Gabriel Scheare December 9, 2014 at 1:48 pm

We are developing a real estate/community project in the Valdivia area of Chile for entrepreneurs to live and work with one another in an inspiring and supportive environment. It is our hope that once it has been finished, it can then be infinitely replicated all over the world. We’ve learned a lot about how not to do such projects from others who need not be named and one of the biggest lessons we took away was that total openness is the way to go. As we progress, we’re going to be obsessively communicative with everyone we deal with remaining totally transparent about every step we take. It’s in this spirit that we would like to invite everyone to offer their feedback, criticisms, and their suggestions as things progress. Question everything and share this journey with us. There’s no reason for us to grow in isolation when we could be sharing the education with everyone here on the Liberty.me community. Cheers!

Rick Rule December 9, 2014 at 2:13 pm

Gabriel

You have the balls of a brass monkey, doing this business in the open! Good for you. I’ll participate in ths discussion. I hope others will too.

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Gabriel Scheare December 9, 2014 at 2:56 pm

Thanks, Rick. I’m looking forward to it! 🙂

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Rick Rule December 9, 2014 at 3:26 pm

So, lets kick ths off. First learn from successful, and unsuccessful past efforts that relate to your endeavor. I know of three failed or at least very troubled Chilean efforts, a laughable effort in Vanuatu, and relatiely successful efforts in Nicaragua and Argentina.

What set Argentina ( Cafayette) and Nicaragua ( Rancho Santana) apart?. Well capitalised developers, Casey and Agora respectively, with enormous captive marketing channels. In both cases the developers were able to buy the land they proposed to develop, and resell, as well as complete substantial offsites like transportation and utilities. They carried no debt, so prospective buyers had some sense that promises might come true. In the case of Cafayette, Casey had a team of deep pocketed investors, some of whom were Argentine, and some of whom had development experience.

You will need to develop and make a public a detailed ” sources and uses” document that accurately describes the financial details of your project, how much captal will be required, when it will be rquired, and where it is, or will come from. You will need to document the inputs used in your cost estimates and timelines, and also in your sales assumptions, in terms of pricing, cost of sales, marketing plan, and sales time lines.

Libertarians HATE the next part, but you must think through and publish your ” CC&R” documents, a set of contracual guidelines that describes the buyers rights and obligations as owners and residents. In addition, a well thught out schedule of ” Home Owner Association” dues and assessments is critical, so potential investrs and buyers can understand the total cost and affordability to consumer.

Thats just to start.

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Gabriel Scheare December 9, 2014 at 4:07 pm

Thanks. I haven’t ever read up on Agora’s project in Nicaragua so it looks like I have some reading to do tonight. I know what you mean about hating the tedious stuff like HOA details but we’re okay with it. This isn’t a “libertarian” or “anarchist” project, per se – it’s for entrepreneurs of all stripes. We’re making no bones about the fact that it’s totally under Chilean law and we play by the book. It’s not a revolution, it’s a serious business and it’s not the time or place to be playing fast and loose or to be making bold ideological statements. I’ll make such statements in my own personal life but not in business when other people’s money is at stake.
So far, we’ve been funding everything out of our own pockets but once our 3D models and press materials are complete, we’ll start soliciting pledges. Once we have confirmed that there is more than enough serious interest in what we’re offering, we’ll nail down the property to buy. Once we have chosen a property, we’ll take bids from construction companies to determine the actual cost of construction so that we can establish the price tags for what we offer. Armed with all of that critical data, we’ll craft the final offerings, confirm the pledges, and proceed to collect initial payments from everyone in order to buy the land and begin the first phase of construction. We won’t proceed onto a new phase until everyone is satisfied with the completion of the previous one…

I do have a question for you, Rick. You mentioned a 25% contingency fund. Could you please expand on that?

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Joe Johnson December 9, 2014 at 9:04 pm

Two out of the three projects here failed, as noted by Rick. Simon pulled the plug. It might be a great benefit if you could get him to meet with you guys so you could interview him and ask why he changed his mind. He has the property and probably could have pulled it off nicely. His reasoning might be very educational.
Out of the other two, one secretly mismanaged funds and appears to have been pulling the wool over the eyes of many. The other openly mismanaged funds by allowing one person access in a way that they could be squandered. The former placed too much confidence in one person that turned out to be irresponsible. The latter allowed one person a means to get to funds and squander them in a way that was destructive to the project.
Point taken? It wasn’t secrecy or transparency that ruined these two, though secrecy may be a factor. Ultimately, it was irresponsible (or criminal) management. Neither of them ever attained a level where they could transfer title (a huge warning sign to investors). Perhaps considering what sort of safeguards can be put in place to assure investors and managers alike that these sorts of things can’t undermine Fort Galt would help promote its success.

