Funding Big Projects with Alliance Bonds

Avatar
Nice Ponzi scheme you got going on there. I look forward to the inevitable drama.
Avatar
Considering GENTS has repaid all bonds to all members myself included there is no scheme or drama GENTS is not BDEAL
Avatar
The corporation I've been in for ages has a "bond program". In essence, you can deposit money (in 500m increments) with the corporation and every month we transfer you 2% interest based on how much money you're deposited. When you are bored of having your ISK sunk in the corporation, you can request your bonds to be cashed out and, usually quickly, you will get your money back.To keep people apprised of how things are going, our CEO publishes a report every month or two which shows a bunch of information about the health of the corporation. She tracks the worth of all of our assets (raw materials, blueprints, ships, etc) and we can all see how we're doing. (It's pretty great, actually. It has charts and graphs and breakdowns of things!)As of the last report, we had 284 billion ISK on deposit, paying out 5.68b ISK a month to the depositors. We've managed this without fail for years now (although the amount has gone up as our assets have grown). We also have a deposit limit of 312b ISK right now -- which is calculated based on assets that can be sold/made liquid pretty reasonably so that we can cover people if they need to cash out.A number of our members have used the bond program to finance their supercapitals. They start depositing money into the corporation which simultaneously helps us (grows the corporation) and helps them (puts it out of immediate "impulse buy" reach). It also gives the corporation a really good way to say "you're at 70% now and on track to hit 100% in 3 months, we'll start building your shiny ship". That way when you hit the magic 100%, your ship is ready to go. :-)Nobody worries about our CEO running off with the money. You would be hard pressed to find a more diligent, hard-working, honest person in EVE. (That said, we practice pretty rigorous safety protocols to minimize losses when someone does decide to steal everything they can get their hands on.)
Avatar
Nice article, a bit lightweight, no real analysis or interviews with anyone of interest or info about any other bond schemes or related scams.I guess it's not hard to produce four of these a month.
Avatar
Trying to sound smart when you're not. Why don't you look up the definition of a Ponzi scheme.
Avatar
An excellent plan, people. And hopefully you newly acquired space provides you with tech-moons so you are able to have an income and gain a fat alliance wallet. Good work guys!
Avatar
What corp would this be? Just wondering.This system seems superior.
Avatar
I'm part of Vanguard Frontiers [VAF]. We fly under Intrepid Crossing's banner for these past few years, out in the depths of Cobalt Edge.Re: superior or not, there are advantages to fixed expirations on bonds. It provides stability for your financial wing so they can depend on certain levels of capital being available. With our bond program, someone can walk up and ask for 30b back at any time. (Of course, we only promise "bonds returned as we can"... it's not immediate on the larger ones.)
Avatar
LOL dude your a idiot, and just got smacked down by him up there^^
Avatar
lol what a idiot
Avatar
Gents. You guys always seemed like cool characters from the Fountain days. Keep up the being awesome.
Avatar
Nice idea, very rare in eve. This would not work in most organizations. Good for the GENTS though, sounds like a great group the more I hear of them.
Avatar
Should a bond be issued for a specific purpose, or for more general alliance expenses and outpost cap replacement scheme etcetera.Would bonds be easier to manage if the in-game system was up to the task?
Avatar
How is this system superior when you can get twice as much interest per month by investing into fully collateralized loans on the open market?
Avatar
Without a fixed expiration date it is very easy to let bonds overlap to make new issues pay for the buyback of the old issues plus interest.I would only consider investing in an offering like if they did create a clean slate every 6-12 months by repaying all outstanding debt (to demonstrate that they are in fact capable of paying it back and not running a Ponzi).Of course they couldn't do that as they prefer to waste the loaned money on activities that don't generate any tangible return and don't allow the principal to be easily recovered (yay, free supercaps).Thus they have to roll over their debt over and over until they find some source of income that is completely unrelated to the bond to pay it back.That's pretty much the definition of a horrible business plan.The second best solution would be to hire an external auditor who is not associated with the alliance leadership and who vouches for the accuracy of their financial statements (iirc Kazzac did that sort of service).Actually the auditor might be a better solution than the "clean slate" as he might be able to detect inappropriate mixing of personal and alliance finances (alliance leadership takes out a personal loan, funnels the funds into the alliance pockets, creates the "clean slate", opens next bond issue, repays personal loan from alliance pockets). On the other hand the EBANK fiasco has very well shown how difficult conducting a thorough financial audit of a large organization can be.In any case, overlapping bonds/loans are a huge red flag and should always be a reason for extreme scrutiny.
Avatar
I doubt I could ever trust an investment scheme in EVE, there are way too many loopholes and too much trust is involved.
Avatar
Each set of bonds would only be issued after all of the previous bonds had been paid off, and it was usually at least a couple of weeks between bonds. This way you don't have one issue paying off the next. By keeping open books you also provided anyone who was interested with a good idea of the cash flow of the alliance. That, and actually trusting leadership make it work. The only problem that was ever had in a bond issue was that they sold out very quickly, usually within a couple of hours of one being set forth (as Kesper stated there where some folks who had an awful lot of spare isk laying around).
Avatar
Well done.

