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Daria Twist
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Posted - 2008.01.13 19:25:00 -
[1]
I've been reading this forum and gotten some ideas but the thing I noticed the most is people don't like to use this forum for market discussion- it's all about investments instead. People seem to keep their business plans to themselves so other people don't steal their ideas and bottom-out their markets and I suppose that makes sense.
Looking at all of these investments they arent really run like investments in the real world. In real life, companies sell portions of shares in already established businesses, the shares offer control of the business and dividends are based on performance. In eve, we get companies offering 100% share equity but dividends are fixed at between 3% and 7% monthly with some going as high as 10% or even 12.5%. I'm not sure why this is done in eve, can anyone tell me if there's some important reason for it? I am interested in getting an investor on-board with my business to fund me but I wouldn't be able to promise a certain percentage monthly return. I'd prefer to do things more like they are done in real life.
***
Here's what I'm thinking of doing. I have an existing research business that I can post numbers on. I would offer a percentage equity in this company for an amount of capital injected and potential investors would bid against each other for percentages of the company. I would go with the person who wants the lowest percentage of my company for the investment I'm asking for. All shareholders would have a say in how the business is run and we'd do every decision by a shareholder vote such as what blueprints to buy.
All the profit from the company would go straight into the corp wallet. Every month I would pay all of this profit to shareholders so if I sold off 50% of the company I would only get 50% of my profits and the other shareholders would get 50%. Every month I would publish a profit and loss account, a balance sheet and a total asset equity. It would be run as a proper investable business. I would obviously ask for only a small amount of money and I would have plans set up for what to do with the isk that the winning shareholder would have a strong say in.
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Before I post my business plan, profit projections and request for investment, I would like to know how many of you would invest in something like this under ideal circumstances. I know most investments in eve are these 100% equity regular dividend things and people have gotten used to them but is there a place in the market for a real investment in a properly run small company?
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Treelox
Amarr Market Jihadist Revolutionary Party
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Posted - 2008.01.13 19:42:00 -
[2]
Originally by: Daria Twist I know most investments in eve are these 100% equity regular dividend things and people have gotten used to them but is there a place in the market for a real investment in a properly run small company?
Yes
Actually you wouldnt be the first, others have come and gone.
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The IPO mechanic used here has basically become a facny way to raise venture capital. Also there is a lot of the times, by what people call shares they are "offering" are in reality Fixed Rate Bonds. A lot of this just has to do with ignorance of how the real world investment markets work. Although as much as some of us try to "educate" most dont seem to care or just dont get the distinction.
I think another reason that you see fixed return, is because the "offering" CEO can get away with it, for two reasons. Firstly there is way more investors than investments, so "offerings" dont have to have that high of rate of return to garner intrest. Secondly the lack of any standardized and unbaised accounting and reporting of the corps "true" P/L, means that it is easy for CEO to "hide" how much they are really making, so investors are truely clueless to what the actual worth and growth of a corp is. --
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Daria Twist
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Posted - 2008.01.13 19:45:00 -
[3]
Originally by: Treelox
Originally by: Daria Twist I know most investments in eve are these 100% equity regular dividend things and people have gotten used to them but is there a place in the market for a real investment in a properly run small company?
Yes
Actually you wouldnt be the first, others have come and gone.
If they have come and gone, does that mean it's a bad idea or do you think it would work in eve?
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Mr McCargo
The Paradox Continium Zzz
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Posted - 2008.01.13 19:54:00 -
[4]
I don't know much about IPO's, but I like the idea of that one here. This means I would join in if you'd launch such an IPO.
- Mr C |
Treelox
Amarr Market Jihadist Revolutionary Party
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Posted - 2008.01.13 19:55:00 -
[5]
Originally by: Daria Twist
Originally by: Treelox
Originally by: Daria Twist I know most investments in eve are these 100% equity regular dividend things and people have gotten used to them but is there a place in the market for a real investment in a properly run small company?
Yes
Actually you wouldnt be the first, others have come and gone.
