The digital economy has radically changed the nature of the relationship between customers and corporations. Individuals have switched from being passive consumers to being an essential force in creating value, either by their actual work (Airbnb, Uber, Apple's App Store, Amazon Marketplace...) or through their data (Facebook, Google...). For that reason, financially aligning stakeholders to the success of the company is now the strongest competitive advantage that a company can build. Yet there is no easy solution to do that today. The letters sent by Airbnb and Uber to the SEC asking to let them give equity to their hosts and drivers respectively are a perfect attestation of both the problem and the opportunity.
With Fairmint, founders can launch a continuous securities offering based on a fixed percentage of their company's equity. Such offerings enable stakeholders to buy and earn convertible securities at any single time, directly from the company's website.
These convertible securities are called CAFEs (Continuous Agreement for Future Equity). They are issued automatically whenever the demand exceeds supply and are priced algorithmically, based on investors' demand. The CAFE has wonderful properties:
CAFEs are programmable, enabling companies to create the automated stakeholders incentivization plan that is perfectly aligned with their company's objectives.
CAFEs are regulatory compliant instruments, the compliance being enforced on-chain (transfer restrictions, lockup periods…), bringing regulatory safety to issuers.
CAFEs are fully digital securities (ERC-20 compatible) that are tradeable on decentralized secondary markets and compatible with the whole decentralized finance ecosystem.
Fairmint enables companies to provide a unique investment experience directly on their website, without requiring any license. Indeed, by relying on the decentralized finance stack, companies don’t have to custody any fund or execute any transaction on behalf of their investors.
As a technology provider, Fairmint can serve companies worldwide simply by adapting the legal CSO offering to the jurisdiction of the company. In summary, using Fairmint, companies can use their equity to let:
- Engaged customers earn ownership in the companies they love & use to build wealth alongside them.
- Sophisticated investors invest in the private companies they believe in with a clear path to liquidity.
Decide on an equity allocation. How much are you hoping to raise? How much equity do you want to allocate for your stakeholders? Do you want your employees to be incentivized with CAFE too? Would your investors like to convert their SAFE to CAFE (that will clean you cap table while providing them with a clearer path to liquidity)? What would your ideal stakeholder plan look like? Answering these questions will help you come up with a proper allocation
Draft your Continuous Securities Offering. We provide a template of the CAFE in many different jurisdictions and can provide you with a list of securities lawyers with whom we’re working, who are already familiar with the CAFE. And if we don’t yet have a template of the CAFE for your jurisdiction, we’ll work with you to create it and launch the CAFE in your country!
Send us the elements of your brand identity. We take care of personalizing your stakeholder backend to match your brand identity. You’ll only need to point the domain name you’d like to our server: (i.e. invest.yourdomain.co) and that’s it!
Connect your investment portal to your website. Place a call-to-action on your website to start engaging your stakeholders. You’re now all set! Place a call-to-action of your choice (“invest now”, “join the community” etc…) on your website and start engaging your stakeholders to invest and/or earn equity of your company.
Using Fairmint has many benefits over traditional equity offering while remaining 100% compatible with traditional equity financing:
Fairmint offers companies access to better equity:
Programmable. Transferable, divisible, computable equity unlocks a new world of automated equity fundraising or incentivization scenarios.
Passively enforced legal compliance. Through the use of smart-contracts and non-custodial technologies, Fairmint prevents issuers and stakeholders from committing theft or fraud.
Disintermediated. Passively enforced legal compliance removes the need for trusted middlemen and enables a direct connection between issuers and stakeholders.
Natively transparent, persistent and auditable. Fairmint uses Ethereum as a single, open and trustworthy system of record for equity.
DeFi native. Fully interoperable with the fast-growing decentralized finance ecosystem: software-based secondary trading, lending, pooling, indexing… is natively available to issuers.
Equity powers the entire stack of entrepreneurship and is the most powerful tool to align financial interests. It is also the greatest wealth-building financial instrument. Until now, the absence of a single, global, open and interoperable system of record for equity hampered innovation and the democratization of equity ownership.