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1 Billion "Flameburst" Bond [CLOSED]
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David Forge
GameOn Inc.
#1 - 2011-12-27 02:22:18 UTC  |  Edited by: David Forge
I have decided to begin my second bond offering. I have been trying to include a link to the first bond but there's something wrong with the BBCode so I'm afraid I have to post the address in vulgar plain text. (https://forums.eveonline.com/default.aspx?g=posts&t=42107) I'm so sorry you had to see that. Now, to the meat and potatoes.

TERMS

Total Bond Size: 1 Billion ISK
Rate: 10%
Bonds: 10 million ISK each (no min/max purchase)
Collateral: None
Audit: Only if Necessary (see explanation of terms)
Start Date: December 29, 2011
End Date: January 6, 2012

EXPLANATION OF TERMS

Initially I considered making this bond only 500 million ISK but in the end I decided that it would be more worthwhile for myself and for investors to make it a full billion instead of taking overly tiny steps on my path to a regular bond issuer. I also considered a lower interest rate, somewhere around 7-9% which seems to be closer to the norm for bonds of this size. However, taking into account my newness and lack of record with the community, I thought it would be more reasonable for me to counter the inherent risk of investing with a newer individual by maintaining the 10% interest rate from my initial bond.

When I say that there is no collateral I mean that I have no plans to transfer assets equal to the full or partial value of the bond to a third party. I do, however, have the ability to, should things go sour, liquidate long term positions and items and repay the principle and hopefully interest (provided I do not somehow lose a massive percent of the principle). This does not provide protection against scamming on my part but it simply is not feasible for me to provide a sizable portion of the principle without seriously disrupting my operations and, therefore, is an act I plan on reserving for only extreme circumstances.

An audit also often proves to be disruptive and I do not have an intention to arrange one. If it proves essential for investor confidence I will go about contacting a reputable auditor and having one performed. Note that this will necessitate the adjustment of the start/end dates.

RISKS

I am sure that everyone is aware the greatest risk is that I will simply take the ISK. There is nothing that can be done to absolutely assure you that this will not happen and like all investments in EVE, in the end, you simply have to take a leap of faith and trust that I am honorable. I hope one day that I can point back to a great number of successful ventures as reassurance but at least for today it will be mainly on faith. Just remember the first rule of EVE, just like not flying what you cannot afford to lose do not invest what you cannot afford lose.

The other main risk is that I will be hit by a bus. You will be happy to learn that my city is controlled by Republicans and our public transportation is so poor that the chances of being hit by any form of subsidized vehicle are ridiculously slim.

Investor Information

Investors may invest as much as they wish but investments will only be accepted in increments of 10 million ISK. It seems only fair that previous investors and those that expressed advanced interest in any offering by me are given preference over newcomers.

Also, questions or suggestions (which in the past have been universally helpful and I really do appreciate) can be directed to me here in this thread, via the mail system, or chat if I'm online.

Investor List

General Mic - 700 million ISK - Received
Jonas Xiamon - 100 million ISK - Received
Latec - 100 million ISK - Received
The Pear - 100 million ISK - Received
Arctur Vallfar
Knights Adamant
#2 - 2011-12-27 04:38:18 UTC
Reminds me of that episode of South Park where Stan is talked in to investing some of his money at the bank annnnnnd it's gone.
Mu-Shi Ai
Hosono House
#3 - 2011-12-27 05:20:45 UTC
Are you combining this 1bn ISK with a pre-existing NAV? If so, why not just calculate what part of your NAV 1bn is and offer investors an actual share in your venture?

Bonds are such a flawed investment scheme in EVE, if only because the rates offered tend to be so horribly low. Also, there are a lot of people who run them not because they actually require the additional capital to run their trading operations, but because they like to RP as investment fatcats.

