How it works
This is a brief overview of the main concepts of PersonalTokenNet.
A personal token
At the heart of the system is a personal token: an instrument that is tied to a single human being, that represents their potential to create economic value — grounded in their equities in companies and other personal tokens (NO personal assets such as houses, cars, salaries, etc. are a part of the personal token).
Anyone looking to transact in any way with personal tokens will need to create their own personal token.
The “Net”
The “Net” is the network of personal tokens. Like how people have personal tokens, the Net has a “NetworkToken” which can gain equity in other personal tokens (see “equity fee” below).
You can also buy equity in the NetworkToken which is a way to indirectly invest in the success of the entire Net. (Note: this is not possible during early access.).
Fundraising (selling equity in your personal token)
A personal token is divided into shares: its smallest unity of equity. When you fundraise by selling equity in your personal token, you are selling shares of your personal token to investors who will then become shareholders of your personal token, and join you in your journey without having any control (voting rights, etc.) over you in any way.
Obligations after you fundraise.
When you fundraise, you are promising to pay dividends to your shareholders. Each shareholder gets a percentage of your capital gains (from selling equity in companies or other personal tokens) proportional to how much equity they have in your personanl token (before federal / state capital gains taxes are applied). (For example: if you sell your equity in a company for $3 million, and you have 3 shareholders who each own 1% of your personal token, each shareholder will get $30,000 in capital gains, before any taxes are applied).
If you have personal token shareholders you will need to report your capital gains every year to PersonalTokenNet and make sure your personanl token wallet has enough money to pay dividends to your shareholders (which will be transfered from your personal token wallet to the shareholder’s personal token wallet within the Net). You only have to do this once a year (by the US tax deadline), and we’ll remind you and walk you through the process when the time comes.
You can also keep your shareholders up-to-date on your progress if you feel like it, but it’s not required. Your shareholders are incentivized to help you win since they have skin in your game. The more transparent you are with them, and the more clearly you communicate what you want, the easier it will be for them to help you. Use them!
Learn more about dividends & reporting capital gains.
Investing (in personal tokens)
You need enough money in your personal token wallet to cover the amount you want to invest before your purchase goes through. If a personal token fundraising round is public to the Net, you can request the token owner to allow you to invest in their personal token. Otherwise, you can only invest in personal tokens that you have been invited to invest in.
There are 2 ways to profit from investing:
- Earn dividends
- Selling equity to another investor (secondary sales).
Fees
On successful fundraise:
- Gas fee: a nominal amount (usually a few dollars) to facilitate a transaction in the Network.
- Admin fee: occurs when a shareholder raises capital through a fundraising round.
- Equity fee: a small (0.1% equity) is allocated to the Network Token (similar to a personal token but one that represents the entire Net).
(These fees will be negligibly small compared to the amount of money you’re raising.)
For secondary sales:
- Gas fee.
- A royalty fee of (2%) is automatically collected from the transaction value. This fee is split between the token owner (1.5%) and the NetworkToken (0.5%)
Early access restrictions
- California residents only (and ofc legally in the US).
- Access is invite-only.
Legal stuff
When you fundraise, both you and investors will be asked to sign a Token Purchase Agreement which outlines the terms of the investment.
If you’re raising more than $250,000, a single-member California LLC will be formed on your behalf which will be the legal issuer of the personal token.
After you successfuly fundraise, a Form D and a California Blue-Sky Notice are filed on your behalf.