Proposal “DashAltThirtySixProposal“ (Completed)Back

Title:Dash: Alt Thirty Six Proposal
Owner:ThirtySix
One-time payment: 5 DASH (342 USD)
Completed payments: 1 totaling in 5 DASH (0 month remaining)
Payment start/end: 2019-07-16 / 2019-08-15 (added on 2019-06-26)
Votes: 666 Yes / 123 No / 11 Abstain

Proposal description

***This Proposal is being submitted for future voting cycle in July to remain visible, we are not requesting funding, the only way to submit for future months right now is on https://proposal.dash.org/ which required us to input a minimum payout of 5 Dash to submit.***

The purpose of this proposal is to notify the Dash network of recent events as candidly as possible and request support from the community. Alt Thirty Six is
not requesting a payout from the budget with this proposal. We feel it is imperative we notify the network of our current financial position.

[Link to formatted document:
Dash_Proposal_June_2019]

On Friday morning June 21, 2019 we were expecting to receive the first installment of our Series A funding. Out of the previously announced $10mm commitment, we were due to receive the first $3mm on Friday, only to be told that our investor has breached the agreement without explanation or reason.  Access to capital was not the issue and has been verified.

This initial installment was already significantly delayed due to dependencies on financial intermediaries. Our executive team has spent countless hours answering questions about our business model and our compliance policies and practices to assist our former Series A partner in obtaining a collateralized loan so they could - upon their request - fill our entire round. The lender had initial reservations about the market that we are targeting (legal cannabis). After reviewing our compliance program, the lender’s concerns were addressed and the loan was disbursed to our former Series A partner last Friday (6/14/19).

Now, the investment group is absconding the funds and not making them available to us as outlined in the signed and executed term sheet. We were previously in discussions with multiple investors, but once we signed the term sheet, we were no longer permitted to pursue other Series A funding options. We are now reopening those conversations, and are currently considering new options for a Series A round, but we still need to cover our immediate operating costs.

Alt Thirty Six
is in the midst of our beta program for our core B2C functionality, and is approaching the full public launch within a month. The resulting revenue growth phase is just around the corner, but in order to achieve it, we are reopening our seed round of funding. We are reaching out to qualified investors who are looking to invest between $50k-500k each. Because of the delays already experienced over the last several months, we were not prepared for multiple funding delays. We now require immediate funding and expect to expedite closing on seed round funding this week (starting 6/24) in order to continue executing our launch strategy. 

Our goal is to solidify $1 - $2 million in total from additional seed capital
and work towards opening our Series A later this year.

Reopening our seed round allows us to deliver a 2-3x increase in valuation when we start our Series A again. With a working consumer service that we can now demo to prospective investors, the risk associated with our execution has dropped considerably. Our merchant waitlist and integration queue are both growing and we're excited to bring our product to market.

We are asking for support from the Dash community; if this is something you'd be interested in participating, we’d be happy to send over our detailed investment deck. We’d also appreciate it if you could put us in touch with any other qualified investors who may be interested in this opportunity. We will accept Dash as a funding method.

The Dash network has put close to $2.5 million into the Alt Thirty Six platform, related integrations, legal work (e.g., licenses), and marketing. While no equity was taken, we see these capital infusions as funds that were invested into the project to help increase the adoption and utility of Dash. Alt Thirty Six has and will continue to remain committed to making this partnership a success.

For all community members that are interested in providing funding, please contact Ken.Ramirez@alt36.com for more details. Thank you for your time and support. 

Show full description ...

Discussion: Should we fund this proposal?

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0 points,1 year ago
Thanks for reaching out to us even if we're not the easiest group with which to communicate. It's most unfortunate that this was done to you, but hopefully good for all of us can come from it. I've alerted a few VC and Cannabis Industry folx to the opportunity, we'll see if any of them contact you.

I'm glad Lauren appeared on the Dash News podcast, really helped elucidate what Alt36 is all about, their strategies moving forward, and how different factors will and won't impact their business model.

