Posted by: Dr Churchill | February 4, 2018

“The Art of Startup” book by Dr Churchill, Chapter 13: STARTUP FINANCE 101 = The American Angels StartUp ICO through the mighty DOTs

ICOs are set to replace seed financing in the next few years, as we see two major antithetical trends in startup development. And as VC financings for fundable Startups have been progressing in totally opposite directions — there may be a fairly significant & opposing correlation.

ICOs are exploding as a startup fundraising mechanism but at the same time seed funding is showing a steep global decline. Professional investors opt to invest larger amounts of capital in mature startups and seed investors are fast disappearing.

Judging from reports and deal-traking as the Major Stock Markets lifted in November 2017 with the new administration of President Donald J Trump’s optimism and positivity,  all the money went back towards Wall Street public companies thus depriving the Startups from the much needed Capital and immediately thereafter, there was an implosion of early-stage VC funding.

Amid record amounts of capital raised by VCs worldwide, and a sharp rise in the number of private “unicorns” valued at Unicorn levels of many Billion dollars and also absorbing many Billions in private capital — the regular early stage Startups have suffered greatly.

Early stage Angel capital for seed investments and the follow on tranches has literally dried up overnight.

That is the reason I’ve got the idea of the Innovation and I created the DOTs, in order to remedy that situation.

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And that’s the reason for the ICOs…

But while ICO skeptics have been bashing them as ponzi nightmares that may create the next dot.com crash, lack of seed has gone largely undiscussed. And it isn’t the basic lack of startup funding that is likely to cause a crash — but if no one can raise money to ‘start’ a startup in the first place, then the whole Ecosystem will falter and fail.

Ergo a New Dot.Bomb crash.

Yet today, the reason given for the Angel and VC seed funding decline is the suction effect of the huge UNICORNS out there that suck out all of the oxygen in the room. Because when UBER sucks out all of the early stage investment since ti is not going for the overdue IPO — the rest of all the Startups that don’t get seed funding, suffer.

Then, we have the problem of maturation of mature and scaling up of good StartUps in the various fields such as mobile apps, Crypto, Blockchain, Tokens, Bitcoin, Fintech, and SAAS, which by comparison make all other smaller StartUp investments seemingly poor and unattractive as alternatives for those fast growing companies.

But given that seed funding had peaked in 2014, it also pointed to an inherent problem with the fundraising model itself, as investors eventually pulled out of seed rounds completely, as they did not earn any of their expected returns.

Also, we consider the disadvantage of the vastly increased legal environment, because by law, Angel investors must be given, all of the legal protections which shareholders have won over the years from the large companies and this presents a rather expensive regulatory burden that all of the small Startups need to deal with as well… And even after an Angel seed round closes, a fairly significant part of a startup’s budget goes to pay the lawyers who work-out the vesting schedules, the IP issues, the Board foundational, the Stock Equity agreements, the Team equity compensation, the Options and other Stock sharing agreements, and much much more. But even after all of that, ultimately the investors have no protection from the risk of a Startups’ likely demise, since over 95% of all startups fail, and almost always, leave no liquidity behind that an Angel could recoup in order to move his remaining funds to other more favorable investments, or hedges against the vagaries of the Startups.

So basically, the only way of winning as a seed Angel investor, is a scattergun approach where you invest in many, many Startup seed rounds, and hope by the law of power averages, that one works out. But the reward/risk ratio for seed investors seems to have been too high to make great profits for the ones who are not part of the secret cabal that gets into the Real Unicorn deals — that Dr Churchill keeps for his special friends that are part of his posse and of his Business Angels’ entourage.

The early birth of the DOTs coincides with the start of the ICOs who were in fact actually birthed due to the complete lack of seed funding for any cryptocurrency projects from 2013 onwards. Indeed the DOTs by Dr Churchill were first created in 2013 and came onto their own in 2014 and thereafter. By now we have worked out all the bugs and are moving full steam ahead.

And although a new breed of Bitcoin cryptocurrency millionaires abounds in San Francisco and Seattle — at the present moment they all run scared as the Bitcoin is exposed for the bubble that it truly is. Also since most of the Bitcoin entrepreneurs and Bitcoin paper Millionaires, got there by bootstrapping, working hard and living sparsely, keeping second and third jobs, relying on support, while enduring ridicule and far too many difficulties — they persevered just in order to keep their blockchain bitcoins and their other cryptocurrency projects alive, since no seed funding was anywhere available, or easy to find…

This was in large part due to the awkward relationship between technology and property law.