If they have come and gone, does that mean it's a bad idea or do you think it would work in eve?
It can work. They have gone, either because they left the game, bought back their shares, are taking a break, or just went scamtastic.
The real question is why would you want to go "public" with your corp, unless you needed to raise more capital for an expansion? Otherwise it just seems like charity, dont get me wrong I'll take "free" isk any day. --
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Daria Twist
CruiserCorp
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Posted - 2008.01.13 20:14:00 -
[6]
Originally by: Treelox The real question is why would you want to go "public" with your corp, unless you needed to raise more capital for an expansion? Otherwise it just seems like charity, dont get me wrong I'll take "free" isk any day.
It's not really going public. It's just getting a private investor not making the corp public. Making the corp public would be releasing 100% share equity and giving myself a fixed salary or something. Theres two reasons that I really want investor backing. One I want to run a business as a kind of economics and entrepreneurship project and two my business growth is slow and capital would be used for expansion. I have never had over 200m in my wallet and all my assets are totalling under 500m so the company would get a kickstart.
Let's say for example that I released 25% of the company for 500m. If I could use that 500m to double my profit, I'd be making more isk than before even with the investor taking 25% of the company profit. That's just an example, I'd have to do a full inventory and balance sheet before being confident in my business real figures.
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The one problem I see is what if I wanted to grow the business again with investment later? I think I would talk to shareholders and vote on making new shares. The company would grow and current investors percentage of the company owned would be lower but they would get the same rough amount of money or even more money after growth. Anyone got any ideas or do you think that would work? Like if the company was worth 200m and theres one shareholder that owns 10% then if we release another 200m shares he would go down to owning 5% but profit would double or more than double. And the shareholder would have a say in the vote to make the shares so if he thinks his profit would go up he might vote yes but otherwise he would vote no.
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Treelox
Amarr Market Jihadist Revolutionary Party
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Posted - 2008.01.13 20:28:00 -
[7]
Originally by: Daria Twist
The one problem I see is what if I wanted to grow the business again with investment later? I think I would talk to shareholders and vote on making new shares. The company would grow and current investors percentage of the company owned would be lower but they would get the same rough amount of money or even more money after growth. Anyone got any ideas or do you think that would work? Like if the company was worth 200m and theres one shareholder that owns 10% then if we release another 200m shares he would go down to owning 5% but profit would double or more than double. And the shareholder would have a say in the vote to make the shares so if he thinks his profit would go up he might vote yes but otherwise he would vote no.
Then you would need to keep track of the NAV, and constantly adjust share price in direct corelation with it. When you release that second batch of shares you sell those off at the current price (NAV/Total Shares = Share Price). This wont hurt the investment of the first wave of investors as much.
Yes you would have to talk to the shareholders, or at least you should before creating more shares, for an SMO. Although you really do not have too, since the way the voting system works you can most likely create the shares without much trouble, because of the way the votes default to the affirmitive action(a silly mechanic). Of course not checking with the shareholders before you do something like this, will get undies twisted and most likely someone will emorage to the forums screaming foul/scam/haxorz.
P.S. I would emorage foul, for the record, and then go with scam if I didnt get a warm and fuzy feeling from answers to my emorage posting. --
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Trilori
Caldari GearBox Fleet Svcs
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Posted - 2008.01.13 21:38:00 -
[8]
This would be neat to invest in from an educational standpoint as it would follow some of the rules of RW investments which I don't know a whole lot about and doing it in EVE this way could let me see how it goes I guess.
I like to look at it from a learning/play standpoint and if I screw up, oh well if you screw up oh well too but I don't want total loss and I'm sure you don't either. Thats not to say that I wouldn't accept loss because any investment has its risks.
This would be something worth looking into as a private investor :)
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Fenderson
Einherjar Rising Cry Havoc.
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Posted - 2008.01.13 22:01:00 -
[9]
if you want to grow your business later, you can always issue a bond (per shareholder approval)
Originally by: CCP Wrangler Oh dear, how about we all calm down a bit instead?
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