It was also good to see confirmation that there are at least ideas about being able to expand to other industries. It'd be a shame for such a slick, comprehensive product to stay only in one niche use case. If our ultimate goal is for everyone to be using Dash as Digital Cash, then we're going to need these developed, professional solutions to entice those in the developed Western world for whom conventional payment solutions are "good enough." Products like this really make this weird, sometimes hostile technology in to something palatable that really puts its strengths in front of businesses and consumers in ways to which they can relate and understand--or perhaps best of all ways they don't *have* to understand.

Really looking forward to seeing Alt36 continue to progress in its operations.
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0 points,1 year ago
Thank you for the comment and reaching out to some of your investment contacts! We'll be on the lookout for any emails that come through. It was a pleasure being on Dash News and grateful they were able to fit us into their podcast!
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5 points,1 year ago
Thank you for all the questions that have been submitted. We will continue to answer questions as best we can. If you're interested and would like to learn more about the investment details please send an email request to lauren.murphy@alt36.com or ken.ramirez@alt36.com.
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0 points,1 year ago
Good Podcash here:
Dash Podcast 101 feat Lauren Murphy Co Founder & President of Alt36
https://www.youtube.com/watch?v=rvZ_NlgSzkM
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2 points,1 year ago
I noticed a lot of your services involve partner integrations, there are usually a lot of fees when going this route VS being vertically integrated with services provided in house.
Can you please provide a list of all the fees involved in making your products work.
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0 points,1 year ago
There are 2 types of partner integrations.

One type of partner integration is the services we use to pull data, and record records associated with a payment. We agree, there are extra fees associated with this and it cuts into profit margins, but we have already been planning and developing the proper infrastructure to continue bringing these in-house. Brining these services in house will decrease the dependencies as well as increase profit margins. We can’t list out fees as we have certain contracts with these providers, but I can tell you our current profit margins are 60%.

The other type of partner integrations we work with are integrated software vendors that are using Alt Thirty Six for the payment system in their platforms. This group is comprised of point of sale systems, online ordering platforms, loyalty, delivery and track & trace technology. These partner integrations are our channel strategy approach to obtain widespread use of the platform.
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9 points,1 year ago
What is Alt Thirty Six's plan if and when Congress allows conventional banks and credit cards to work with cannabis businesses for deposits and payments?

What will be your value proposition when this happens?
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4 points,1 year ago
We receive this question quite often from investors and partners. If and when congress makes this change on a federal level, and all policies & guidelines have been updated, this helps enhance our offering. Your question is 2 separate issues, but a common theme between the two is all banks and credit card processors are worried about their brand risk. With brand being a concern for many of the major banks and credit card processors, they still refuse to bank or work with what they perceive as high risk industries that are fully legal.

For Banks: There are banks already comfortable with some of the risk associated with banking cannabis related businesses both those touching and not touching the plant. We are currently working with some of them. Compliance is a huge deal for those banks that are currently becoming friendly with the industry and those that will wait until federal regulation changes. Alt Thirty Six has taken a strong stance with compliance and doing things the right way. We strongly believe doing things the right way, (even it takes a little longer), approaching compliance seriously - will determine long term success of the platform and our partnership with Dash.

Once things are federally legal, you will start to see some of the banks dipping their toes in and researching the financial solutions out there currently working with cannabis merchants, such as Alt Thirty Six. Regardless of the federal law this will still be viewed as a high risk industry and will be treated this way from a banking and payments perspective. Alt Thirty Six will be perfectly positioned as a compliant solution that works with; the merchants, regulators, state officials and existing banks. All reports for merchants using our system are logged to the Dash blockchain and every transaction can be verified, which is very favorable towards government officials for reporting and tax revenue purposes.

For Credit Cards: Once the federal law changes, Visa and MasterCard will begin to change their rules and regulations to enable cannabis merchants, create new Merchant Category Codes (MCC) and interchange rates specific for the cannabis industry. It takes about 8 months to create and implement a new MCC and interchange rate. The high risk credit card processors will most likely jump on board first but it will come at a high cost to merchants (estimated 10-15%).

We are looking to enable credit as a method of payment in our transaction flow while still using Dash on the transaction. The current banking relationships we have will help endorse favorable credit card processing relationships. The technology is perfectly positioned to enable this type of payment method for consumers.

Federal regulation will most likely turn at some point. Alt Thirty Six has contacts on The Hill, one being an advisor to our company, that helps advise us on what this legalization process looks like. There are a few ways the federal law could change based on processes set by the government.

