Doug Scott, loud mouth Geordie entrepreneur living in the Midlands.

ICO Transparency Document – Questions to Ask Founding Teams Raising Via an ICO

ICO Transparency Document – Questions to Ask Founding Teams Raising Via an ICO ( work in progress )

ICO’s ( Initial Coin Offerings ) are a step between a private company and a very public one, but currently there are no regulations in place to protect the public, so the public need to find as much information as possible prior to investing into an ICO. For such a reason I have created a list of questions (ICO Transparency Document ) that a founding team can answer and make public:

  1. How many years has this company been live?
  2. How much money has the company raised before?
  3. How much money are your raising via the ICO
  4. Which country is the company registered in?
  5. What is the citizenship of the founding teams? Please supply names and citizenship.
  6. Has legal council been sort on whether this will be deemed a Security by the country of registration of the company? Can we see a letter to state this?
  7. Has legal council been sort on whether this will be deemed a Security by the country of citizenship of each of the founding team? Can we see a letter to state this?
  8. If you received investment before but could not get a product market fit why do they think you will get product market fit with more money?
  9. Is this ICO just an easy way to raise more easy capital as you could not raise more venture capital money?
  10. Has the share table been restructured in the past 12 months? If so what happened and why?
  11. How much runway do you have left before you run out of money?
  12. If you have venture capital funding before are they participating in the Token sale and buying Tokens at the full price? How many tokens are they buying? If they are not buying why not?
  13. How many Tokens are previous investors being given?
  14. How are company shares and Tokens to be distributed among founding team?
  15. Can you share the names of every person who has signed the documents to agree to the ICO happening?
  16. Who was and is on your board now?
  17. If there has been a change on the board, who changed, when and why?
  18. Do you have any board members who are not management but external to the company?
  19. Are these board members incentivised based on the price of the Tokens or via some other mechanism? What are the incentivizes?
  20. What lock ins are in place for all coin holders, so as to not allow anyone to to become rich without any value being added to the world?
  21. Has the founding team changed in anyway in the past 24 months, ( ie anyone resigned or been fired from the team ), if so who and why?
  22. Do the founders have any involvement in any other Token companies, if so which ones, what is your role and why are you involved? Are these Tokens in anyway a conflict to your own Tokens?
  23. Do any of the founding team hold any other Tokens? If so which ones and why? Are these Tokens in anyway a conflict to your own Tokens?
  24. Do any of the founding team have any involvement in helping raising finances for other Tokens? If so which ones and why? Are these Tokens in anyway a conflict to your own Tokens?
  25. If you have helped,or are helping other Tokens to raise finance do you need regulatory approval to do so in the country you live in, the country you are a citizen in, the country the ICO is registered in?
  26. What will money raised in the ICO be used for?
  27. What are the deliverables of the project? Can we see the project plan?
  28. What controls are in place to prevent misuse of the money raised via the ICO? Can we see any documents?
  29. What data will you produce to your community and when?
  30. What criteria do you believe the project should be deemed a failure?
  31. If the project is deemed a failure what are the process’s to return the funds to anyone?
  32. DistrictOx have already started to offer complete transparency on what they are doing as a company, salaries etc and making the data public on how money is being spent (). Will you do this? If not why not?
  33. Blockstack, a $50,000,000 backed ICO with many established players investing and advising has created a Token sale mechanics where Tokens are released depending upon deliverables of the project. Are you going to do the same? If not why not?
  34. Aragon has a transparency model and each quarter produces reports ( https://blog.aragon.one/why-transparency-matters-d6f9e6e10985 ). Are you going to do the same? If not why not?

This is not a definitive list of question but should give investors in Tokens some extra information to go along with any documents the ICO team produce.

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How to Get Rich from an ICO and maybe not goto Prison

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1. Raise lots of money from loads of angel investors and small vc’s, give them most of shares in my company

2. Do what I want with the money ( skiing baby ). Most investors won’t care as they have small share holdings, make sure to keep them in the dark

3. Build something interesting in the company. Most investors won’t care as they have small share holdings, make sure to keep them in the dark

4. Use some company money to goto ICO events ( in nice places – I am not going any where shit) and meet everyone who is important

5. When I am running out of cash, sack staff and do a recap of the share structure, so I end up with enough shares to control the board. Most investors won’t care as they have small share holdings, make sure to keep them in the dark

6. Wait a little bit of time and announce a Pre ICO. Give the investors some very small number of coins, just incase anyone did care. Most investors won’t care as they have small share holdings, make sure to keep them in the dark

7. Keep most of the coins for myself ( more skiing soon baby ).

8. Persuade some “whales” to buy my coins Pre ICO, who I met on my ICO tour/holiday.

9. Persuade, with coins, some exchanges to list my coins.

10. List on exchanges

11. Pump it when listed on the exchange, everyone involved sells asap, if they know whats going on. I am RICH. The whales maybe get a nice return. The original investors may get some cash back.

