How to launch an ICO 2.0. Everything you need to know about ICO 2.0.

Transcription

1 How to launch an ICO 2.0 Everything you need to know about ICO 2.0.

2 About Howard Marks

3 ICO History Bitcoin Satoshi Nakamoto releases Bitcoin Ethereum First successful ICO raises $18M DAO Failed ICO. $50M contributed Crypto vanishes T-Zero Raises $100M+ with a regulation D 506(c) offering January 2009 August 2014 May 2016 November 2017

4 What is an ICO 2.0?

5 The Natural Evolution Before: ICO 1.0 Unlimited raise amounts No regulation No Bank Secrecy Act checks Hackable Smart Contracts No financial disclosures No accountability Heavy legal and liability risks with regulators and justice department Regulation: ICO 2.0 Unlimited or raise up to $50M per year depending on choice of regulation SEC registration or use an exemption Implement Bank Secrecy Act Transfer Agent holds ownership information on securities Financials and ownership disclosures Supervised by the SEC

6 A Brief History Online Public Offerings The JOBS Act President Obama signs the Jumpstart Our Business Startups Act. April 2012 Elio Motors The 3-wheel car maker raises nearly $17M in a Large OPO. February 2016 Small OPOs Companies are approved to raise $1M in Small OPO May 2016 OPO Industry Over $1B raised capital Growing 20% per month October 2017

7 JOBS ACT Rules Reg A+ ICO 2.0 Raise up to $50M per year SEC qualification required Investor prospectus 2 fiscal year CPA audit Takes 3-4 months for SEC qualification Reg Crowdfunding ICO 2.0 Raise up to $1,070,000 per year Unaccredited investors Can be live in as little as 4 weeks Shares tradable after 1 year (lock) Costs $100K+ to start Can solicit investors prior to the raise (Test the Waters) Shares tradable immediately after offering closes Can raise over the limits from accredited investors with a Reg D 506(c) and Reg S at the same time.

8 JOBS ACT Rules Reg D 506(c) ICO 2.0 Unlimited raise amounts Open only to accredited investors Private financial disclosure. No SEC qualification required. Shares tradable after 1 year Reg S ICO 2.0 Unlimited raise amounts International investors ONLY (also excludes commonwealth countries); cannot be visible to US investors (IP block required) Open to all investors including non accredited subject to each country rules Private financial disclosure. No SEC qualification required. Shares tradable after 1 year

9 Recommended Structure StartEngine ICO 2.0 Pre-sale under Reg CF/Reg D/Reg S Pre-sale shares tradable after 1 year (lock) Tokens Discounted compared to crowdsale Crowdsale using Regulation A+ three months later Share tradable immediately Can attach Reg D/RegS to Crowdsale if looking to exceed $50M raise Benefits Permitted to price your pre-sale ahead of the general sales legally. Can raise several millions in the pre-sale using 3 different exemptions. The pre-sale investors need to wait 1 year but they get a better price. The main sale investors are paying the full price but they get to sell immediately prior to the pre-sale investors.

10 How does it work?

11 Three offering structures DATE (Debt Agreement for Token & Equity) A security token sold for BTC or ETH or fiat Trading on regulated marketplaces Trigger for optional conversion of the debt into equity. Interest on the debt, terms and covenants. Optional perk: Drop ship utility tokens to all of the investors when ready. Must be clearly defined Issuing tokens which represent shares A security token sold for BTC or ETH or fiat Trading on regulated marketplaces Can pay dividends and be liquidated by company in an exit Use security purchase agreement RATE (Real Agreement for Token & Equity) A security token sold for BTC or ETH or fiat Trading on regulated marketplaces Can pay dividends and be liquidated by company in an exit Use security purchase agreement Optional perk: Drop ship utility tokens to all of the investors when ready Must be clearly defined

12 Securities as a Token Examples 1. Token is one share of Common B 1. Each token can represent one security in a new class of shares. 1. The purchase agreement signed by your investors will detail the terms 1. Drop ship security tokens when ready stock. Can receive dividends and has voting rights. 2. Token is a Preferred stock with revenue share from the company s net revenue less variable and operating costs. 3. Token represents a Debt offering and receives interest and principal repayment.

13 The regulated quadrant Regulation A+ / Reg CF Regulation D 506(c) / Reg S Debt Tokens plus perks TBD TBD Equity Tokens plus perks Gab Reg A+ T-zero Reg D 506(c) and Reg S

14 How Investors Trade the Tokens ERC-20 smart contract Investors can trade the tokens on registered exchanges T0 (T-zero) StartEngine Secondary Others Registered transfer agent (RTA) Alternative Trading System (ATS) Seller RTA Buyer ATS + Partners AML/KYC smart contract

15 Fairmont Miramar Hotel 1,000 attendees anticipated 40+ speakers + 10 ICO pitches

16 Q&A