Monthly Archives: July 2014

Bitcoin Self-Regulation

Article Link:

Article summary
Maintaining customer faith in Bitcoin is the number one priority for all Bitcoin providers, exchanges and related companies. Without a tangible asset and historical context for value, Bitcoin will collapse immediately if people lose faith in its legitimacy. All cryptocurrency providers, such at Bitcoin, must push to self regulate to protect their value. The self-regulation must happen FAST for there is a lot of interest and concern building within governments and monetary systems. Establishing standards that are easily adhered to and adopted will be critical. Providers must engage in conversations to define standards and hold each other accountable in very much the same way Truste worked with websites to define consumer privacy and data usage standards.Cryptocurrencies are at a point know where they must self regulate or BE regulated.

Eric (@ericdunstan) is a proven strategist and business leader with a focus in marketing strategy and planning, product development and partnership development. He has deep experience in the Internet, e-commerce and mobile verticals and has recently expanded into banking technology and payments. Eric brings the discipline and structure found at larger companies and is highly functional in the start up and small company environments that require him to lead teams across many functional disciplines.

Eric is accomplished at developing and launching integrated marketing plans targeting both the B2B and B2C audiences. He is also valued for his ability in building strategic partnerships to achieve marketing and product objectives. Eric is also skilled at developing product strategies and roadmaps for mobile, tablet and web products for e-commerce, personal finance and consumer credit applications.

Eric has a BA in Psychology from UCLA and an MBA (Marketing Concentration) from Santa Clara University.

Feedback is welcome @ericdunstan

Looksery (CA) – Startmeup.HK Global Competition

On Jul 5, 2014, at 10:15 AM, Johnson Hor <> wrote:

Sent from my iPad

Begin forwarded message:

From: “Robin WON” <>
Date: June 26, 2014 at 11:38:16 AM PDT
To: Johnson Hor <>, Victor Shaburov <>
Cc: Robin Won <>
Subject: Looksery (CA) – Startmeup.HK Global Competition – Re: You might find of interest – adding Robin

Thank you, Johnson.


I saw your standup poster at F50.  While you are visiting Hong Kong and if you have time, you may wish to check out the website and visit some of our co-work spaces [].  When you return, you may consider applying to InvestHK’s start-up competition.

2014 StartmeupHK Venture Program in Hong Kong offers an opportunity for early or mid-stage startups seeking funding or partners for growth.  It is a global competition for high-impact, innovative and scalable startups that may benefit from Hong Kong’s strategic position as Asia Pacific’s hub.  It is a great way for new ventures to tap into the fastest growing region. 

Invest HK is offering benefits valued at over US $500,000 and an opportunity to meet strategic partners and investors and obtain funding, R&D, manufacturing, or market access.

Hanson Robotics, HQ in Dallas, was one of 3 grand award winners in 2013.  Dr. David Hanson, CEO, shares his insight and tips about the competition in the following youtube video, 

For more information, please visit:

Online application: 

Applications close on July 30, 2014 @ 9:00pm PDT USA. (31 July 2014 @ 12:00 noon Hong Kong time)  

We look forward to seeing all interested parties at the StartmeupHK Venture Forum and competition finals in Hong Kong on November 11, 2014.

Winners receive benefits worth over US $500,000:

  • Sponsored trip to Hong Kong
  • Pitch to angel investors, venture capitalists, strategic partners and the startup community
  • Professional services from leading accounting, legal, design, branding and hosting firms
  • Business matching and networking opportunities
  • Mentorship and assistance to build your business
  • Free working space
  • Media exposure opportunities
  • Business incorporation and trademark application services

Plus: two special awards for the Best Fin Tech and SmartCity Technology entries

Why should you apply? 
Get connections, funding and support to develop and launch your business in Hong Kong for the Asia-Pacific and global markets.

Who should apply?
High-impact, innovative and scalable startups from any industry or any country.
How to apply?

Online at

Application deadline
31 July 2014 @ 12:00pm (noon) Hong Kong Time

July 30, 2014 @ 9:00pm PDT USA

For enquiries:

Best regards,

Robin Won

Robin Won, Senior Manager, Investment Promotion
Hong Kong Economic and Trade Office / Invest Hong Kong
130 Montgomery Street, San Francisco, CA 94104
Tel: (415) 835-9326     Fax: (415) 392-2963

Crowdfunding for Startups – Using Convertible Z-coupon Convertible Notes

Abhishek Singh graciously submitted a guest blog to answer a question I had about ideal crowdfunding scenarios.  Please enjoy, study, and inquire via Twitter @gl_citizen and I would appreciate being copied @charlesjo .


Crowdfunding for Startups – Using Convertible Z-coupon Convertible Notes


It isn’t necessary to give away equity in a start-up when you’re raising your seed round. Often startups can raise a round of $1m+ off zero coupon convertible notes. Effectively, debt instruments like bonds, except issued by a start up company with no revenue.