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Gabriel Scheare December 9, 2014 at 9:19 pm

Yeah, I would love to hear Simon give a debriefing of what he was doing. There’s probably a lesson or two in there… I don’t know much about how Freedom Orchard has been operating, but I know for certain that the mismanagement at GGC could have been caught and remedied right away if more people we able to see what exactly was going on. Because of how all that transpired, I want to operate in such a way that there is never any question about honest practices. This is my first such project and I’m well aware that I’ll have to work hard to earn people’s trust before I can rightfully expect it. Good points though. Fortunately, because we’re only offering suites rather than estate lots, we won’t have to worry about subdivisions and all that stuff. I think our model will be much more straightforward and easier to execute in that regard.

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Joe Johnson December 9, 2014 at 9:28 pm

I’ll answer anything I can regarding FO, though my information isn’t from being part of it so much as being close to those who were. One of the main downfalls was that one of the partners misused funds in the company account. He didn’t steal or embezzle them. He used them on things that weren’t necessary for the success and ended up costing more than the project could afford to lose. The mismanagement led to tension in the leadership and the same person acting unilaterally, ultimately destroying any chance of rebounding without another influx of capital.

Having said that, it still might be saved. There are folks who are still working on it. I can’t really say more than that at the moment though.

I hope that’s at least a little helpful.

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Gabriel Scheare December 9, 2014 at 9:39 pm

Ouch, yeah, that must’ve sucked royal. Our company bank account has been structured so that multiple partners are needed to authorize all transactions and withdrawals so that should protect against anyone that might snap and go all spend-crazy. Again, I think having more eyeballs around will help in that regard too.

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Rick Rule December 9, 2014 at 10:39 pm

This discussion should also benefit our liberty oriented brothers and sisters who are approached to invest in, or purchase product from developers. The questions I’m asking Gabriel to consider, are ones you should , when considering investing, or purchasing.  Later bfor philosophy, and ideology, this is money!

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JT December 9, 2014 at 11:11 pm

Great Idea.  I look forward to following its development.  As I plan to head south next fall, something like this was on my list of business possibilities in whichever city/country I land in.  I wonder if it will be able to set a model for further developments in other countries/cities.   *hint*

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troi+ December 10, 2014 at 11:02 pm

Gabriel – I just went to http://www.fortgalt.com and signed up for your updates. I have ‘thought’ of starting a similar project before… but thinking is not doing is it… I admire your initiative.

I think there is a desire for a low cost intentional community for enterprising anarcho-capitalists.

I see that you are planning different options for suite sizes including what look like bunk beds for the low cost basic option. This is EXACTLY what to do; offer several different price points for people to come in at.

 

Are you also considering selling time shares in rooms? I imagine that some people will only be on site part time. But perhaps they can come down for 1 month per year for a cost of 500$ or 1000$…

more members coming and going means more networking and a larger talent pool for startups.

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Gabriel Scheare December 10, 2014 at 11:52 pm

Thanks Troi. We’ll be sending out our quarterly newsletter in a week so it’s good that you signed up.
Yes, some of the people who buy-in will want to rent their units out while they aren’t using them so we’ll manage that process for them and there should be accommodations available for visitors who only want to come and stay with us for shorter periods of time.

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Rick Rule December 11, 2014 at 11:09 am

I think once you are done disclosing vision, you need to market deliverability.

How much money will be required to deliver the vision and where will you get it, and wnen, are critical considerations for people with other than an economic interest in the project.?

Do you intend to finance based on “moke and mirrors”, wher you option everything, and finance by ?pre selling” a dream. or will you be the odd ethical developer that has capital at risk, and has some reasonable chance f succeeding in building out the dream?.

The success of Rancho Santana and Cafayette has in substantial measure to do with very well capitalised developers. The two Chilean failures were the typical penniless libertarian utopian fantasies.

