But if it's an entitlement to a % of profits, then it is much more like equity.
It's a contract to get dividends on a loan that is based on speculation of profit (not tied to any assets). So, yes, a worse version of equity in a startup.
Re:Goodbye ICOs, hello ILPs?
by JumpCrisscross on Thursday April 12, 2018 @07:06PM
(#16825761)
> a worse version of equity in a startup
Minus the enforceability or equity and bond claims. So a combination of the worst elements of equity and debt plus additional negatives. Financial innovation at its finest...
It being blockchain based makes it innovative. I mean, it's linked lists 2.0: electro bugaloo
... Initial Loan Procurements (ILPs) have emerged as a new fundraising method. Similar to an ICO but in the form of loans rather than coin acquisitions, ILPs enable borrowers and creditors to enter into a loan agreement through legally binding smart contracts. With an ILP, a creditor's investment is contractually tied to the performance of the company and eliminates the wild swings of volatility that have been associated with a vast number of ICOs. In simple terms, as long as the company makes a profit, the creditor gets annual returns...