Market Discussions

Elizabeth made a point on a random thread a couple of days ago about MD being here for *discussion* -> In between the obvious scam attempt posts, the troll posts, the "can't tell if troll or scam or srs" posts there isn't actually a lot of content going through here.

Can we provide some discussion on how to actually go about raising capital/your first bond/"how to ask for ISK and actually have a chance to get it" ?


Bonds are reasonably simple (on the lending side anyhow) - I think rimmer actually has a macro that posts "no collateral + no history = no bond"
But ... "How can anyone raise capital without much of either of these when getting started ?"

Commonly stated rationale is "I'm looking for an ISK injection to expand my trading" subtext being - "My liquid ISK is below 5% of my total wealth, I've got X on the market already, but I've still got Y order slots unused - with more, I could make more"

If I were this guy, and I was looking for Z ISK /and/ I had Z Worth of ISK lying around in unused assets - I would just liquidate and move on without asking.
(Umm, for clarification I actually was that guy several years ago - I /could/ have made more and faster with an early'ish investment - instead just carried on doing the same and occasionally re-tuning for faster turnover)

Story time -> How you successfully raised your first bond, or some general strategies for building history/collateral... Or something along those lines.
(Underlying goal, discussion! + a thread to just link to in the "not sure if scam or just a newbie" posts. )

Spend enough time on your loan proposal and borrow small enough that intentional default is low or at best medium ISK/hour.

Tell that to Germany.

Regards,

Greece

I’ve done a few bonds in my time, all uncolateralized, and I’ll put in my experiences in the hopes that it will help others. This has been problematic in the past as this looks like a how to scam guide but hopefully it will have the opposite effect showing the time and dedication needed to grow reputation.

Rykker Bow bond #1 - (3 Billion) February 2010 (with audit)
Rykker Bow bond #2 - (8 Billion) April 2010 (with audit)
Rykker Bow bond #3 - (8 Billion) September 2010
Rykker Bow bond #4 - (15 Billion) October 2010
Rykker Bow bond #5 - (10 Billion) November 2010
Rykker Bow bond #6 - (15 Billion) January 2011 (with performance audit page 2 by VV)
Rykker Bow bond #7 - (15 Billion) May 2012 (with performance audit page 3 by VV)
Rykker Bow bond #8 - (30 billion) June 2012
Rykker Bow bond #9 - (20 billion) August 2013
Rykker Bow bond #10 - (25 billion) July 2015

Back in 2010 I came across MD forums and was quite intrigued with the meta game of bonds, finance and trust. I started out with the desire to issue a bond mostly based on the challenge of successfully launching an uncolateralized public offering with the secondary goal of raising capital and long term reputation. That sent me on a fact finding mission of previous bonds; of the ones that successfully launched and more importantly of the ones that failed to see what it was that killed them. The information gathered pointed towards a couple of truths of the bond issuer having good social management skills, a public presence and a detailed plan. Lastly was the time that the issuer spends in these areas. The more time invested in putting a prospectus and character reputation together relative to the potential scam is pretty obvious to the refined investor here in MD. A quick scam attempt looks like a scam. A well though out, detailed and prepared heist is much harder to detect.

Having a public presence is almost an absolute necessity. Being known in the MD community, giving insightful and friendly advice and generally getting your face out there will make you more attractive to investors. You’ll make contacts, you’ll make friends and contacts and friends are much more likely to lend you money. This also seems to count towards the time involved to the isk gained ratio. The longer you’re in the community, the more time and effort is involved and that alone weeds out most as scammers that like the quick buck.

Social management skills. MD seems to rise and fall over time as to how much risk it wants to take. Being able to figure out the maximum you can get from a first issue is a big plus as the first few bonds are usually smaller than what you actually need. Also being able to handle the questions and trolls that come with an offering in a friendly and concise manner shows the general investing public that you can stay cool under pressure. Keeping your cool shows you can remain stable under duress which is a good tool for investors in calculating risk.

Having a polished offering. Take the time to go through the basics (see my offerings) Start off with an elevator pitch with a quick summary and biography then proceed to the body of the bond. Don’t forget a tl;dr section for the investor who’s not interested in the details. If your offering looks weak it will bring out trolls and if the trolls have a following your as good as sunk.

Follow up after issuing. Set aside a couple hours after issuing. You’ll get questions and if you’re able to answer them quickly it will show your commitment. Try to get a feel for how MD is taking your bond and tailor your responses to aid in the launch.

Cheers and gl.
- Rykker

I'll give my advice from a different direction - what investors should be looking for in an offering. Now, in reality you can make your offer and aim it at the lowest common denominator, the guys who fill bad offers and get scammed a lot. But a really good offer should attract the responsible investors and the following is an outline of how a responsible investor will approach a loan.