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Gabriel Scheare December 11, 2014 at 12:08 pm

Yes, this is a major point that we’ve been figuring out. Units will come with shares in our business so buyers will be invested in the business as a whole and will stand to earn along with us once the business is open (hotel, restaurant, live events venue). Everyone on the team is a big fan of the UPOD philosophy (under-promise and over-deliver) and the last thing we want is to repeat the mistakes of the other flops so with that in mind, the plan as of now, is as follows (please don’t hesitate to suggest alterations):

-Complete and publish the architectural designs, 3D renderings, and budget figures with price and fee quotes.
note: because construction companies give such vastly over-blown quotes when the land hasn’t yet been determined, our initial pricing quotes will be just as over-blown. They will likely be adjusted downward a lot once the land has been purchased
-Solicit pledges (nobody has to put any money down yet, but before proceeding any further, we need to know that there is enough serious interest.
-Once enough pledges have been made, we’ll pick out the parcel of land to buy, confirm its suitability via soil samples etc and publish all the data along with a video for everyone to review
-Once everything is in order and we are satisfied with the land, we’ll solicit a 10% down-payment from everyone who pledged in order to buy the land.
-Once the land is purchased, construction companies will give us more accurate cost estimates and make bids for the job
-We’ll publish the best construction bid for the consideration of buyers/investors
-At that point, we’ll collect another 10% payment from everyone so that we can proceed with hiring the construction company and beginning on the first phase of construction.
-Construction will proceed in phases and the funds for each phase (10%) will only be collected once everyone is satisfied with the previous phase. Every time someone makes a 10% payment, they receive 10% of their shares as well. If someone wants to back out halfway into construction, we’ll match them up with someone on the waiting list to buy them out, otherwise we’ll have to dip into our contingency reserves to refund them).
-Once construction is complete, everyone will have all their shares and will be welcome to move right in.
Notes: Profits made from events at the property will be divided amongst the shareholders.

If anyone has any ideas about this sequence of steps or if you have potentially better ideas to suggest, please don’t hesitate to speak up. Rick, if you were in our bootstrapping shoes, is there something you would do differently? Thanks in advance, everyone.

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Rick Rule December 11, 2014 at 12:36 pm

As libertarians you will all hate hearing this, but I suspect that there are laws concerning these solicitations in both the US and Chile, and the fact that we don’t think there should be is totally irrelevant.

I think that the solicitation takes at least two forms; the investment solicitation for the capital to develop the product, which is almost certainly an investment security in both Chile and the united States, and a Real Estate interest. Comminglng the offer may appear more simple, but my suspition ( I’m no lawyer, and my free advice may be over priced) is that segregating the offerrings by function ( Capital from Investors, a real estate interest from users) may be more practical from a legal pioint of view.

I would suspect that a US lawyer could help you draft an offerring memorandum that could be crowd funded pursuant to jobs act legislation. I can offer more detailed guidance as to structure if needed. If you decide that you would like Chilean partners, then Chilean regulations need tp be considered as well.

To broadly solicit the sale of the real estate interests ( the regulators will consider this discussion a solicitation if it comes to their attention) you need to consider real estate sales rules in any jurisdiction you care to solicit user interest from.

Sadly, the lawyers are at least as important as the architects, and engineers.

.

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Gabriel Scheare December 11, 2014 at 1:18 pm

Great points. Haha, yes, we’re certainly no fan of the legal stuff but we completely accept that we have to deal with it properly nevertheless. Our Chilean legal consultant has been priceless thus far for everything pertaining to this jurisdiction but I’ll be sure to ask an American attorney I know about the points you just raised regarding offerings made there as well. He has already mentioned a bunch of regulations that we’ll have to comply with in order to keep the SEC happy. I’ll pass what you just said on to him right away and see what he thinks is the best way to go about it.

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troi+ December 11, 2014 at 1:26 pm

What Rick said above is gold; “What set Argentina ( Cafayette) and Nicaragua ( Rancho Santana) apart?. Well capitalised developers, Casey and Agora respectively, with enormous captive marketing channels….”

I am one of Casey Research’s thousands of paid subscribers. Doug has a long track record of international real-estate and a lot of trust built up among his fellow anarcho-capitalists. So when he founded Cafayate he had a chance to convince enough people to buy in. But even with his huge circle of influence, making sales was still not a given.

I was one of the first 50 people to buy into Cafayate but I stupidly sold two years later because I thought I needed to raise capital to handle some debts. Fortunately I have a friend who still owns a lot down there and who is going to sell me half. We will build one house and live there different times of the year. Anyway, I am very excited to be back into the original ‘Galt’s Gultch’.

