshares, a system of decentralised governance will be implemented which will mix voting based on the cooperative values of 1 person - 1 vote, with some considerations to take into account the amount that each person has invested when the decisions to be taken are related to economic matters.
The voting system could be used to decide about things like strategic partnerships, new cryptoequities, key economic decisions etc....
A model that we can use and adapt for Coopshares is the Swarm -Standford document: https://fair.coop/?get_group_doc=50/1430309418-SWARMSTANFORDModelDCOTemplate.pdf
Platforms for crowdinvestment and legal cover:
We launch on Thursday May 21st, with Getfaircoin.net as a first platform for investing in Coopshares.
We will add Fairbill as an ethical alternative to PayPal to facilitate investment in accord with our values...
Other crowdinvestment platforms could be added to facilitate access to investments in a broader way.
The website Coopshares.net will be launched and updated to allow users to follow the crowdinvestment campaign and the Coopshares process.
As for the question of legal structure, the campaign will be covered by the CIC's financial/legal status.
We will study if another legal form needs to be created or not before the launch of the Coopshares P2P equity platform.