Continuous securities offerings are subject to applicable securities laws depending on jurisdiction and nothing in this post is to be taken as investment advice. This post is not an endorsement of Fairmint or its products.
Depending on your experiences, the idea of fundraising can invoke a variety of emotions. Some find it exhilarating, others terrifying, but many simply find the entire process exhausting, especially if you wind up with a less-than-ideal cast of investors.
I first read about the concept of a Continuous Securities Offering (CSO) several months ago. It immediately piqued my curiosity but my attention was quickly pulled in another direction, so my exploration of the topic was put on hold.
For the uninitiated, continuous securities offerings enable companies to raise capital by selling claims on a reserve typically funded by a fixed percentage of revenues. Rather than selling shares, CSOs allow companies or startups to raise non-dilutive capital from a wider base of prospective investors. Tokens representing a holder’s ownership stake can be traded on secondary markets or redeemed directly for cash from the reserve, which is expected to grow with the company as it contributes a fixed proportion of revenues.
The pricing of CSO tokens is based on a bonding curve and is directly proportional to the number of tokens outstanding; as the number of tokens issued increases, so too does the price of minting each additional token. The impac