This is a public warning about the Dutch scam Tradeqoin, following my research into their recent crowdfunding campaign where they are seeking €150,000. Like Bartercard’s recent IPO, and Daniel Evan’s Ormita fraud, this attempted round of funding is based on little more than hot air, fed with misinformation, strong self-promotion, a crazy valuation and wild projections that haven’t a snowball’s chance in hell of ever returning a dividend to investors. My conclusion . . . it’s another moneymaking black hole and my advice is to stay right away.
Before I charge into making any accusations, please let me make it clear that the ‘brains’ behind Tradeqoin is Rob van Hilten, named in my litigation against IRTA relating to defamation. While the fact that I am suing him may be construed as a reason for revealing the scam this fact has no bearing on either the reason for the post nor the contents. I initiated my investigation because more than one person has alerted me to this crowdfunding campaign and because they are now seeking funds from the public. I’d prefer NOT to have another blog post about bad boys in the Barter industry at the moment, but as Dietrich Bonhoeffer put it so eloquently, “Silence in the face of evil, is itself evil. God will not hold us guiltless.” So, having deferred to a greater authority in such matters, here we go . . .
Tradeqoin is the flagship currency of the Dutch business, Qoin, and was launched on 20th March 2014. Rob van Hilten and Edgar Kampers are the two guys who run the thing, a couple who have a long track record in the business, presenting themselves as Complementary Currency ‘experts’. There is no question that they have proved themselves quite capable of putting together lovely looking proposals and securing funding from large European institutions. Whether they have actually delivered anything lasting or meaningful is questionable though.
Their primary greatest success story is advising on the setup of the Bristol Pound, with their puff-piece simply glowing about its success. I’m not quite so sure this is accurate and I view it as an averagely performing social/local currency that seems to have cost a mint to get going, that has plateaued, and performance that equates to something that which even a couple of average guys who have set up a commercial trade exchange could achieve.
Their past business ‘successes’ include the Makkie (assessed by Lotte Boonstra and Professor Arjo Klamer Erasmus University in a report published in March 2013 as pretty much a conceptual and practical failure), an ‘experimental’ business that ended in bankruptcy, and many other projects none of which have ever really ‘fired’ as far as I can see.**
The Tradeqoin scam has three areas of concern:
- Mis-representation of the past multiple business failures,
- Incomplete and inaccurate information on their present business and
- Wild projections of future performance and Return On Investment (ROI).
The business model doesn’t make sense and can never work, short of injecting third-party funds – potentially yours! More on this aspect in a moment.
A Barter/Trade Exchange like Tradeqoin typically makes its money by charging membership fees up-front, (i.e. a joining fee) and/or a monthly fee, and/or a percentage of trade volume (similar to what VISA does with their participating merchants).
Tradeqoin however is a freemium business model. Freemium requires an ultra-low cost of initial service in order to work – software is the primary success story, but there are Open Source and Web 2.0 technologies as well that have suceeded. Barter however is at the exact opposite end of the scale with high costs to acquire, educate and encourage a new member up-front in order obtain long-term income streams. It requires a high-energy investment on the part of trade exchange owners and generally two years of hard work to establish the magic 300 Members that makes a system ‘work’. Most trade exchanges fail despite best intentions and often because of bad intentions and inexperience. Tradeqoin does not have a successful track record of with a regular trade exchange, let alone a freemium one!
Tradqoin’s business model has no upfront fees; their commissions/transaction fees are paid in trade not cash and lastly, their monthly fees of €25.00 only kick in after the first three transactions.
This is NOT a viable business model. Investors will NEVER see an ROI because there can never be any profits. The entire crowdfunding exercise is obviously designed to bring in cash to pay the bills, NOT to build a profitable business. Donations, grants, goodwill gifts . . . yes! Investment . . . no!
While TradeQoin could be yet another struggling commercial trade exchange seeking investments – in its current form it is a scam!
The Tradeqoin Offer
The current Symbid crowdfunding campaign is set to run until Christmas 2014 with a target of €150,000.00.
At the time of writing 27 people have pledged a small amount (3%) and I would hazard a guess that most of these are friends and family of the key people. Like with the Bartercard IPO, Fools, Friends and Family will be the initial punters. No serious investor would invest into a business losing money for the first few years then suddenly and miraculously making huge profits out of thin air! Investors look for proof-of-concept and the potential for an ROI.
A single post (Don’t miss out on your chance to get a great return on your stake in TradeQoin!) in the LinkedIn forum “Think Barter” advertised the opportunity to invest to the trade. Qoin will have spread the offer around various other social media and print media locations, no doubt as they claimed that they would do this and they are good self-promoters.
The offer is to invest cash today, with a zero ROI for a few years and then an unusual ‘exit’ in 2018. You can see the entire prospectus in English here. It’s marked CONFIDENTIAL although why this is, I don’t know if they’re out there trying to secure funds one would think that they would want it widely distributed!
The Current Business
Analysis of the current Memberships* is conclusive.
My findings are:
- Only six percent of current members intend to stay on and take up the paid version once their free Membership runs out.