More from Rick; “…In both cases the developers were able to buy the land they proposed to develop, and resell, as well as complete substantial offsites like transportation and utilities. They carried no debt, so prospective buyers had some sense that promises might come true. In the case of Cafayette, Casey had a team of deep pocketed investors, some of whom were Argentine, and some of whom had development experience.”

Correct Rick, yes when I traveled down there to look over the lots there was a lot of construction going on, there was utilities in place for some of the lots, there were vinyards and wine being produced that one could sip. Also, the clubhouse was completed and a sample small home. I think I had to put 40% up front and the rest in increments over 18 months. But I can’t see putting up much real money at all if there was not something real that one could believe in. Also having legal tittle, people like legal tittle to property, even anarchists lol

A note on the value of pledges; Free State Project… nuff said.

Now about costs… both the Casey and the Agora project are very expensive, as illustrated by the fact that I had to sell and am now teaming up with a friend so that we can own a chunk of this awesome intentional community. So yes I think that a lower, much lower cost alternative is desired by the market. If you can provide this Gabriel, awesome!

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Gabriel Scheare December 11, 2014 at 1:51 pm

Thanks Troi. These are good points. Because we don’t have deep-pocketed investors to carry the risk for everyone else, the only option I see left is the route we’ve already been taking. Because this is our first development project, we don’t have an established track record with which to entice larger investors so it seems to me that the way we’re going is the only sensible one. Maybe I’m overlooking something? I’d love to hear from anyone that might have other ideas about this.

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troi+ December 11, 2014 at 1:58 pm

How about using existing houses people already own? Doing this you could immediately open up in multiple countries which will solve the “I would totally join if it was not Chile, but in country X instead” problem. It would also solve your construction cost and your time lag problem. People who open up a house for the project could make site specific revenue from lodging others (rent) and renters could move around from place to place as they wish without being tied down to one location. But the key value would be the participants; entrepreneurs who want to collaborate on decentralized enterprises. So I kind of think of it as a mastermind group… not sure if that’s what you are thinking but that’s what I specifically yearn for.

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Gabriel Scheare December 11, 2014 at 2:16 pm

Well, you’ve certainly piqued my interest… not sure I follow exactly what you have in mind though. We had entertained the idea of just buying an already existing structure in order to skip the construction process and save time… but it wouldn’t be “Fort” Galt anymore… could you elaborate on your idea a bit?

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troi+ December 11, 2014 at 2:36 pm

sure, well I am just guessing that when you are organizing this network you will come across lots of people who are interested, but only if the ‘fort’ is located in a specific country. Using the Free State Project as an example, there were lots of westerners who refused to go anywhere but Wyoming, Montana, or Oregon… so those people were lost to that project. So whether or not you decide to start with new construction or use existing homes, I think that a great feature would be for participants be able to commit to specific places and even specific buildings (existing or under construction).

 

Maybe there is THREE separate businesses here. (1) is Fort Galt (2) the ‘Gone Galt’s’, a phyle of entrepreneurs who want to hang out with each other and make cool stuff, and (3) is an open database of intentional communities and phyles where people can find a project / phyle in an area that they want to live made up of like minded people.

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troi+ December 11, 2014 at 2:41 pm

So say you have 44 locations listed in 22 countries, some are already existing and some are just construction plans… one just simply waits and sees what the market decides. The project(s) that gets filled up or funded first was the one(s) the the market wanted.

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troi+ December 11, 2014 at 2:48 pm

Let’s say you own the network business, and it’s your job to attract members, to vet them, and to boot out the ones who prove to be jerks. As well it may be your job to inspire collaboration and make introductions between people working on similar ideas… Well if you do this well, that’s a value I think and worth either an annual membership fee to be part of the phyle, or a % of the rental revenue from the ‘fort’ landlords.

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Gabriel Scheare December 11, 2014 at 2:51 pm

I see what you mean. Yes, that has always been the more long-term vision. After the first one is built, I want to replicate it all over the world… but one step at a time. 😉
I like the other ideas for building an online network of intentional communities beyond just our own.

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troi+ December 11, 2014 at 3:26 pm

http://www.ic.org/ (fellowship for Intentional community)

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troi+ December 11, 2014 at 2:06 pm

BTW I am probably full of shit when mentioning lack of capital as a problem. The constant success of crowd funded projects proves that people do pay for things now before they receive them all the time now. Even for things costing tens of thousands of dollars and waiting years such as Tesla’s!