If and when the process gets started to change federal regulation on cannabis - everything goes perfect without any hiccups and all government positions are able to agree; this would take about 2 years. From this point new regulation and guidelines need to be drafted and approved. Whether the law changes tomorrow or in 2 years, we are still in a position of value. Our compliance, existing track record and relationships will increase the value proposition of Alt Thirty Six should full legalization take place.
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1 point,1 year ago
@ken I believe you may not be aware, but Canadian MSP already have a significant amount of business with US Marijuana business,

Furthermore MCC codes have been created and the corresponding interchange rates aswell, as per the V/M IOG ( visa / mastercard international operating agreement)

This can be ascertained by the plethora of Cannabis business in Canada which accept credit cards!

Regards,
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3 points,1 year ago
We are aware of the current legal status of cannabis in Canada, we also know there are solutions out there that process credit cards & payments across country-borders. These are illegal and not compliant, regardless of the legal status in Canada.

There are several companies here in the US that are also operating with credit cards, many of them have been fined and are no longer in operation. Just because a solution is running and working today, does not mean that it will not get shut down and receive fines if they are breaking card brand rules or laws.

Visa and MC both have a brand risk awareness management department that are actively doing investigations on these acquirers supporting non-compliant solutions, that violate their rules and regulations. The fines can be up to $200-250K which are sometimes passed onto the merchant, if the processor is not knowingly miscoding the merchant category. If the processor is not in compliance and knowingly accepting this type of business, they are at risk of losing their license to process payments, in addition to hefty fines/lawsuits. We don’t deny that it’s happening, but these types of solutions are not compliant and crossing any country borders in this industry with payments can have serious consequences.

There was not an MCC code created for Cannabis. In Canada the MCC they chose to use is Pharmacy and it’s registered as a high risk industry, but there is no differentiator on the merchant category specifying a merchant sells cannabis. There is also no special interchange rate at this time for cannabis merchants.

October 2018, when cannabis was fully legal in Canada, there was only 1 major player in Canada - Global Payments - that processed credit cards for the licensed and registered Canadian cannabis merchants. The flood of acceptance for merchant accounts that was anticipated, was hardly that and many financial institutions were hesitant to get involved regardless of the legal status. The legalization in Canada is great, and we get several requests each month to expand there to support the licensed cannabis businesses, but when it comes to banking and credit cards there is still a lot to work out. With all this said, we would work very well in Canada. From our discussions with financial institutions and card brand executives, we believe our approach with compliance would make banks and processors feel more comfortable with servicing the cannabis industry.
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2 points,1 year ago
With interchange rates as low as 3.25% CNP transaction!
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2 points,1 year ago
2.25*
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3 points,1 year ago
Thanks for the response, you make some good points

Is it your guess that your investors pulled out for this reason (full legalization)?
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5 points,1 year ago
Based on the information we have, it's not our belief that the investor pulled out for this reason of - full legalization. We actually secured funding from a lender for the investor to invest in our company, and went through an in-depth due diligence compliance review related to this issue. Based on the review the lender for our investors approved the loan and use of funds. Unfortunately we aren't able to disclose more details at this time. There was no logical or business reason explained that caused the outcome of this relationship, but unfortunately this is the reality we have to navigate. I wish we could explain more, but feel it's best to focus on how we move forward.
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3 points,1 year ago
Well, we just gave you nearly $2.5million, so if your Series A funding fails because lack of investor and your company goes belly-up: Shit happens
Are you kidding us? Come on now, seriously
Have you even properly informed us or Dash Core Group in advance, about the risk or potential possibility of your Series A funding failing or the real risk of the investor (if they existed) breaching the agreement, before you took nearly $2.5million from us?

Here is not the right place to beg for another $10million in funding.
You need to contact venture capital companies or firms specializing in private equity and startup funding.
Or you ask one of the big brand names in (international) legal cannabis.
If the slightest thing in your business plan or in the curriculum vitae of any of your executive officers looks fishy, implausible or lacking credibility, you will have difficulty obtaining such funding.