- Trade volume is miniscule
- Income to Tradeqoin is even more miniscule
- One entire region (consisting of approximately 20% Tradeqoin Membership) will never produce any income streams, ever!
1. Low satisfaction
In fact 6% in a freemium business model is high. I actually think that when the rubber hits the road though and the Members have to pay, or find high inflation and can’t trade effectively that they will be lucky to retain 1% core traders (a dozen or two), but of course this is conjecture.
2. Low trade volume
Following a prompt to engage with their members, Tradeqoin personnel commenced communications with their members on 11th September 2014, offering products and services on a daily basis. This petered out within a week or so as they ran out of things to offer or the interest to maintain communications with daily offers! Trust in the currency and the system is ultra-low. The marketplace contains 251 random items, which is less than one item per claimed member. It is clearly not being used much.
Tradeqoin by their own figures are not and will not be a profitable business for YEARS! As I have been saying for years and blogging about in regards to the Bartercard disaster, making a small bad business bigger does not make a good business – it just makes a bigger bad business. Investors, Directors, and those involved in Tradeqoin will be well advised to first actually make a profit, even if only a small one, and then grow that business. Conmen smile, talk about big dollars sometime in the future then fail to deliver. Tradeqoin is NOT profitable and nothing on this planet will make the current business profitable even if it has a billion members on it’s list!
4. A Dead Dodo
The Achterhoek Region (the Dutch Hinterland) is an entire area run by a Board Member/franchisee Reinier Grobben who has told my team that he has absolutely NO INTENTION of charging for the services. Reiner was actually a founder of a coin BEFORE Tradeqoin ‘took over’ the Hinterland region – in February 2013 actually! Immediately several facts now come to light – there is division within the Board at TradeQoin with conflicting objectives (one commercial and the other non-commercial); a large part of Tradeqoin’s validation for their crowdfunding campaign is revealed as fraudulent; basic good business practices such as integrity, teamwork, unity of purpose and joint communication of that vision lack and serious rifts will occur within the Tradeqoin operations very shortly, if it even continues. You can’t have some members in the organisation having to pay for the same service that others are not. Expect the Hinterland to quietly disappear from the Tradeqoin marketing materials!
The Planned Business
The Investment proposal states that Tradeqoin is basically a traditional Trade Exchange – nothing is different about the core business.
TradeQoin focuses on the SME sector. This sector is under a lot of pressure and in need of new solutions; competition by large corporations is stiff and banks are increasingly reluctant in financing SME working capital. Because of the recession profitability and assets are under pressure. MKB Nederland (Organization representing the Dutch SME sector) predicts 30% of SMEs will not survive the next 10 years, unless they highly specialise themselves and excel at entrepreneurship.
So Tradeqoin is entering a market that is expected to lose 30% unless miracles occur!
Tradeqoin’s flagship is estimated to have 390 Members by the end of 2014. It actually has only 156 names on a database***, no trading, minimal management and produces virtually zero income. Let’s hear the sales spin though:
TradeQoin BV operates several ‘flagship’ communities itself. The first of these is the current TradeQoin community in the greater Amsterdam area (with currently approx. 200 members), Flafships allow us to demonstrate how TradeQoin can benefit its clients and impacts the region. Flagships are also the place to introduce new services, pilot-test innovations, develop and improve best practice guidelines. We aim to launch new flagship communities in other regions. Flagships will be very recognizable and educate others to start their own communities.
In regards to Membership relationship building Tradeqoin says:
TradeQoin B.V. develops and manages the web-portal, actively recruits participants, brokers between supply and demand and organizes trade events. We maintain personal relationships with the entrepreneurs and together we realize increased procurement and sales within the network.
My telemarketing proved this to be a falsehood. Members of the exchange that Tradeqoin inherited referred to communications with Greg (the previous owner) as satisfactory – not so under Tradeqoin’s ownership. Not one person reported satisfaction in this regard. Many expressed lack of confidence in Tradeqoin BECAUSE of their failure to communicate as well as failure to deliver!
In regards to the costs to develop a couple of dozen possible traders and possibly at the outside 200 short-term freemium members Tradeqoin boasts:
The development and launch of TradeQoin has been made possible by an investment of Qoin, grants from the Doen foundation (subsidiary of the Dutch National Postcode Lottery) and the European commission and three crowd-funding campaigns. By the end of 2014 the total investment in TradeQoin will have been approximately € 1 million.
Ouch! Let me put this gently Doen, EU and others who chipped in a million Euros . . . “You’ve been done over big time!” Many of those members came through acquisition – and from one exchange too! Your money went on wages . . . lucky for those people eh? That is until the money ran/runs out!
Income streams are a joke, with projections even more astounding than the Bartercard/BPS Technology prospectus! Let’s view their proposed income streams from their Prospectus then double check that with Rob van Hilten’s own words, because income streams are important:
Participants pay 5% per transaction (of which 4% accrues to TradeQoin and 1% to the stability fund) and (after their 3rd transaction) €25,- per month.
