Update Wednesday January 4th, 2017: Mainstreet released an updated memorandum with some significant changes to their ICO and buisness plan. They also released a Prospectus on their first aquisition, a sanitary waste management firm based in Michigan.
- ICO period changed to January 23rd, 2017 to March 23rd, 2017.
- Intellysis has modified the carried interest split from 30/70 to 50/50.
- Intellysis will recieve a 10% catch-up disbursment after investors recieve their 10% prefered cash-on-cash return.
- Intellysis has clearified their bulk discounts rates and modified their early bird discount rates.
Mainstreet LP is a Cayman Islands investment fund that will operate like a private equity firm by purchasing companies for growth, reform, or acquisition–but will pay a portion of profits to those who hold its Mainstreet Investment Tokens (MIT) crypto-tokens. The Mainstreet fund is managed by Intellisys Capital, a blockchain investment management firm that started in 2016. At this point the two projects appear to be synonymous.
Intellisys is offering a 50% stake in the Mainstreet fund to investors in their ICO. The remaining 50% of the fund will be held by Intellisys Capital. Intellisys Capital will act as the general partner of the Mainstreet fund and manage the fund’s portfolio as well as the operations of companies they invest in. Investors are allocated 10% annual cash-on-cash return of income earned by the fund, then Intellysis is granted a 10% catch-up disbursment, after this profits are split 50/50 between investors and Intellysis. Holders of the MIT token will receive dividends distributions on a quarterly basis.
Note: this project is complex, with more information being released periodically and the team responding to comments. Smith + Crown will update this description as more information becomes available or secondary research is complete.
We encourage the reader to review CoinFund’s excellent Q&A from December 21st, 2016. This covered many differences between Mainstreet and traditional private equity arrangements.
The Mainstreet fund will not be registered under the Securities Act of 1933. Likewise, Intellisys Capital will not be registered as an investment company under the United States Investment Company act of 1940. As a result, interests in the Mainstreet fund will not be offered to residents in the United States or the European Union.
The Investment Product
The Mainstreet fund will be a mix of investments in private equity, funds-of-funds, as well as Bitcoin and blockchain assets. 90% of all ICO proceeds will go towards building a diversified investment portfolio, while 10% will be reserved for management and operation. Mainstreet specifically plans on investing in middle market companies in the Midwestern United States. Target investment industries include manufacturing, senior care, real estate, blockchain assets, consumer services, digital media, and communications. The goal is to create an investment product that contains non correlated revenue streams.
What is the token being sold?
The Mainstreet Investment Token (MIT), is an Ethereum metatoken. The total supply of MIT will represent a 50% share in the Mainstreet fund. The supply of MIT is capped at 50 million, but the actual supply will depend on the level of investment. 100% of MIT tokens will be distributed to investors.
What are the sale terms?
The ICO begins on January 23rd, 2017 and ends March 23rd, 2017. Investors can contribute Bitcoin and Ethereum in exchange for MIT tokens. 1 BTC buys 500 MIT. For the first week of the ICO, investors will enjoy an 10% bonus. For weeks 2-4 there is a 5% bonus. For the remainder of the ICO there is no bonus.
Mainstreet is also offering “bulk discounts” on MIT. For investors who contribute $2 million or more will receive a 7.5% discount and investors contributing between $500,000 and $2 million will receive a 3.75% discount. Bulk discounts stack on top of the weekly discounts outlined above. Investment funds will be sent to an Ethereum smart contract that will pay out MIT to investors when the ICO ends. There is maximum investment goal of $27.5 million.
The sale is not open to US or European citizens. If such individuals hold tokens, they are not entitled to dividend payouts–to the extent identities of token holders can be determined.
What is the project status?
At the time of writing, Intellisys Capital is engaged in acquisition negotiations with a number of companies. They say 20 deals are currently in their pipeline. As deals are finalized, more information will be made public. Currently, Intellysis capital has released a prospectus about their first aquisition, a sanitary waste management company based in Michigan. The prospectus does not include the identity of the company in question or any information about its cash flows. Intellysis plans on extending this company’s market reach by buying up smaller competitors in the region.
At time of writing, code for the mainstreet ICO smart contract has not yet been released on github.
Funds from the ICO will be used to acquire companies, while Intellisys will finance additional investments in expanding the individual businesses through business loans, with CEO Jason Granger personally liable.
Who is the team behind the project?
Intellisys Capital CEO Jason Granger is a Michigan based businessman with experience working in private equity, venture capital, and blockchain technology. His Linkedin focuses primarily on his partnership with AIG to build a $2 billion senior living community.
Charlie Shrem is an entrepreneur, founding member of the Bitcoin Foundation. He made headlines around the world when he was sentenced to two years in prison for aiding and abetting a money-transmitting business related to the Silk Road. He was released in July 2016.
Some members of the Intellisys team are anonymous. The identities of the Acquisitions Director, the Investment Director, the Controller, and the Office Manager are all listed as “confidential” in the Mainstreet Investment Memorandum.