Looking at Bitcoin, we can easily see that it is not an Organization, nor is it a real or even visible Corporation, it has no CEO, nor does it have company headquarters, or any employees, and it doesn’t have any visible leadership — but is is a shadowy secret cabal of string pullers that manage to subvert the good will and graces of all the young believers and bitcoin miners around the world with fake paper profits that are now going to be taxed and burden all of them with the IRS and the SEC too.

But back in 2013 all of Bitcoin and their community were playing at the nefarious and criminal game of the Silk Road, and all the other dark web criminal enterprises and all the other crypto-currencies were mostly the same in supporting illegal activities.

Obviously there was not a shred of legal protection for shareholders and nothing of accounting and accountability was available.

Therefore, all the real Seed, Angel, and Venture Capital investors, stayed as far away as possible… as reasonable human beings ought to.

Then the FBI moved in to clean up the dark web and the Silk Road, but it is a giant job and the Police authorities around the Globe, have only started to clean the surface of this vast criminal community.

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However, aside form the criminal element, it was the need for funding in this investment-free-zone that birthed the ICOs and the new clean and transparent digital currency named DOT.

That, and an understanding that approaching seed investors was a zero sum game that forced Dr Churchill, to pilot the first ICO for the Startups using DOTs the summer 2014 and carried on until today and beyond, now with renewed emphasis and vigor through the American Angels society.

Dr CHurchill’s main incentive was to enable all the StartUp founders to give up their day job so they could focus and work full time on their StartUps in order to succeed and create the great new companies and services the world needs.

This  is the way that the ICO process through the DOTs was born and spread throughout the world of Startups back in 2014, and continues on to this day undaunted by the hiccups on the road to stardom.

And that was the most interesting thing, as far as Dr Churchill was concerned, about what he was doing to help the Thousands of the Startups that he always wanted to help.

And indeed today all of the American Angels and their leader, Dr Churchill, are amazed at the amount of Capital, the various Startups raised through their ICOs, and as this coincided with the official birth channel, of DOT’s — this success has vastly exceeded the expectations of what Angel investment people and StartUppers, thought we could ever get.

Dr Churchill is an Innovator, a Business Leader, an Inventor, and a Technological Entrepreneur with deep High Finance and Macro-Economic knowledge, who knows the ins & outs of Startups and who has helped thousands of Start Ups to get started, funded and scale up. In this process, he observed the discombobulations and the angularities, and he decided that he wanted to build something and needed some money to achieve it.

And this is the nub of the issue. The trend from the Business-Angel investment seed tranche of the StartUp to the time of the same StartUp’s ICO, actually goes hand in hand with the broader movement that “software is eating the world” and of the “fat tail of the Internet” and “The Rise of the Crowds.”

The decline of VC seed capital fundraising, and the rise of ICO-DOTs, points to the fact that startups are technology projects firs,t and companies second. The ICO companies normally have a company structure attached none the less, and ICO-DOTs may better support the entrepreneurs and investors that create and invest in them.

At this time, it is important to know that digital and other alternative currencies have become a popular topic as pure strength alternatives within the Bitcoin space, not only because we have of course the original Bitcoin forks, but we also have the DOT’s and the BitcoinCash, the Etherium, the Litecoin, the Primecoin, and myriad others, all of them introducing alternative mining algorithms with novel properties.

Properties, such as the PPCoin that DOTs utilize in order to replace power consumption and even coin-mining entirely with a non-costly alternative, such as Ripple creating a cryptocurrency network that can store credit relationships and user-defined currencies.

And then, we have over seventy more cryptos, setting up and getting ready to run with new ones being created as we speak…

However the one particularly interesting project that has received the largest amount of real world investors and Business Angels and StartUp Founders’ attention over the recent years and months, however, is the mighty DOT that is a true hedge against the Tulip-mania and against the vagaries of criminality, and the economic crashes that occur almost daily, with the bitcoin illegal leadership and criminal supporting enterprises, every time the Law moves in and arrests some of their leaders and Mafia types lording it over the Bitcoin slave miners that seek easy profit and instead get chained to this awful enslaving game…

And that is one of the key differences between Bitcoin that is a secretive Cryptocurrency facilitating illicit trades and criminality masked behind a wall of anonymity, and the totally legit and legal DOTs that represent the Green Fields, and the Blue Sky of Open-Airy-Transparent-Visible- Digital Currency environment.

In addition to that there is the fact that for StartUp it is far easier to utilize the DOTs because rather than trying to bootstrap an entirely new blockchain, as every other cryptocurrency does, the DOT seeks to create an entirely new network of currencies, commodities and securities away from Bitcoin itself and away from the world of crypto and secret hacking stuff and the nameless criminal enterprises the Bitcoin has consistently supported and allowed to thrive within it’s many secretive folds…

The concept of an alternative fiat currently not relying on Bitcoin, set to take advantage of its powerful and secure network backed by petahashes of mining power is our new idea.