After handing over nearly $2.5million, poor excuses are the last thing we want to hear.
You better get your shit together. The dash we granted in the past, are not growing on trees, you know.
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5 points,1 year ago
Alt Thirty Six was not just given $2.5mm. This is an accumulated amount we’ve received over the course of 2 years to build the product we have successfully built. Some of the $2.5mm was also used for partner integrations, co-branded conferences and events with the Dash team.

Dash Core Group was aware of our investment situation prior to this proposal submission. We have always kept an open and brutally honest communication with the Dash Core Group. Since DCG is the entity put in place to manage the network from a business aspect; we filter a lot of our communication through them to determine best steps forward for both Alt Thirty Six and Dash as a whole.

We are by no means are begging, nor are we asking for $10mm. We have reopened our seed round which is far less than $10mm. The seed round would be an investment, which would mean these funds are not just given to Alt Thirty Six for free.

There are many things that occurred in this investment deal and Dash Core members have been informed from start to finish of the relationship. In the final hour we received notice that the deal would not be happening, Dash Core was notified immediately. This investor is not the only one we were speaking with when we first engaged, but exclusivity was demanded. After discussion we agreed to the investor demands - of being our sole funding source and we updated the other major firms that we were working with at the time.

Regardless of how unethical and unprofessional the actions of this investor may be, this is not the time or place to air dirty laundry. We want to focus on continuing to make this project a success. There is an extreme amount of work and effort put towards getting our company to this place, we are not looking for any kind of free ride nor are we looking to quit.

We wanted to notify those within the MasterNode community of this current position and offer the option for investment. We are also engaging previous relationships and other networks of professionals to participate in our reopened seed round. Participating in the seed round at this point is quite favorable to the investor given the current stage of the company. Our team is committed to making this a success and will continue to put in the work to get there.
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4 points,1 year ago
Thanks for the clarifications and for taking the time to reply.
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2 points,1 year ago
No problem, thank you for reviewing the response.
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2 points,1 year ago
Given you are launching within a month, it would be a shame to fall short on "ramp-up" funding less than a month before the consumer product launch. To have built the entire product and service and not launch would be idiotic for any Dash whales to not support... plus they get to own part of your company, so it's not like they'd be giving away money. They would be getting equity in return AND help their Dash investment succeed at the same time. With the product ready to launch, that seems much lower risk, too. Seems like a no-brainer to me for anyone heavily invested in Dash to try to help if that's within their means.
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2 points,1 year ago
We appreciate the support, thank you!
If anyone in the network would like more information and details regarding the investment, please reach out to ken.ramirez@alt36.com or lauren.murphy@alt36.com.
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3 points,1 year ago
Thank you about alerting the Dash community about your current Series A Funding problems and i do hope you find alternative investors that want to participate in your Series A Funding initiative.

Good luck.
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5 points,1 year ago
Thank you for the supportive message. At this point we felt it would be best to reopen our seed round for those investors that would like to participate with anywhere from $50k-$500k. Our goal is to raise $1-2mm within this reopened seed round. This will allow us to focus on the Series A later this year at a more attractive valuation due to increased revenues and use of the platform.
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1 point,1 year ago
Maybe this could be the first project for Dash Ventures?
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4 points,1 year ago
We’ve been eager to participate in Dash Ventures and maybe this is an option once it’s ready to invest in its first company. The recent events we experienced with our Series A are damaging to the company and require us to start raising capital now. We’ve made the decision to reopen our seed round so when we start on our Series A again the seed investors benefit from favorable terms and were able to achieve a 2-3x valuation at that point.
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0 points,1 year ago
Seeing KuvaCash is not getting funded and this is a similiar project with far less oversight and communication with the Dash community, I don't see how this will be funded. Do perhaps via Dashfunding this could be possible.

PS I can't find this on DashNexus which should be the go to platform.
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5 points,1 year ago
Thank you for the response. We are not asking for funding from the budget. This proposal was to notify the network of recent events that occurred and reaching out to qualified investors within the network who may be interested in participating in our seed round, or know of an investor they could introduce. If interested we ask that you reach out to ken.ramirez@alt36.com so we can share additional details about the company and investment.

(The only platform that would allow us to submit yesterday for the future months voting / visibility (July) was proposal.dash.org the Dashnexus platform does not yet have this capability. We currently have this proposal listed as a concept that should be public on the DashNexus site if you search for Alt Thirty Six.
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