Market Discussions

Afternoon MD’ers!

I currently run a manufacturing business within EVE, and i’m turning over mediocre profits. Enough to pay for a PLEX every month, run a small tower and make around 200m additional profit to fund expansion into other markets. Enough for me. I’m primarily involved in the manufacturing of Rigs (all, excluding Capital - whatever is profitable month to month), but I am branching out into T1 construction and Capital Construction. I spend about 30 mins per day in game, and possibly a little more at weekends. This is my main character after selling my combat pilot to fund my Industry ambitions.

My current NAV is approximately 14B ISK, including over 4B ISK invested in Capital Component BPO’s, and 4.5B ISK currently liquid. I have no real need for investment, however I wouldn't mind running what would be a part publicly owned entity. I would be offering no collateral. It wouldn't be a loan, it would be an investment.

What I am proposing is selling a 15% stake in my corporation for current NAV. Assuming I have a total of 10,000 shares, each share is currently worth 1,427,856.35 ISK. This would raise 2.14B ISK which I could then put towards expanding into different areas (Invention, Reverse Engineering) or in to expanding my current activities. As I would effectively "make" 2B from the float, anything I purchase with that 2B (i.e. a BPO) would be loaned to the Corp, but remain my personal asset.

On a monthly basis profits would be distributed to all shareholders. As I would retain 85% of the shares my dividend would be mostly re-invested. I would purchase a PLEX from my share and return the remaining ISK into the Corp, forming the Base NAV for the next month.

The way to deal with me PLEXing the account is a little fuzzy in my head right now, but I think I know how it should work. It would mean that Corp growth is slow in terms of NAV increase, but monthly dividends should help off-set the slow gain in share price given most investment opportunities don't offer shares at all.

Would this kind of venture attract any interest? I wouldn’t want a single investor as it would take the fun out of things a little. Share value would increase over time as the corporation gains more assets, so there’s the potential to add another Corp share into the stagnated trade market.

If you are after a bit of public funds/roleplay, why not try and get a loan against those Component BPO's?

Well I'd be interested, but I'd need to know a lot more before I'd be willing to invest. A month on month breakdown of income, expenditure and profit margins would be required, as well as a more specific idea on what would be purchased with the additional funding, and how much of a return we would be likely to see. For example are you saying 15% of your profit (>200m) would be distributed monthly? If that's the case it would take up to 67 months to recoup the funds invested (as you would be distributing 30m/month, which would equate to 150 isk/share/month).
Also, if the BPOs are becoming your personal property, there's no way for us to get a return on investment should you choose to pack up shop or should the corporation fail. If you liquidated the corp, the corps assets would be minimal, so we would gain nothing while you would hold onto all personal assets.

There have been many IPOs raised before in this game, some legit, some scams, and as far as I am aware, every one of them has failed. IPO investments in EVE are very high risk with a low return.

Well reputation is one problem. Having no reputation to lose creates more risk.

Not tracking your income and not separating your concerns (personal isk from business isk) is also a problem. For example, should you not make a plex amount of profit for one month, does the corp make a loss that month as you need to plex to continue? Realistically profit should be split before the plex purchase, so if 85% of the business profit which goes to you is not enough to get a plex, then you need to make up the difference from your personal wallet.

With the BPOs, your own BPOs you currently have a loan to the corp would stay as yours, but we would not be buying 15% from you as such. We would be investing in the business directly for a share in the business, not your personal wallet. So the 2b would go into the corp wallet as isk, then assets bought with that would remain property of the corp, not your personal asset. Should the corp fail, corp assets would be sold, and you would get 85% of that. That's how it would generally work.

IPOs generally suffer from more problems with continuation and return than from straight up scamming. A lot of the failed IPOs all started with good intentions, but failed to continue. Then once they started to fall apart, someone jumps ship with the assets and it's all over.

Advice wise I would say:
- You need to get a better return on investment. Reduce the price of shares and double the value. 7500isk/share for a total of 30% of the corp and a 1.5b investment. this gives a 25 month return (around a 4% monthly return).
- You need to separate your concerns. Do this now. Split your corp from your personal wallet. Run the corp as a business and pay dividends to yourself.
- Build your books. You need to be able to show a history of your business making money, how it is done and how it will continue. This will also help with the first part, as if you can show your current profit is higher than 200m/month, you can increase the price per share or increase the number of total shares (reduce the total stake investors have in the business)
- Growth. You need realistic ideas on how to grow the business. How will you increase the profit of your business over time, and thus make my investment grow?
- Tracking. How will I track my investment, and/or how will you report to shareholders?
- Reclaiming shares. Do you have an aim to eventually purchase the shares back from investors from your personal wallet so you eventually own 100% of the corp again? If so, what would be the restrictions on this?

You don't. The value of the corp should include estimated value of the shares. It's not income, it's the initial assets of the corp. Essentially what you are saying, is say you have 7500/share, and you are selling 25% of your corps shares. You buy 75% of the shares and 25% are for the public.
Let's just chuck in some numbers to keep some sense of it.
Corp value: 6b
Your share: 4.5b
Public Share: 1.5b
Total Shares: 800,000

You need to put in 4.5b from your personal assets into the corp (remembering to value the pos realistically as this is currently your asset but would become a corp asset). The investment fills in the other 1.5b. Should the investment not sell in full, then you can either buy that yourself or leave it to the corp. Should you buy it, you still need to put in money that's from your personal wallet and assets. This makes the corp assets 6b. Each month you pay out whatever agreed profit percentage you have to all investors (yourself included) through dividends, leaving the remaining isk in the corp to increase it's value. Should the corp fail, you need to liquidate whatever value the corp still has, then pay out that to all investors before closing up shop. This is where most IPOs fall down as it usually results in a grab and run scenario.