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Gabriel Scheare December 11, 2014 at 2:19 pm

Yeah, I spent three months at Galt’s Gulch Chile before it went tits-up and was amazed by how willing their buyers were to spend so much on faith alone… baffling, really.

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Gabriel Scheare December 11, 2014 at 5:19 pm

We have also entertained the idea of selling club memberships, which entitles the bearers access to the fort’s accommodations and amenities rather than actually selling shares or rooms. This would theoretically allow us to bypass the SEC bullshit… but I need to research this further. I’ll be speaking to an attorney about this tomorrow so hopefully, I’ll have some answers…

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Joe Johnson December 11, 2014 at 5:45 pm

Forgive my ignorance, but why would you give a rip about the SEC?

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Rick Rule December 11, 2014 at 5:52 pm

If Gabriel proposes to raise money in the US, or from US persons, and does not propose to be a guest of the state ( prisoner) believe me, he cares. If he proposes to sell interests in use, either as real estate or interval ownership to US persons, there are state and federal agencies to care about.

And for those of you who don’t know, Chile is plenty legalistic too.

There are doubtless many on this site who believe that from a moral point of view he shouldn’t care, but I would not want to see Gabriel in the company of Irwin Schiff, Franklyn Sanders and the other martyrs for liberty, dressed in one piece orange, living rent free in a federal cell block, and eating lousy food at the expense of sensible cowards like me.

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Luke Crowley December 11, 2014 at 6:52 pm

Hello Rick,I really appreciate you advising us. We really have an amazing team that is getting better every day. The goal for me is to build what we all want to exist but does not yet. A place for people with moderate means financially but that are very passionate to get this done. We all believe that there are others like us who want a place like Fort Galt in the world. I am the construction guy so I will be leaving most of the writing to my partner Gabriel. Thanks

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Gabriel Scheare December 11, 2014 at 5:53 pm

Selling assets to Americans… it’s nightmarish, according to Skinner (head of Exosphere). He suggested we set up an American holdings company that would own the property and sell to the American customers but I hope we can find a way to not have to do that. I’ll be asking an American attorney about it tomorrow.

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Joe Johnson December 11, 2014 at 7:04 pm

A Canadian selling shares in a development in Chile has to get permission from the SEC to sell to American subjects? What a world.

There are some particulars in Chile regarding apartments and how they’re deeded. You might be able to go that route. Then you’re basically selling part of the building (as an apartment) and serving as a rental agent. The buyer gets a clear title this way. Another aspect to run by your atty.

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Rick Rule December 11, 2014 at 8:35 pm

plenty of blame to go around. Canadian regs are equally stupid

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Luke Crowley December 11, 2014 at 9:18 pm

Hello Joe,we are mostly selling rooms not full size apartments. That is why we need to sell shares. This is what keeps the price lower.There will be some full size apartments also,maybe those can be treated differently. We will find out soon.

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Joe Johnson December 11, 2014 at 9:21 pm

Right Luke, I understand that. But does it have to include a private bathroom to be considered an apartment for legal purposes? If you can convey title, you can make it a different animal and simply have membership for owners. Maybe it won’t work at all… just a thought.

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Luke Crowley December 11, 2014 at 9:40 pm

Hello Joe, we did consider offering only memberships but this would not really give people ownership of the property and also not give them the ability to profit from the business as a whole.Also adding a bathroom adds a lot to the price and we wanted to have the costs spread out in some of the units. This way people have more options.

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troi+ December 12, 2014 at 11:42 am

Are you guys planning for this to become a startup incubator? Would the people who invest in this fort not just own real estate but also a percentage of the startups that come out of the fort? If so this project reminds me very much of blue seed.

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Gabriel Scheare December 12, 2014 at 7:11 pm

No, we don’t plan to be an incubator, per se… just a community of mutually supportive entrepreneurs.

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Gabriel Scheare December 15, 2014 at 2:02 pm

Well, we just had a phone consultation with an American lawyer, here in Chile. We learned the following two major points:
-The name Galt has taken a serious beating in South America because of GGC and so he was reluctant to even take our call. Once we explained what we were doing and how we are different, he warmed up to us but to him, the name is perceived as a liability. He suggested we change it but I really don’t want to. Atlas Shrugged is the world’s best selling book next only to The Bible – nobody can trash the name so easily. Certainly not a couple of used-car salesmen. I’m being unrealistic, am I?
-They do not specialize in securities or foreign investments but he thinks that selling to Americans is more trouble than it’s worth. He suggested we either cut them out of our target market or establish a US company, which would own the land and sell to the customers (which, would cost us around 15k to do). Both options sound pretty lame to me but if those are the only options, so be it. I’m willing to test the market (pledges) to see if there is enough demand outside of the US and if there isn’t, we can go ahead and establish a US company (cringe).