The general concept first appeared in form as a secure timestamping system to store the DOTs in people’s own blocks. Because DOT users can also use the Bitcoin blockchain to store every transaction — as a back up. Philosophically, the best way to think of DOTs is as an alternative way of making sense of Bitcoin transactions; just like the Bitcoin protocol takes a series of transactions and parses them to determine how many bitcoins are in every address at any particular moment, the DOT protocol also takes the available Bitcoin transactions and parses them to extract data relevant to the DOT-ICO American Angels network, so that we have a huge success in all of our ICOs for the young StartUp companies.

New protocol layers on top of the bitcoin protocol will increase bitcoin values, consolidate our message to the world, and concentrate our efforts, while still allowing individuals and groups to issue new currencies with experimental new rules.

The success of our experimental currency protocol layer will enhance the value and success of the foundational protocols, but will leave behind in the dust, all of the cryptocurrencies because the world is tired of the secrecy and the drug dealing associated with it.

From a less philosophical standpoint, the practical advantages that a DOT protocol has on top of Bitcoin are essentially twofold. First, DOTs can leverage the high degree of fame, popularity, and security that the Bitcoin network gains from its popularity and its high level of mining power. Second, it becomes much easier to create protocols that interact between Bitcoin and DOTs, and potentially with other blockchain protocols and Fiat currencies to come in the future.

The project formally launched on July of 2013…

Why have the DOTs seen so much attention?

User-defined currencies – like the DOTs are beautiful because anyone can create their own ICO on the American Angels network.

The most ambitious feature of the DOTs is the help StartUps to rise up…

Self-stabilizing currencies, however, potentially offer an efficient means of doing this. A self-stabilizing currency works as follows. First, the currency’s creator, who has no further involvement once the currency is up and running — picks a currency or commodity that the currency would follow, and finds a price mechanism for that currency. They then take this information, along with some other metadata such as an “aggression factor” to indicate how closely the currency should track the underlying index, and publish it as a transaction. This is the Bitcoin method of coin creation and tracking, and that is what caused the Tulip mania we experience today that parallels the Bitcoin bubble to the Tulip-bulb bubble and the economic crash of the Dutch economy in the 1600’s that sunk Amsterdam for ever and destroyed the Dutch empire.

From that point on, the DOT protocol itself simulates a sort of central bank for this currency, creating units out of thin air and selling them to anyone who is willing to pay the market price.

In theory, the idea of a self-stabilizing currency sounds very seductive; if successful, it provides a way for users to store any currency in the network without having to trust that a centralized issuer has the funds to back the currency up, which is the weakness that Fiat currencies have. Because even though the price feeder can potentially manipulate prices for their own benefit, they have no clear incentive to cheat the way that asset backers do – namely, by running away with everyone’s funds.

However, the Dollar-pegged currency does have the obvious advantage over all others and that is the strength of the Almighty GreenBack and the United States government.

To that end, community members who have attempted to generate any amount of DOTs via ICOs through the AmeriKan Angels that act as the purveyor of the ICOs for all Startup companies, have the unique advantage over all other coin ICOs.

This scheme has the advantage that coins will be distributed in a fair way, but without wasting resources or privileging anyone, but by backing self-issued currencies for StartUps and serving as a medium of trade between the various user currencies, most of which will be too small to have highly liquid markets directly between each currency pair.

All alternative cryptocurrencies and digital currencies also benefit from this mechanism that the DOT development introduces into the world at large…

With DOTs however, implementing double-spend-proof transactions and the advanced features at the same time will require some additional thought.

What is the future of the DOTs going to be?

There are definitely many new features around the corner. One interesting idea is the concept of limited accounts, which will allow users to set up accounts that can spend from a particular source of funding but once up to a set maximum within a prespecified timespan. This will have two main use cases. First of all, it can be used as another safe mechanism for storing a savings account, limiting the losses from the limited address getting hacked. Second, it can be used as a Coinbase-like “recurring subscription” feature – for example, I might give a person a limited account for $? per day in exchange for a VPN subscription. Other developments include a bounty for a DOT, and much further into the future we may even see DOTs serving as the base of a decentralized market.

Anyone interested in looking more into the DOT startup software FinTech project, can check out the American Angels website, the various DOT development tools and the Angel Investors community.

If you want to purchase DOTs in order to invest in the StartUps check out the DOTs  order book, or buy directly at http://www.AmeriKanAngels.com where the Mobile App resides as well.

Yours,

Dr Churchill

PS:

Lots of knowledge to digest and that is why for our Startups we have DOTs to allow us to finance them and to grow our own Unicorns through digital currencies.


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