Yes, skillbooks related to corp activities, as well as ships and such could be bought with corp cash as an expense. Ships and items would remain as corp assets, while skillbooks would obviously be a direct expense with no return. It would be up to you to make the decisions of what expense would likely help with a good return.

+1 to Lucas Kell above.

Your biggest issue in appealing to me is your inability to separate personal assets from business assets.

You have existing assets that currently belong to you. You are doing business with them. All fine so far.
You value your assets at 14Bill ( lets take this as granted for simplicity )
If investors put 2 billion into you as a company with 14 bill assets the 15% looks fairish so no problems there.

What happens now is you own 85% of your existing assets - which includes both your 14bill and the additional 2 bill.
But investors now own 15% of your current assets and the 2bill cash.
If you spend/use any of that on anything investors still own 15% of everything you do, buy, own etc.....
You no longer have any of your ( original ) personal assets - you own 85% of the enitity ( company).

Say the company pays a dividend - you get 85% of the dividend and it is yours personally - but you need to keep it in a personal account separate from the company. You can't get the two mixed up. You can't dip into company money to buy your PLEX ( well you can but I'll get to that later ). Company assets and your assets must be kept separate.

Taking advantage - You can as the major share holder get up to all sorts of shennegins depending on whatever terms the share were sold under. You could vote yourself anything.
Playing it straight - With a big company net worth, and a proven track record of performance you might be able to get the shareholders to agree that the company actually pays you one plex a month for doing the work.. It could be performance or target related. I you are good you could build up to this.
And lets not forget that this is Eve, once you have your hands on stuff, you can do anything you want and no-one has any recourse e.g. law etc.... and all the above is meaningless..........

Again, useful feedback.

To get a sense of scale, of my 14B, I currently have about 1.5B in materials and 1B in stock. I have stockpiled 2B in materials for when I have access to my freighter and can mass-produce ships (this weekend). Spending 30 mins per day (15 mins AM updating orders, setting factory runs, moving items to market, rinse/repeat PM) I am turning over a profit between 200m and 1.6B (depending on activity and market fluctuations) after PLEX. I am very much low-balling with my projections, including how I calculate NAV (see my recent post on NAV).

Your point about reinvestment is correct, and is something that needs to change. I had initially assumed that I would make PLEX + 200m per month (using your 751) minimum. If I dividend all profits then 15% = 112.65M to the external shareholders. This leaves 638.35M to me, from which I can buy a PLEX and put close to 100M back into the corp, increasing NAV to 14.1B. Not colossal, but you get a dividend plus an asset that increases in value.

Yes, this is peanuts in the grand scheme of things, but the idea is that profits will grow as I utilise a larger chunk of my NAV. As I said in my OP, over 4B are tied up in blueprints, over 1B in a freighter, but the idea is to be in a position to utilise the remaining NAV to make money. If I am making 700M off 2B (35%) then even a conservative view would put monthly potential at 15%.

I guess i'll put this on ice for now, prepare a good few months of "evidence" prior to seeing if it's really worth it or not.


Virm - I agree that I would need to separate the assets at the start, just working out the best way logistically.

This leaves 638.35M to me, from which I can buy a PLEX and put close to 100M back into the corp,

AGGGGGG ( sorry )
How do you "put" your extra personal 100M back into the corp?
When you do it then belongs to the corp not you.....
The separation works both ways, you can't just drop money into the corp willy nilly any more than you can take it out willy nilly.
If you want to leave it in the corp set the dividend lower, so you get just enough for your plex.
The investors get back at the same rate as you. The remainder never leaves the corp - so it doesn't need to be put back in - and is used to grow the corp net assets.

Shareholders aren't going to object to you giving your own personal money to the corp ( although I would ) but they will object when you try and take it back out.
"I only lent that money to the corp, now I'm taking it back" won't wash with the investors.
You really need to get a grip on this separation.

I have done exactly what you want to do 3 years ago, but only with "myself" (hehe ).

Point was: I wanted to start industry and my PvP-Main had something like 8b liquid ISK while my industry alts had around 3b spread in Hulks/Orca/Freighter and some minor stuff.. Now I did not want to simply dump all the ISK in the corp blindly so I decided on the following scheme:

I created my own corp and valued all my industry characters assets as corp assets (so total of 4b). Then I gave a cash injection from my PvP-Main of about 6b. I created 9000 additional shares totalling 10.000 shares so each share would be worth 1 million ISK.

I started out with T2 invention and T1 manufacturing (I think I supplied RvB-Stations with Ships for example). Monthly I calculated the NAV (It was pretty quick since I simply valued any BPOs at NPC price etc) and every ISK on top of the share value was paid out as dividend. The money from the Industry characters was reinvested instantly and the money the PvP-Main received I decided depending on ship losses or need for bling pewpew ships how much I would reinvest into the corp. I would also give out new Shares as well according to the amount reinvested. You could obviously leave this step out and the shares would simply increase in value.

It took me 6 months to do JF invention and having all the BPOs required for this.

Of course this is a lot easier to execute if you are doing it with yourself but this would be the only way of doing it. Because you pretty much need a third party to secure this. Although even here Bad Bobby comes to mind :D

I forgot to mention: With my example I used the corp bulletins for publishing my current assets/income etc the whole calculation for doing the dividends basically.