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Joe Johnson December 15, 2014 at 2:17 pm

My ten pesos – Keep the name. I think you’re right. And it’s part of what you want to identify with. GGC will blow over.

I hope you don’t get stuck enslaved to the US. Personally, I’d rather see you simply count US customers out if you can…. or make it their responsibility to deal with the repercussions somehow.

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Rick Rule December 15, 2014 at 3:04 pm

I’m no lawyer, but if you do decide to accept US investors, or ultimately accept US citizens OR residents as owners of units, even these oreliminary public discussions could be considered a form of communication, and therefor solicitation.. I suspect, but can not confirm that the same hlds true for Canadians. Disclose this thread, when you are recieving legal advice. While I am sympathetic to Joe’s suggestion to make it an American participants responsibility to deal with the ramifications of their involvement, that is not how US law works.

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Gabriel Scheare December 15, 2014 at 3:14 pm

Rick, if we were to deny US customers/investors, are there similar troublesome markets besides that one to be aware of? Canada and Europe are fine, I presume?

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Rick Rule December 15, 2014 at 3:22 pm

with the caveat that I am not a lawyer, Canada.

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Rick Rule December 15, 2014 at 3:53 pm

To be clear, I’m not recommending that you avoid American participation, the US retail investment market is still, far and away, the largest pool of investment capital, and in particular, risk capital on the planet. I suspect that American buyers may consitutute the largest pool of potential buyers on the planet too.

I’m just saying that you must understand the regulations of every jurisdiction that any potential participant hails from. To often, people from pur philosophical community attempt to ignore regulations that they disagree with, or find inconvenient. Failure to understand this courts prosecution, and conviction.From the point of view of any would be participant, failure to plan for these eventualities, and disclosure of managements intention concerning them, should be considered an IQ test.If these aspects have not been considered, what else ” fell through the cracks?”

Once originators have communicated their ” vision” potential participants need to focus on the ” nitty gritty” of the originators ability to deliver. Is the plan feasable, is it financeable, does the team posses or rasonably have access to the cash and experience required to deliver the dream, what are the identified risks, and the strategies to mitigate these risks…?

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Gabriel Scheare December 15, 2014 at 4:23 pm

Yes, I understand. We’ll likely have to bite the bullet and set up a US company in addition to our Chilean one so that we can deal with the US market. It’s because of shit like this that we became libertarians/an-caps. :-/
The hard fact of the matter is that, despite our team of good people and our ability to do the leg work, we lack capital and need to raise it from outside. We need to do this in the most sound and honest way possible and as you say, America is the biggest market so we would be foolish to discount it.

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Joe Johnson December 15, 2014 at 4:55 pm

Very wise course probably. I hope you find a way around having to jump through US shackles. It really grates on me as well; the crooks. But keeping things above board and maintaining the transparency you are is certainly admirable and will hopefully go a long way in promoting the project.

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Rick Rule December 15, 2014 at 6:18 pm

I would start considering the funding issue now. I funded my first real estate investments ( more modest than your proposal) with a combination of savings, student loans, vendor takebacks and BC government second mortgages ( yes, government subsidies)!

From your point of view, ” bootstrapping”, or funding by pre selling staged participations in the project, may appear optimal. For investors or user, this approach is decideadly sub optimal, because it often leaves the developer unfunded, and can lead to loss of principle on an unfinished ( even unstarted) project.

Raising money at the venture level,funding the development company, and then selling developed units, gives the owner users more comfort, but can be time consuming, and mind numbing for you. If you go the route of raising project equity, I suspect you will need to embark on one of three paths;

1) seed and mezzanine round equity, where you sell an early stage participation to one or more ” angel” investors on an almost un promoted basis, so that your early stage expenses ( preliminary plans, preliminary permits, property option, incorporation, equity offerring private placement memorandum etc.) are coverred, and then a subsequent round at higher levels to fund the ” sources” in your sources and uses document.Note that your economic interest is usually a promoted, or carried interest, but your interest is usually subordinated to your investors recieving their investments and perhaps a pre dtermined rate of return back.

