How the Stakeitback prototype app works
A disruptive mechanism for funding small businesses, including projects that benefit society
What is the Stakeitback prototype app?
Stakeitback is a web app that runs on any device. Small-scale commercial projects, such as community based products and services, can use it to raise funds by selling stakes.
What is a stake?
What does buying a stake mean?
It means you can redeem your stake for the purchase cost plus a fixed amount when the project reaches a target.
In the meantime, you can use the app to see progress towards the target, as well as towards social outcomes aligned to the UN Sustainable Development Goals.
Why use the Stakeitback prototype app?
Stakeitback lets you use some of your money to support small projects you believe in, rather than investing in savings accounts, bonds, equities, or other capital markets.
As well as doing good and being ethical this is also a sensible financial choice, since returns from small projects are often high and risks easily estimated.
Will selling stakes help my project in other ways?
Stakeitback guides you through creating a robust project plan and does funding calculations automatically.
Once you sell stakes, buyers may also support you by becoming customers of your business and telling other people about it.
Can I sell my stake to someone else?
Stakes can be sold on at any time.
The app calculates the price automatically, from how close a project is to reaching its target. This eliminates any possibility of speculation.
Why does the Stakeitback prototype app not need regulation?
UK regulation is not yet in place for cryptoassets. For now, the Jul-19 Financial Conduct Authority Guidance on Cryptoassets defines 3 types of token: exchange, utility, and security. Stakeitback stakes are neither exchange nor utility tokens. They are similar to security tokens, but the only tokens to which regulation may be applicable are "those that reach the definition of specified investments under the RAO" (p.16).
The RAO is the The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. Under the RAO, Stakeitback stakes (which have no intermediary, no end date, and a fixed return) are not specified investments but commercial arrangements (for use of funds in exchange for delivery of information services, until a target is met).
Why is the Stakeitback prototype app different from mainstream social funding
Grant and loan funding is often available only to projects that have infrastructure, a track record, financial resources, bid writing skills - and patience.
Crowdfunding is often available only to projects with a high social media presence - and as a form of charity is not sustainable.
Stakeitback is less cumbersome than either approach and diverts far less funds into administration (1% rather than up to 50%).
Stakeitback also offers investors liquidity, since they can sell their stakes at any time.
What is a Stakeitback locality?
To safeguard stake buyers, you cannot issue stakes in Stakeitback until you are authorised. When you ask to be authorised, the app gets your locality from your user account and sends an email to the corresponding team. If the team know who you are and why you want to issue stakes, they will authorise you and you will get an email to confirm.
The team for a locality is usually appointed by the local government body for that area. Because authorisation is so personal, it is best for a locality to have a small enough population that the team can get to know local project owners - up to 25,000 is a good size, and 50,000 a realistic maximum.