12. Avoid the SEC

ICO’s, Crypto’s and my Concerns.

ICO’s, Crypto’s and my Concerns.

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My Background in Crypto

Firstly let me say I am a massive believer in blockchain technology and the possible uses that could advance humanity. Having spent quite a bit of time in the crypto/ICO world over the past 6 months, in Berlin, Zug ( Crypto Valley ), Singapore, Hong Kong and on  The Coinsbank Cruise in Asia I feel I have more of an understanding of the space than many ( but I  am far from an expert ). In these and other locations I have talked to many, many people about anything and everything around the subject, including the impacts on society, the valuations of coins, potential uses, the list is endless. But I have some major concerns that this method of funding is being abused by many.

ICO’s

ICO’s are a new funding mechanisms being used by many in this space to raise finance. It can be a much easier funding mechanisms than traditional Venture Capital methods, but with much less protection for investors. ICO’s are raising $10,000,000 plus many with little product. For these reasons the moral character and execution abilities of the founding teams behind any ICO are of huge huge importance. This issue was recently addressed by Vitalik Buterin, the founder of Etherum. ( Reference )

Screen Shot 2018-02-04 at 00.51.00

 

ICO’s are currently unregulated and many governments are concerned, including the US who have recently begin clamping down on some ICO’s. In December this happened to Tezos (Reference):

Screen Shot 2018-02-04 at 08.20.38

 

Last week:

Screen Shot 2018-02-04 at 08.13.02

Reference

Also be aware that for an ICO to be a true ICO it needs not to classed as a Security. Securities are very heavily regulated globally and the US regulators are beginning to class many ICO’s as Security sales, so be aware, especially if you are a US citizen as founder or investor.
Screen Shot 2018-02-04 at 10.50.31
Coinbase have produced this for reference – securities-law-framework
REALITY AND CONCERNS
A very common practice in the ICO space is this:
  • the Company raises money via a private ICO without the coins being listed on any trading exchange. ( sometimes these are old failing companies who have run out of funding who are just repackaged).
  • the private ICO is executed with syndicates of private investors buying the coins ( unregulated collective investment schemes – which are illegal in many countries ). Many people running these syndicates have been involved in the “scene” for a few years and are very well connected.
  • sometimes these syndicate deals are done with the agreement of the founders and sometimes the founders are completely unaware of what is happening.
  • thus coins are now held between founding teams, advisors and the new investors.
  • exchanges are “persuaded” to list the new coin ( I have no idea what criteria each exchange use to decide if a coin should be listed or not ).
  • prior to the listing on a exchange a marketing exercise is created to create hype round the “new coin”.
  • once listed on the exchange the “new coins” become tradable and the mass market begins buying the “new coin” generally at a premium on the price ( the coin “pops” is the term people use ).

Some of the recent ICO’s have created systems to prevent coins being traded by investors and founders for years and have also decided to not list on exchanges for several years. Thus locking investors and founders into help deliver a product and thus remove speculators, but the amount of ICO’s where this happens is still small.  Once more Vitalik of Etherum,  has shown his concern, and has proposed a potential solution to the speculation issue:

Screen Shot 2018-02-04 at 09.06.40

Reference

CONCLUSION

So before investing in any ICO please check:

  • make sure the ICO is not a security and there is a real need for a coin.
  • make sure the ICO is not just an old failing company repackaged to look pretty for an ICO.
  • ask the founder “what is so different about what you’re doing that requires an ICO rather than usual methods of fundraising?”
  • ask all the early investors, coin holders, founders and board members to state in public (twitter/facebook/linkedin etc) that they believe the team is morally good. ( hence creating a public record incase any regulatory bodies want to investigate if something goes wrong )
  • you believe the team are extremely moral.
  • you believe the team can deliver the project they have described.
  • the white paper explaining the business forces the founders to have very long lock ins and only to become rich if they deliver something of real value.
  • the early investors have no method to quickly “flip” their coins and make a quick profit.
  • the ICO operates in a jurisdiction that has some resemblance of legality ( Singapore and Switzerland are common countries for these to be based in ).
  • Do you have experience building a community?
  • What is your strategy in building, growing and sustaining your community?
  • What is the role of your token?
  • Could not you have just used Bitcoin?
  • Who is your customer base?