In the case of Fortune 500 companies that issue bonds, those bonds are rated by S&P or Moody’s, based on the ability of the company to fund the interest rate or ‘coupon’ as its called, from its existing and forecast cash flows. So, for example, LVS is the ticker for Las Vegas Sands, and gambling tends to be a recession/downturn proof business. You can expect bonds issued by LVS to be rated relatively well due to their strong expected cash flow.


In a startup, when buying a zero coupon convertible, investors don’t buy the ability of a company to repay the note, they buy the right to convert their note to equity at a discount in the startup once its hit certain milestones (e.g. functioning site/app built). In other words, you’re getting a discount on the price of buying in to the equity upside in exchange for being one of first to buy in to the vision of the founders


For example, what does it mean if an angel investor invests $100k into a startup in exchange for a zero coupon convertible, with:

  • a 3 year term;
  • a revenue or Series A or buyout trigger; and
  • conversion at 20% discount to pre-money valuation


For our example, lets assume a Series A round values a company at $20m and value per share is $1 (there will be a new shares issued to get total issued to 20m and complete the round).


In the case of a Series A round, the angel investor has the right to convert their $100k note in to shares at a 20% discount to pre-money valuation i.e. $0.80 per share. In other words, the no of shares they get would be $100k/0.80=125,000 shares, instead of $100k/1=100,000 shares which the Series A investor gets paying $1 per share.


It would be the same process if the startup went revenue positive or hit a revenue milestone (depending on how the issuing contract is worded) and for a buyout.


In case of a Series A or buyout, the angel investor has the option of ‘selling in to the round’, i.e. converting and selling their shares to the series A investor or buyer (in buyout), getting a 20% return on their investment. They can of course choose to hold their newly converted common equity, and come along for the startup ride, in the hope that the upside will get bigger and they can sell in to subsequent rounds of financing.


If the startup does unfortunately close without raising a Series A or getting bought after the 3-year term of the note, the company would be on the hook for returning the principle. You can choose to make it a straight obligation to repay principle or add a low coupon.


In theory, this technique could be used for crowdfunding pursuant to the JOBS Act. Cooley LLP has a great summary here, but the simple is:

  • you can only crowdfund up to $1m in a year;
  • investors with a net worth (essentially assets minus liabilities) of less than $100k can only invest upto 10% of their annual income or net worth; and
  • you do have some heavy regulatory requirements to follow if you crowdfund from sub-$100k networth investors.


Some practical points:

  • With tightly worded documents, you can raise multiple rounds of seed funding using this technique, worth considering if you need an additional bridge between seed and Series A
  • Given regulatory burdens and annual limits, practical to consider limiting number of sub-$100k net worth investors. Though that’s locking out many of the folks who want to access small, high growth companies. This is an obvious point lawmakers should revisit, but for now it is what it is.
  • Be mindful that you’ll have to increase the number of shares in Series A to issue to the note holders who convert, and be transparent about that dilution with any potential Series A investors
  • You can give each zero coupon note holder a right to buy the others out. This is useful when your convert trigger is a revenue milestone, since it gives investors a possible exit post conversion in the absence of a Series A or buyout.


For the obvious reasons – the information above isn’t intended to & does not constitute legal advice. You should get customized advice for your specific situation. The views expressed are my own. That said, happy to take general questions and help where I can.



Abhishek Singh (@gl_citizen) is an entrepreneur and lawyer. He presently divides his time between managing the legal function for Southeast Asia for a US Fortune 50 company, and working with start-ups in Asia. Abhishek was previously a technology media and telecoms (TMT) lawyer, having advised a number of blue chips and start-ups in the TMT space in Asia on matters ranging from market entry to attempting, and defending against, hostile takeovers. Abhishek has also been an advisor to the Government of Afghanistan on TMT policy, and has authored chapters on present and suggested future directions for TMT policy in Asia in the UN supported publication Digital Review of Asia-Pacific. Abhishek graduated from the University of Sydney, Australia, with degrees in Economics/Econometrics and Law. He presently lives in Singapore.


First exercise – everyone follow Marc Andreesen on Twitter @pmarca

First exercise: Everyone follow Marc Andreesen on Twitter @pmarca .  Join Twitter or revive your account and follow the guy who created the Web browser and now invests in startups at the highly respected venture capital firm, Andreesen Horowitz .  I personally know technology executives with perfect resumes whose dream job would be to work there or get funded by them.  He has very optimistic forward thinking ideas about startups, technology, and the market.  See who is bold enough to contribute their own thoughts and if they seem interesting, then follow them too.  I encourage everyone to join the conversation.  Encourage your friends to do same.

(Of course, all welcome to follow me too @charlesjo).

Next exercise coming up soon.  Feedback always welcome!

Charles Jo