Startups find it very hard to get initial funding
The three main ways a startup gets initial funding are:
In early funding rounds, companies receive less money per share than of later rounds. This means they would have received significantly more funding for the stocks offered to investors if they had traded all of their stocks at the same rates as the last round.
Crowdfunding a startup often lacks short term incentives for investors. Investors receive a token reward for their investment that is not worth the value they invested. When they do get a small share of stock, it takes years before they see a return on their investments.
To obtain loans, a startup would require warranties. In most cases, early stage startups are not able to provide this.
The pitfalls of traditional fund raising can be resolved via two mechanisms.
First Feedback Funding (FBF)
With FBF, a startup only needs to make a set amount of shares available to investors for a certain amount of time. The shares are recycled among investors and the price increases with each transfer of ownership. In each transaction, the seller receives a small payout while the company also receives a portion of the sales.
Loans With Shared Warranties (LSW)
LSW is a non-custodial liquidity protocol that consists of depositors, investors, borrowers and entrepreneur borrowers
Depositors and Investors provide liquidity to the market and earn passive income while borrowers and entrepreneur borrowers are able to borrow in an over-collateralized fashion.
August – September
Adding members to the team.
Review and version of white paper for Feedback Funding.