1. Get as much basic information as possible to build a risk profile. This in no way provides solid protection as people can certainly act against expectations but it does provide a guide as to when you might expect someone not to bother with scamming. The basic info I always want includes a) current outstanding unsecured debt; b) previous highest unsecured debt; c) earning history and potential, including current NAV; d) degree of activity. With this data you can see that if, for example, someone has held 20bil unsecured for 6 months, cleared that debt and then launched a new bond for 10bil then they are unlikely to be following a masterplan that will involve scamming that 10bil. It is important, however, to get a commitment, where possible, that additional funds won't be raised beyond a certain level or the 10bil could rapidly become part of a 100bil debt that may fit better into a rational masterplan.

Earning history and potential is also useful but by no means definitive. Someone who can earn 10bil a week and has actively engaged with the MD community for months is unlikely to be following a masterplan that culminates in scamming 10bil. Of course they may do so for the laughs but that is a different issue (see below). Degree of activity is worth bearing in mind as it may cast a risk profile based on the previous data into doubt. Whilst someone might not build a masterplan to scam 10bil after already not taking the opportunity to scam 20bil be aware that priorities may change over time. There may also be a desire not to screw certain old investors but to suck in new ones (see, for instance Bad Bobby's decision to refinance a bunch of old debts immediately prior to scamming).

All this data can initially be asked for from the person you are thinking about investing in but you then have to trust them that the data they give you is true. Whenever possible get a third party that you trust to confirm this information via an audit or fact check. This in no way makes the data absolutely certain but improves the chances of not being misled.

2. Be very wary about investing in people that appear to be slightly unstable, erratic or eccentric, no matter how much you like them or respect them. Unstable, flighty and changeable personality types may be lovely people (or *******s) but the additional uncertainty involved will always make an investment more of a gamble.

NEVER invest in people that are contemptuous towards their investors/potential investors or who take pleasure in the suffering, inconvenience or pain of others. If someone values putting other people in positions of distress they may well end up deciding that distressed investors are worth more than on-going business relationships.

3. Make sure you get a decent return for your risk. Acknowledge your own fallibility and ask yourself how often you would expect to be wrong. If you think something like BMBE looks like a pretty good bet, ask yourself whether you would be surprised if analogously good bets failed defaulted or scammed once in a year, two years, three years, etc … So, if it wouldn't surprise you if you took three years off eve and came back to find that at least one person you trust as much as BMBE or Grendell or Chribba or Darkness had scammed then it would probably be a good idea to only invest in such people if you can get an interest rate according to which one successful investment would at least balance out a failure (so roughly 3%). Obviously this is a non-rigorous rule of thumb.

4. Never be afraid to pull an investment if new information or behaviour makes you nervous.

"NEVER invest in people that are contemptuous towards their investors/potential investors or who take pleasure in the suffering, inconvenience or pain of others."

You just described a large portion of the playerbase. And there goes Code bond too lol.

A red flag for me is when I am unable to understand why the borrower wants the loan. If I see someone saying they have made 10B profit in the last two weeks, and asking to borrow 5B, I immediately want to know why they don't just use this week's profit instead of borrowing.

I understand there are lots of reasons to seek additional capital, and that if 5B more, right now, will generate more than the interest on the loan then it makes sense for the borrower. But it raises a question in my mind, and has stopped me from participating in otherwise attractive offerings.

It could be that I just don't think like a banker. Banks thrive on loaning money to customers who don't "need" it, and by definition there is more risk in loaning to those who do. But I value independence and self-sufficiency, and I would only borrow as a last resort. (That may help explain why I am not very rich.)

I I was ever to ask for a loan it would look something like this:

hey guys I want to borrow 20 billion Isk to spend on Gecko speculation. I plan to buy all the geckos I can get my grubby paws on between now and the isk runs out.

I will be selling the Geckos at the end of this year/into january and I plan to repay all my creditors then with 20% interest. Yes Im that confident the Gecko market is going to keep climbing. I understand this is a controversial though and has divided forum opinion. You may well think Gecko prices won't climb at all and its a bubble that will crash. Thats my risk however not yours as I have collateral for the loan.

I plan to deposit 40 plex with Chribba and pay his fee as collateral for the loan. Why not just sell the plex? because I also believe the plex prices are going up and will be over 1 billion by next year. Even if I am wrong though and plexs crash as well as Geckos 40 plexs at 500 million each equals 20 billion and could cover the debt in the event I get screwed by the market gods and the lords of chance.

Tldr: want to borrow 20 billion isk at 20% using 40 plex deposited with Chribba as collateral. Loan to paid at the end of this year.


Its simple easy to understand. You can see exactly what I'm doing and that I've done the best I can to minimise my INVESTERS risk.

OFFER THEM BACON

EVERYONE LIKES BACON

I LIKE IT

On topic:
I had a rant typed out but deleted it as it was unconstructive. In my experience of seeking loans, MD has become far less receptive to uncollateralized loans. Even then, filling a collateralized loan without having a great rep greatly depends on luck. That is my $.02.