Category: Funds

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Secrets of a successful ICO Whitepaper

Categories ICOs, Malta, Law, Technology, White Paper, Funds

Secrets of a successful ICO Whitepaper

Whilst Initial Coin Offerings have been around since 2013, it wasn’t until 2017 that their potential was realised and their popularity skyrocketed. In the most basic of terms, an ICO is an alternative way of crowdfunding except that investors receive crypto tokens in return for their investment. The concept of an ICO has allowed any kind of investor, anywhere in the world, to have the opportunity of investing in new projects, that was once reserved for professional and institutional investors.

By the end of 2017, the amount of funds raised by ICOs exceeded $4.9 billion with some projects raking in around $700 million each. Then as 2018 started, the number of ICOs increased dramatically. Knowledge of this new type of fundraising became mainstream and by the end of Q2, the amount of money raised via ICO was already double what had been raised in the entirety of 2017.

Whilst the growth of the market is a positive thing, more ICOs means much more competition for start-ups looking to fund themselves in this way. Couple this with increased regulatory scrutiny and bad actors causing doubt in the market, the need to make your ICO stand out has increased significantly.

This is where the white paper comes in.

What is an ICO White Paper?

Every ICO needs a white paper to be legally compliant in a growing number of jurisdictions.

A white paper is a document that seeks to provide potential investors with all of the information that they need to know about the ICO and the product or service that is ultimately being offered. It should describe in detail the problem that the product is solving, the solution, its architecture, and the interaction with its users.

This is not a document that can be created in a week, but it rather requires in-depth market research and highly detailed reporting, combined with savvy copy that will interest, intrigue, and motivate investors. Care must be taken to remain factual throughout because the whitepaper is the cornerstone of the startup’s credibility and just one small error can be the difference between success and failure.

The perfect white paper has to strike a careful balance between fact, information, and pitching to ensure that it is accessible and interesting to any kind of reader, but that it also provides all the details required to give investors the full picture. Attention must also be given to any regulatory or legal requirements imposed by the applicable jurisdictions to ensure that the white paper and the project is fully compliant.

What should a good white paper contain?

A good white paper should contain the following:

Executive Summary

This should give readers a good idea of what the white paper is about by summing up all of the key points in just two short paragraphs.

The Problem

This section must consist of market research and an in-depth explanation of the problem that exists within a particular market.

The Solution

The solution must describe how the proposed product will solve the aforementioned problem, and how it will counteract the issues raised during the market research.

Description of the product

In this section, a full description of the solution/product/service must be given including all features and specifications.

Tokenomics

Here, the token sale and the token economics must be detailed carefully and accurately so that investors know exactly where their investment is going, and what they will receive in return.

Roadmap

The startup must outline every ICO stage that the project will be rolled out over subsequent months/years, and the use of funding as and when each goal is achieved.

Team

Providing information about the team behind the ICO is imperative for building trust and credibility. Details need to be given about the relevant experience of each team member, and their responsibilities in the project.

Legal Requirements

Depending on which jurisdiction the ICO is operating in and from, there will be certain legal requirements that you are bound to include. These as a standard, comprising of a Disclaimer, Company Information, and information on sources of funding.

Creating a whitepaper

Creating a whitepaper is not just a matter of ticking off these sections and presenting it to investors; care, time, and careful consideration need to be given to each and every section, and it is advisable to have it checked by a legal professional with experience in the sector.

If you are considering launching your ICO in or from Malta, there are rules that you have to adhere by. Furthermore, as new legislation comes into force, any white papers that were launched before November 1st 2018, need to be rewritten and amended so that they are compliant.

E&S Group reviews and amends white paper to ensure it is legally compliant. Remember that you cannot have an effective ICO without a winning white paper so making sure you get it right is the key to your success. To find out more about E&S Group ICO Legal Service send us an email on [email protected].

 

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Malta as a fund jurisdiction

Categories Malta, E&S Group, Funds, Investment

Malta as a fund jurisdiction

Over the last few years, Malta has firmly established itself as a prime jurisdiction for hedge funds, UCITS Schemes, investment funds, and retail funds. No longer considered as an emerging finds domicile, it offers investors a range of sophisticated investment vehicles for a range of different purposes.

But why is Malta such an attractive jurisdiction and why has it been so successful in attracting investment opportunities? Here are some of the reasons.

  • Malta offers a favourable fiscal regime which has created a range of business models that would be unfeasible elsewhere.
  • Malta offers sound and comprehensive regulation which both considers the needs of businesses whilst ensuring the protection of investors.
  • Malta’s regulator is highly approachable and is willing to consider new ideas and structures whilst ensuring a high level of regulatory and legal compliance.
  • As a fully-fledged EU Member state since 2004, Malta offers easy access to the European investments market.
  • In Malta, all manner of applications is handled quickly and efficiently ensuring fast turnaround times.
  • There is no requirement to have a local fund administrator and businesses have a high level of flexibility when it comes to choosing service providers.
  • Malta offers the opportunity to use self-managed structures.
  • Protected cell company (sub-fund) legislation makes way for the creation of ring-fenced pockets of liabilities and assets within the same legal entity.

Collective Investment Schemes

Malta provides investment fund managers with a range of vehicles that can cater to a number of investor types and strategies. The majority of these are created as SICAVs which are investment companies with a variable share capital but there is also the option of creating an INVCO (an investment company with fixed share capital), a contractual arrangement, a partnership, or a unit trust. These can all be used for a number of fund types, including but not limited to UCITS funds, retail funds, private collective investment schemes and professional Investment funds.

Professional Investor Funds

The Professional Investor fund is the Maltese hedge fund and has proven itself to be the most popular type of fund in the local market. The PIF is extremely flexible and provides fund managers with a product that is for the most part immune to investment restrictions and leverage. Therefore, a PIF can be used as a vehicle that can conduct innovative or unusual investment strategies as well as being only sold to investors that meet certain sophistication criterion.

Malta also offers a variant of the PIF that can be sold to investors with a low minimum investment amount of just EUR 10,000 subject to certain leverage restrictions.

E&S Group is able to assist with the structuring and setting up of funds as well as providing ongoing advisory services. We can provide all drafting services as well as managing relations with the applicable regulatory authorities. To find out how our expertise can help you, contact us today by sending us an email on [email protected]

 

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