I am going to start asking founders who are doing ICO’s to answer these questions and publish them. First one will be in a couple of days. Any questions I should ask?

This is a work in progress document, so please help me and post extra information for me on twitter:

https://twitter.com/doug_scott

Thanks for your time please share this far and wide

 

Doug

Ps. This week I will ask these questions to Mick Hagen to founder of Mainframe.com who is current doing a $30 million ICO

 

 

 

Day 13 – Walking and walking Singapore

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Back to semi normality…did well with the jetlag and slept ok.

Started running again…… wow it is hot and wet here ( I was out running in the rain round Fort Canning park, so if you see an very slow bloke running up hills in the heat, that is me ). Today listened to podcast by Olaf of Polychain.

Met a mate for lunch at Dempsey Hill, which was fun, with great food. Then me and Andy walked round Singapore for 10 hours, stopping for snacks now and then….plus if you travel with Andy you have to stop at the bar when there is one…..watch that belly sir as you no longer can cycle.

Hours of walking in something I have always done as I simply love it that you have no idea where you end up….in this case some dodgy Chinese food bazaar, with lots of very odd food. On another front I always have walked with staff as I find it is not as formal and everyone is more open to have discussions. So obviously me and Andy righted the world….serious not we had hours of conversations about what we did and why we did things.

Oh forgot to mentioned we bumped into Alice from EF, not only was she in Singapore the same time as us, she also was in the same hotel and the same floor…with rooms almost next to us…… Is she stalking us???

Andy looking sexy…..emmmmm

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Day 12 – Flying

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Late evening flight to  Singapore ( we tried an experiment to fly via HK as the timings allowed us to get a long sleep – its 11.5 hours to HK ). Made the trip a few hours longer but it seemed to work. Also added some nasal spray to help with the dry air. We did have nice beds on BA…the “we” are me and Andy my mate and 15 year old suffering business partner.

So not much happened really, sleep, watched SPLIT – great film. Plus read more of the Trump book…feel like I am going to give up soon…it is like reading Eastenders day after day. Trump talks loads of crap, the people around him are astonished they won and have no experience, the good people round him are wondering how manage him as he all over the place…..people who worked with me…you think I was bad read the book.

Landed in Singapore and quickly to Fort Canning Hotel, which looks awesome.

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Checked Fantasy Football League team, I am currently 5th in the league ( I was 14th a few weeks ago ). Made some changes…..:) Hope you people who play against me are watching.

Nighty night

 

 

Day 9 – Security Day

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First thing…well 9am out for my run…thanks to Harry Stebbings for his podcast as I got to listen to the founder of Coinbase this morning. Managed almost 30 minutes and took a new route…up a hilll, so harder than my normal route. But another day with out stopping. Plus managed to listen to Scott Galloway from NYU… I love listen to him…so smart and so abusive…great entertainer.

Then headed to office, 800 yards away…. I made the office close to home so as to give me a nice way of life:) One of the best decisions of my life.!!!!!!!The office is next to town and the kids school.

Spent the next few hours learning about security on crypto and devices etc and upgraded everything I had… thanks to Rich, the paranoid android:):)… Look it up.

Obviously did some more crypto reading. As I was in the office I annoyed everyone by interrupting them working……sorry but I just do. Whilst I have been away they have recruited some people, so I said hi to the new 3 people and went out and bought fudge for the office……. it was all scoffed down by 5. My job was always to try and keep people happy…some times I did well, some times I did badly…..life but not as we know, Kirk.

Couple of calls today, both with old mates. One helping him how to do tax planning…honest…some where along the lines I managed to learn some odd way of seeing this. Then a chat with a mate of mine since I was 19, who we try to meet up now and then…..chatting about how many of our mates are semi retired or dossing about…..we seem to not have many friends who have worked like dogs….maybe like attracts like:)

Managed a bit more of the Trump book.

I am off tomorrow to London, Singapore and Hong Kong….nicely my little girls was upset that I was off. Being a girl she some days just ignores me…..others I get jumped on prodded and hugs galore….she is learning well.

It now is 11pm and as usual I have not packed…so off I go to pack my suitcase.

Life is seeming very easy and simple…. Doug has a tendency sometimes to create mayhem around him as he loves the fun. “Firefighters create fires when there are no fires” said a wise man to me recently…thanks Mike. Some times creating fires is not the wise thing to do…. Go and find a new fire to help put out maybe more useful use of time.