2) a real estate venture loan, typically an investor or syndicate will advance all of the money, in return for a 12% annualised ( yes, cumulative and compounding) but you back in for 51% of the equity, post payout

3) crowd funding, where promoters are looking for and acheiving venture capital style ” carries” as a consequence of the naivete of the newbie crowd funding investors.

 

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troi+ December 16, 2014 at 3:56 pm

I see that your tagline on twitter is: “Your Bitcoin Castle Refuge for $5K”… cool

How many units would you need to sell for $5000 to fill up the first project?

BTW this seems like a good price for a “bolt hole in another country”.

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Gabriel Scheare December 16, 2014 at 9:09 pm

Hi Troi. Thanks for bringing that up! The twitter tagline was put up back in August when the business plan was quite a bit different than it is now. Originally, the idea was to renovate an existing structure to make a capsule hotel, much like the ones you find in China and Japan. The capsules were priced at $5k …since then, we’ve had to move to a new location and go back to the drawing board. The fort design is much larger now than it was and we’re building it from scratch so the expenses have increased a lot. I seriously doubt we’ll be able to offer anything for as low as 5k anymore. We’ll have more info on pricing when we have bids from construction companies so we know what our costs will actually be. I just took that reference off of the Twitter page – I totally forgot it was still there. 🙂

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troi+ December 16, 2014 at 4:19 pm

here’s how to avoid giving up too much equity in a seed round AND still comply with the red tape… are you ready?

take all of the information off of your website – go into stealth mode

figure out all of the money that you need for land purchase and red tape, let’s say it’s $100,000

let’s say that you plan to sell 100 units in your first project.

so you will need a crowd of 100 people to fund you 1000$ each without hearing the pitch or even being solicited to come to the website by you founders.

this $1000 ( x 100) should be more than a pledge but actual money that is held in an escrow or in the case of BTC held in a multi sig wallet. (as the Bit Nation fiasco taught us all)

The people that transfer you 1000$ are doing so only to hear your pitch (to read an official prospectus on a specific date in the future)

After you deliver that prospectus they can either withdraw their $1000 or they can use their $1000 ‘coupon’ for a $1000 discount on a unit in the project.

Another huge advantage in going this route is that you will gain more interest if things are secret and seem exclusive.

 

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Rick Rule December 16, 2014 at 8:27 pm

how do you go about finding money from bodies without having source of prospects to pitch? Stealth works when you already have a community

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troi+ December 16, 2014 at 11:43 pm

It’s theoretical but I would say it could be done by word of mouth. Online speculation and rumors.  But not through official members of the team. I was only thinking it would be $1000 max from each investor which could be taken back if that investor does not like the prospectus. Think of the upfront money as an option to buy in if you like the investment. But it holds your place in line.

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troi+ December 17, 2014 at 12:01 am

Rick: I admit that having seed capital and a well thought out prospectus to offer people would be more ideal.

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troi+ December 16, 2014 at 4:36 pm

Although I see no problem with giving up equity to a philosophically congruent VC who also brings experience to the table as well as marketing clout within your target market. I think that’s a win win.

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Gabriel Scheare January 20, 2015 at 8:06 pm

Hi again, everyone. I’ve updated the Fort Galt website with a lot of new information and a 3D video rendering too. All feedback is very much appreciated. 🙂

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Gabriel Scheare January 20, 2015 at 10:25 pm

.

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Rick Rule January 21, 2015 at 4:19 pm

Very pretty, inspiring sight and message, but you need to show that you have, or can get, the capital to make the dram come true. The failed Chilean efforts were noble concepts too. The community will be rightfully concerned that this could become another anarcho-fantasy if you don’t allay those concerns up front.

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Gabriel Scheare January 21, 2015 at 4:53 pm

Thanks Rick. When you have a moment, could you please read over the information that I posted on the website’s “Offerings & Information” page? I would very much appreciate your feedback on the plan that I outline there.
http://www.fortgalt.com/offerings–information.html

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Rick Rule January 21, 2015 at 5:28 pm

A project ” sources and uses” would be helpful, as well as a discussion of cash escrow arrangements, the articles of incorporation, minority shareholder and dissent rights, and the amount ( if any) reserved for founders, officers, directors and employees.

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Gabriel Scheare January 21, 2015 at 5:51 pm

Perfect. I just added them to my to do list and will put them up on the site over the next few days. Thanks again.

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