Almost anybody, with not much effort could put 1bn ISK to work at better than a 10% return per month. Offer investors a real share. Make it worth their while, at the very least.
David Forge
GameOn Inc.
#4 - 2011-12-27 06:05:21 UTC
Interest rates are low compared to what profit can be made with the money because investors do not want to handle it themselves. A person that issues a bond is selling time and effort to his customers. They would make more profit if they did the buying and selling directly but that is either unappealing or too much work, in EVE bonds provide a service that results in modest profit with zero (or at least minimal) effort.
Bleach andVomit
Brutor Tribe
Minmatar Republic
#5 - 2011-12-27 06:10:40 UTC
I agree, you need to make it more worthwhile. I could set up buy orders and turn 20% profit without trying, this is especially more appealing when dealing with smaller numbers like 10 million isk. Set a buy order for a ship in the butthole of eve and some sap discards it and I made an easy profit that requires no risk compared to lending money to someone I dont know.
Mu-Shi Ai
Hosono House
#6 - 2011-12-27 06:22:37 UTC  |  Edited by: Mu-Shi Ai
David Forge wrote:
Interest rates are low compared to what profit can be made with the money because investors do not want to handle it themselves. A person that issues a bond is selling time and effort to his customers. They would make more profit if they did the buying and selling directly but that is either unappealing or too much work, in EVE bonds provide a service that results in modest profit with zero (or at least minimal) effort.



Well I mean, do you even need the capital, or are you wanting to run a bond "just because"? It seems to me that, if you had to put that capital to use, i.e. it was actually needed as opposed to a status item, offering the investor(s) a 1bn ISK share of your enterprise and giving them that percentage slice of the profit, would not actually be an unappealing idea. You'd be gaining something significant (because you need the capital) and the investors would be gaining something significant (an actual share of the profits, instead of a low fixed rate of interest).

I think that the lower the rate a person offers on a bond, generally the less we can imagine they actually need the capital. Because if they aren't leveraging it for good returns, they probably are bumping into a wall regarding how much capital they can adequately invest. 10% of 1bn ISK per month is pretty weak, especially if there's a pre-existing NAV that it's being piled on top of. If, on the other hand, that 1bn constitutes your entire NAV, and you're only going to be managing that single source of capital, it's probably a more fair proposition.

But then again, if you're only working with the 1bn your investors give you, I'd have to question the entire premise of the bond to begin with.
David Forge
GameOn Inc.
#7 - 2011-12-27 06:25:36 UTC
Again, I think that everyone realizes that the interest rate on bonds is far less than what could be earned by an investor handling the ISK themselves. People buy bonds because they do not want to handle it themselves. If you want a higher rate of return then by all means do it yourself, if you would rather sit back and let someone else do it for you then you will be paying a premium. I do not mean to sound either ill-tempered or condescending but I am a bit surprised that I have to articulate this. In the future I would like to run a more permanent setup, like a hedge fund, that might include higher rates for investors but that seems a long time off.
Mu-Shi Ai
Hosono House
#8 - 2011-12-27 06:28:58 UTC  |  Edited by: Mu-Shi Ai
David Forge wrote:
Again, I think that everyone realizes that the interest rate on bonds is far less than what could be earned by an investor handling the ISK themselves. People buy bonds because they do not want to handle it themselves. If you want a higher rate of return then by all means do it yourself, if you would rather sit back and let someone else do it for you then you will be paying a premium. I do not mean to sound either ill-tempered or condescending but I am a bit surprised that I have to articulate this. In the future I would like to run a more permanent setup, like a hedge fund, that might include higher rates for investors but that seems a long time off.


Oh, I'm not a prospective investor. I'm speaking from the other side of the coin. If I had a need for an extra 1bn ISK in my own venture, I'd be posting a counterpoint here offering a real share in my business.

I'm also offering these criticisms because I hope the culture around these low-interest bonds will start to fade away. Anybody who wants to know how they can better put an extra 1bn ISK to use without resorting to handing over their cash for the guarantee of a mere doubling in 10 months (if it doesn't evaporate into thin air in a scam ... not accusing you personally, just referring to a very real risk), just send me an email and I'll give you a detailed run-down.