See some of you tomorrow in London for dinner…assuming you read this drivel:):)

 

 

Day 4 – Crypto Day

US flights to East Coast were messed up:

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Reorganising travel to one of my staff whose flight to Vegas was delayed. I am the company travel agent for fun:) Always have been even for mates holidays. The advantages of being a well travelled person.

Ran in the morning – getting better but no distance

Messed up my times and was late for a meeting ( started at 11 and finished at 6 ). Wes appeared ( a guy who quit his job after a45 minute meeting with me last month ). All day gabbing about crypto stuff plus how to motivate people and the madness we do….smart funny guy:) We will meet more sir:) Thanks for coming.

Played more with my crypto alt coin game – this evening the crypto world has gone quiet on the trading front…no good for a fun day trader like me:) My model is developing well.

Fantasy football tonight I am hoping lots of points come from West Ham and Spurs….. So I can catch Ross G. 25 of us in our fantasy football league, I created some different models to win the league, last few months I was 14th to 20th but over past 4 weeks my strategy is working and I am now 5th:)

Tomorrow is chilled day so can sort my crappy post…next week is London then off to Singapore.

 

 

A New Year – A New World

A New Year – A New World

1/1/2018

So it begins….. After years of founding and running www. Potential.co I am stepping aside from being the operator that I am.

Fish

 

It has been an interesting ride, some good and some bad…but mostly good, interesting and fun….15 years….wow. The guys and girls within Potential are much more capable at running things than I ever was. It is becoming a grown up company now and needs grown ups to run it. So best I step back for everyone’s benefit and sanity. No more throwing chocolates at people’s head for my amusement will make many people happier:)

I have no idea what I will do going forward. I am currently just filling the next few months with stuff that takes my fancy, the family want me out the house or I will drive them mad:)

So I am going to document the rambles of my new world, maybe just so that I have to have some focus on keeping a track of what is going on. Maybe some people will find it helpful to explain what happens when you have no plans or desires to do anything in particular…….but you think you should…

On my list so far is:

  • watch loads of bad films I should have watched but did not
  • read loads of good and bad books ( probably skim read ). 200 on the kindle so far.
  • get some allergy tests done – just so I know what I should avoid eating
  • go skiing a couple of times and try and be decent so can ski with mates
  • goto HK to help some mates do something
  • goto Singapore and learn about blockchain ( decentralised systems and society seem wow to me )
  • start running each day ( I have a mangled hip from much too much football when younger, you can’t tell, but will see how it suffers when running )
  • train to cycle up a mountain in France in June
  • goto Newcastle and see if I can help the guys in any way at Campus North ( coffee maker probably a good job )
  • learn how to do podcasts and ask mates random abusive questions about tech
  • play with eating different foods to see how I feel ( bread makes me feel shit I know, plus alcohol is a killer nowadays )
  • try to sleep for 8 hours each night ( I goto sleep easy and sleep easy, any where, but I always have much less than 8 hours )

If anyone wants to meetup and chat interesting bollocks then more than happy ( assuming it does not interfere with my dossing too much ).

Open to all random suggestions…the madder and none tech related the better.

Cheers and Happy New Year and thanks for all the fish.

 

Doug

Ps. Cheers to Mills @ Ustwo who has no idea what he has started:) https://twitter.com/millsustwo

VE Interactive goes into Administration

VE Interactive goes into Administration

https://www.ft.com/content/9e153f8f-3be8-331a-89f1-675c4d113c57

The founders and some of their investors in their heads thought they were a Unicorn…… oops

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Dave Brown the founder of VE Interactive

Dave also founded ThinkersHQ

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Mark Pearson of Myvouchercodes and Fuel Ventures was an early investor and stepped into the company in March to help try and sort out issues. Think Fuel Ventures deck which they used for raising money on Seedrs may have to be changed.

Congrats to Kadhim at the FT, who has been digging through all the data about VE Interactive for ages.

My post from last year:

VE Interactive UK Unicorn Curious?

I am not one who ever wanted them to fail, but I always believed the stories they were telling the world were not good for the eco system. Fact and fiction seemed to be confused in the narrative coming from many people.

 

Doug

 

 

That Sherman Lee ( Good Audience, Rocco ) bloke asked me again to invest

That Sherman Lee bloke asked me again to invest

Can you believe it?

Remember Sherman:

The guy from San Fran who came to London and asked me to invest and then wrote a blog about how it all went wrong

 

2014-08-10-GoodAudience_Founders_ShermanLee_KarlGusner

 

Who I then replied with this:

My responce

Well seems like he wants some more money and has asked me again………what do people think of that then??

Founders have a gall don’t they.

Wow who would wanted to be an investor?? :):)

Doug

 

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