One of the biggest challenges facing young alliances is that they lack the funds to embark on major infrastructure projects. This was something that GENTS faced in the days after its founding, when we moved into two constellations in Fountain that didn't actually contain station. We had no home station and no isk in the alliance wallet. We solved this problem by selling alliance bonds, allowing members - who often had much deeper pockets than the alliance itself - to put their isk to work while also improving conditions for the alliance as a whole. Since it worked so well for us, I wanted to share this strategy with others in hopes that it can help newer alliances with their own projects.

GENTS sold bonds at 900 million isk per bond, with no fixed term, repaid with 10% interest. That means that we paid out 1 billion isk for every 900 million isk bond we sold, and that we repaid the bonds "as able", not keeping to a particular schedule for repayment.

We found that alliance members were suprisingly willing to invest in alliance projects; every time we opened a new bond offering, the bond typically sold out within 24-48 hours of our making it available. We've sold a total of 123 bonds over the two years the alliance has been in existence, and the isk allowed us to build not only our first station in BYXF-Q back in the old Fountain days, but two alliance titans as well - much, much sooner than we would have been able to build them otherwise.

Keep Open Books

I can't emphasize this enough. Your membership needs to know they can trust you with their isk. I recommend using Google Docs to maintain spreadsheet showing the alliance's major income and expenses, as well as keeping a record of who has purchased bonds and whether they have been repaid. Share this spreadsheet with corp CEOs and directors people can easily get a sense for where the money is going and whether bonds are being repaid appropriately.

Repay Early, Repay Often

You'll reassure bondholders and alliance members alike by repaying bonds as often as you possibly can. This usually coincides with major bursts of alliance income, whether from moon minerals, alliance mining ops or taxes. By repaying one set of bonds you're reassuring the people further down the list that they'll get their money back.

Keep Your Promises - And Only Promise What You Can Deliver

It's important to set expectations clearly when you offer alliance bonds. In GENTS, we knew that we would be able to pay off our alliance bonds eventually but we couldn't promise an exact schedule. As a result we made sure everyone knew up-front that our bond offering had no set term, and to our delight people were willing to invest anyway. Likewise, it's critical that once you issue a bond offering, you repay it under the terms you set in a timely fashion. If you don't, you most likely won't be able to issue another one - and you may very well face popular unrest within your alliance.

Bonds Are Liberating

Overall, we found alliance bonds to be an excellent strategy for financing major projects in advance of our income despite being small and cash-poor. I hope that this strategy will be useful for other alliances in getting off the ground. The station and titans built through the bond program were major sources of pride for GENTS, and your own alliance will get a morale boost out of completing major projects through cooperation and trust repaid - a rare commodity in EVE.

[name_1]
Kesper North is a humble line member in GoonSwarm Federation. His passions in EVE are nullsec politics and solo PVP. He gladly accepts donations of Orthruses. Twitter: @KesperNorth