EDIT: Btw, I'm sure you'll probably get your billion ISK. This is MD, after all. No hard feelings, I'm just trying to present a constructive counterpoint to what I think is a failed, paleolithic MD trend.
David Forge
GameOn Inc.
#9 - 2011-12-27 06:40:03 UTC  |  Edited by: David Forge
I'm sorry, I was posting while you posted so my last response did not properly address what you asked. In short, I do not "need" the ISK but I have reached a point where I have very little liquid ISK for immediate use. So you could say that I do require it if I want to continue trading without waiting for my current positions to come to a close. That being said though, I think I would be running a bond even if I did not actually require it, based on my previous experience (as limited as it was) I did enjoy it and I think it is an aspect of the game I want to involve myself in.

I am not inclined to divulge specifics to my operations but either in active orders or stock waiting sale at a later date I have roughly one billion of my own assets in trade and less than 100 million ISK liquid. You might consider this my pre-bond NAV. With another billion I have a great deal extra opportunities open to me which I would like and I think that 10% interest is a fair price to pay for it, especially over a relatively short time frame (two weeks). If somebody would rather handle the buying and selling personally for a much larger profit (as they could easily do) then they are more than welcome. If they want to do it passively through bonds then 10% is on the higher end of what most issuers are offering. I personally am not willing to part with more than 10% of my profit and I would also be hesitant to promise more than that in the event that things went poorly and I was unable to meet my obligations.
Mu-Shi Ai
Hosono House
#10 - 2011-12-27 06:44:32 UTC  |  Edited by: Mu-Shi Ai
Isn't the timeframe 1 week (Dec 29-Jan6)? And the rate isn't 10% of the profit you earn, correct? Isn't it 10% of the investment capital (so 100m ISK total)?

Also, I'm all for people doing what they want to do. There doesn't have to be a strict need for everything. EVE is a game, after all. But still, personally, I think a lot of people are trying to get into the MD investment game too quickly for their own good. The culture doesn't seem particularly useful for either party most of the time. A lot of RP and whatnot. And I think what gets lost is that it can be useful. It's like all these internet companies who want to rush to IPOs. Where's the demonstrated need for capital investment? Most of the time it seems to be (and is) just a big cash-in moment for VCs and pre-IPO investors, than something done to fulfill an actual need for capital.
David Forge
GameOn Inc.
#11 - 2011-12-27 06:48:52 UTC  |  Edited by: David Forge
Yes, I'm sorry, strictly speaking the bond starts on the 29th but I will, of course, invest money as it comes in so two-ish weeks. It would be far more proper to do as you have done and round it to one. I also spoke incorrectly to say "10% of my profits" as you quite rightly point out that I am referring to 10% of the principle and not 10% of the profits. Thank you for correcting me, I hope that is clearer.

EDIT: To reply to your addition - As I said, this is both a matter of actually having more willpower to trade without enough capital to fund it and wanting to run a bond for the fun of running a bond. I don't know why, in the context of a game, it should be considered detrimental that I want to conduct this offering at least partially because I enjoy it.
Vaerah Vahrokha
Vahrokh Consulting
#12 - 2011-12-27 08:58:33 UTC
Please explain "An audit also often proves to be disruptive", I don't get it.

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Chung Ju-yung
Doomheim
#13 - 2011-12-27 10:07:30 UTC
Vaerah Vahrokha wrote:
Please explain "An audit also often proves to be disruptive", I don't get it.


... to the MD reputation and scamming process.
Mu-Shi Ai
Hosono House
#14 - 2011-12-27 11:01:01 UTC  |  Edited by: Mu-Shi Ai
Vaerah Vahrokha wrote:
Please explain "An audit also often proves to be disruptive", I don't get it.


1. You have to find somebody who will do it.
2. You have to work around their schedule, playing eve-mail ping-pong for who knows how many days.
3. It takes real effort to do it thoroughly.
4. People will typically want some kind of compensation, which in the case of a bond this small, ends up being counter-productive.
5. Nobody really does them anymore.
6. They don't establish anything that can't immediately be unwound by somebody who fundamentally begins with the mindset of wanting to scam.

