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What I’m up to

September 23, 2016
Hi all,

I met all of you at various events, and I’d like to give a status on what I’ve been up to.

The big vision is that I want to do for fundraising what Henry Ford did for cars and what Ray Kroc and the McDonald’s brothers did for fast food.  Right now, the fund raising business is in the pre-industrial age, and I want to set things up so that instead of costing USD 100k to set up a fund, it costs USD 1k.  At which point you can create funds and corporate structures through an assembly line.  Forget about IPO’s, you IPO the moment you have an idea.
The basic problem is that the cost of back office is too high.  This means it impossible for a VC/PE fund to invest in small deals, which ends up to be a problem for Hong Kong since you have a ton of deals that are just too small to be of interest for a VC/PE fund.

Africa has even a worse situation.  Right now, I’m trying to figure out how to provide USD 5k in funding to a watermelon farm in Tanzania.  This turns out to be extraordinarily difficult, and I think that smart contracts and coin based investment is the solution.

Much of the problem has to do with the economics of fundraising.  It turns out that fundraising is a very low margin business which means that you need a pool of money in order to generate some profit.  However, this means that a small fund has no “fat” to develop tech, and a big fund has no reason to be efficient.  I’m trying to get around that problem by using my own capital (USD 300k) to invest using high technology.

Right now, I’m talking with a few companies who are interested in microfunding in order to get some capital that I can use to develop some of this technology.  The amounts that I need are about HKD 50k/month.

Here is the work that I’ve been doing on javascript smart contracts….

https://github.com/joequant/bitquant/tree/master/smart-contracts

The next step with these contracts is develop a standard contract for convertible notes.  Also been looking at figuring out what the correct legal structure is doing coin based investment.  What you need is a standard legal agreement that attaches a coin to a set of assets.

Once you have these legal building blocks you can basically automate everything.  At that point the cost of fundraising and back office goes down to nil.  At that point you can create funds that invest USD 5k into a watermelon farm in Tanzania or a noodle shop in Hong Kong.

The good news is that regulation is no longer an issue.  The attitude of the Hong Kong regulators at this point is for people to push the tech forward, do good things, and let them know what is going on.  This changes your mind set completely, because most of securities law turns out to involve doing crazy and sometimes stupid to get around arcane rules that don’t make any sense to anyone.  If you start with a clean sheet and so “forget about regulation, just do what makes sense” your mind just opens up, and a lot of what we are doing makes just no freaking sense.

So what I’m looking for is a company that wants to be a Guinea Pig.  I already know what I want to say to the regulators, I just need a small amount of funding so that I can say it.  I’m also looking for dead startups in Hong Kong.  It turns out that a dead startup often has valuable IP and other useful things that would can be recycled and salvaged.

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