Is it really that difficult to see the cons here or are you just playing dumb?
Loraine Gess
Confedeferate Union of Tax Legalists
#15 - 2011-12-27 12:48:43 UTC
Mu-Shi Ai wrote:
Vaerah Vahrokha wrote:
Please explain "An audit also often proves to be disruptive", I don't get it.


1. You have to find somebody who will do it.
2. You have to work around their schedule, playing eve-mail ping-pong for who knows how many days.
3. It takes real effort to do it thoroughly.
4. People will typically want some kind of compensation, which in the case of a bond this small, ends up being counter-productive.
5. Nobody really does them anymore.
6. They don't establish anything that can't immediately be unwound by somebody who fundamentally begins with the mindset of wanting to scam.

Is it really that difficult to see the cons here or are you just playing dumb?



Well, it is VV...
General Mic
Caldari Provisions
Caldari State
#16 - 2011-12-27 13:36:32 UTC
I would like to buy all the shares for 1 bil isk.
Jonas Xiamon
#17 - 2011-12-27 16:10:10 UTC  |  Edited by: Jonas Xiamon
Damn, I was about to buy some shares.

Only about 100 mil worth though.

Edit: Also, I agree, I bond, because lazy.

I usally write one of these and then change it a month later when I reread it and decide it sounds stupid.
David Forge
GameOn Inc.
#18 - 2011-12-27 17:20:35 UTC  |  Edited by: David Forge
In regards to the question about why I am reluctant to undergo an audit Mu-Shi Ai expressed it far better than I could have. In the end things that I find most unappealing about an audit are that it is time consuming (and as I said in the original post it would require the start and end dates of the bond to be moved further into the future, perhaps considerably), it would likely cost a significant amount in comparison to the bond size (unless I was able to secure a auditor who billed as a set and reasonable percent of the bond size which, at this level, seems to hardly be in his or her interest), and finally it really does not provide any protection to the customer. For these reasons I said that I would prefer no audit and would only accept one if it were necessary to the success or failure of the bond.

General Mic, I am flattered you trust me with such a large sum, but I will be giving preference to past investors as I feel that I owe them at least that much for having given me their trust when I was completely new. Counting Jonas Xiamon and one other I have two offers for 100 million ISK each which will be accepted. Towards an undefined time of "later today" I would be happy, should you still wish, to accept whatever the difference is between what ISK I have received and what still remains to fill the bond. I would understand if less than 1 billion was too small a figure for you to bother investing with and I would be happy to simply look forward to your business at a later date. Should you find filling the difference acceptable I suppose I should say that totally new investors will simply have to wait for the next bond. While it is tempting to simply increase the size of the bond it would hardly be professional. I'm sorry, I didn't think there'd be such a rush. Smile
Latec
Slugga Boyz
#19 - 2011-12-27 18:12:19 UTC
Im in again for 100m
Isk sent

Latec
Vaerah Vahrokha
Vahrokh Consulting
#20 - 2011-12-27 18:42:53 UTC
Loraine Gess wrote:
Mu-Shi Ai wrote:
Vaerah Vahrokha wrote:
Please explain "An audit also often proves to be disruptive", I don't get it.


1. You have to find somebody who will do it.
2. You have to work around their schedule, playing eve-mail ping-pong for who knows how many days.
3. It takes real effort to do it thoroughly.
4. People will typically want some kind of compensation, which in the case of a bond this small, ends up being counter-productive.
5. Nobody really does them anymore.
6. They don't establish anything that can't immediately be unwound by somebody who fundamentally begins with the mindset of wanting to scam.

Is it really that difficult to see the cons here or are you just playing dumb?



Well, it is VV...


Yes, the same who owned you here.

Said by the guy who did not inform himself about API changes (in order to avoid audit ofc, how original!) and said: "Yep. Apparently I do need to go back to preschool.".

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