This is a stunningly challenging business model – to receive income by way of full trade. It means that Tradeqoin will be living off membership fees alone and will eventually have to dispose of the Trade Credits somehow in order to pay themselves, and their bills. Rob confirms this to another set of raised eyebrows [not mine] when he says:
2) Als de gemeenschap van deelnemers voldoende groeit om de organisatie van tradeqoin in al haar behoeften te voorzien, zullen tradeqoins dan geaccepteerd worden als betalinge van het lidmaatschap van tradeqoin zelf?
Dat is nu al het geval. De transactie fee van 5% op inkopen (dus wanneer een deelnemer betaling doet in TradeQoin) is nu volledig in TradeQoin. Wij zullen zelf maximaal TradeQoin accepteren om aan te tonen dat we-walk-the-talk. We zullen zelfs met aandeelhouders het gesprek aan gaan om hun winstuitkering in TradeQoin te doen.
2) If the community of participants grows enough to provide the organization of tradeqoin all her needs tradeqoins will then be accepted as a disciple of beta membership tradeqoin yourself? That is already the case. The transaction fee of 5% on purchases (ie when a participant payment does in TradeQoin) is now fully in TradeQoin. We will accept up TradeQoin to show that we-walk-the-talk themselves. We’ll even with shareholders the conversation going to do. Their profit distribution in TradeQoin
Their “Action plan” is worthy of attention. Hint: It is not a multimillion dollar business plan:
Based on the following action plan we expect to have TradeQoin profitable in 2017:
Think about this incredible statement for just 5 seconds. Invest now . . . we will lose money (your money) for three+ years after we have already burned through a million Euros already BTW . . . and then we “expect” to make a profit. It’s Alice in Wonderland stuff, especially when you look at the actual figures!
-‐ First focus is on expanding the Amsterdam and Achterhoek communities. The partnership behind the community will be expanded with strong partners like Rabobank, Amsterdam Economic Board, business clubs and accountants.
Right. Tradeqoin has two hundred or so members many acquired from a previous trade exchange, and 6% claim that they will remain. Rabobank, Amsterdam Economic Board and others . . . watch out – Tradeqoin is about to arrive on your doorstep!
-‐ To build the network and generate trust and awareness among our target group, we invest in the personal relationships with our clients. We use off-line sales and promotion activities during the first phase. On the basis of specific clients’ procurement needs, new businesses will be sought and signed up.
Nope. My investigation has found that Tradeqoin acquired one trade exchange; stopped communicating with the members; have had zero real growth; target some 400 members for 2014 but only have a dozen real ones and according to most of their members makes no effort [none!] to trade co-ordinate or broker business!
The distant future is also covered, and surprise, surprise it will require further cash injections:
2018 and beyond
In 2018 TradeQoin will introduce a B2C product (very much similar to the Bristol pound (www.bristolpound.org), which will boost the impact, turnover and profitability significantly. We will start the international roll out at that time as well. The focus will be at North West Europe and the USA. For this the business plan will be redeveloped. To execute that plan new funds will be acquired.
Bristol Pound has approximately BP300,000.00 in circulation as far as I can establish. It cost GBP600,000.00 to establish. My advice – don’t do it Tradeqoin!
Based on a recent Equidam valuation we estimate the value of the company at €1.6 million (premoney valuation).
So €1 million has gone in thus far, wages of €659,700.00 and a valuation of what?? Perhaps it’s massive software project to rival Bartercard’s vapourware Webturtle? Nope – they use Cyclos as their core system! Bricks and mortar perhaps? Nope – only for the principals and staff of the scam! . . . so €1.6 million with a couple of dozen real members who are not even trading? Nope! Not even Bartercard’s dodgy Prospectus was this far off reality!
Butchering the Currency
From Day One the TQ Currency will be butchered, with deficit spending occurring before the first trade takes place by way of payments to investors. Note that this is not a credit line, this is a “Pre-paid card”!
For a typical trade exchange this priming of the pump is a virus of Ebola proportions and has serious ramifications:
From € 200 = Pre-paid card worth 50TQ, activated in 2015
From € 1.000 = Pre-paid card worth 150TQ, activated in 2015
From € 5.000 = Pre-paid card worth 500TQ, activated in 2015
Issuing pre-paid cards is inflationary and at 25%, 15% and 10% respectively on these projected cash investments would be a serious blow to the integrity of the Tradeqoin currency. Their bribes are even structured the wrong way round BTW, because anyone would invest in multiples of € 200 to get double the credit than a € 5000 investor!
With a lot of hard work and in the hands of a capable operator, a typical trade exchange will grow over a 2-3 year period to 300x members and then reaches a ceiling. Attrition and logistics then kick in so that new systems are required to take a business further than the magical 300 number. Four hundred Members in the first year is incredible performance worthy of serious attention. Over a thousand members after two years is unbelievable. Three thousand members in three years is just impossible and never in the history of mankind has a trade exchange grown or will it ever grow to 5230 members inside three years!
Even accepting the crazy projections, Tradeqoin’s income projections don’t add up. Tradeqoin expects to receive €25.00 per month, 4% in TQ and 1% in TQ to their Bad Debt Reserve Fund (BDRF). This falls way short of their projected expenditure. Even with a massive 5230 membership, Tradeqoin is not profitable! The figures are a joke.
|Trade Volume||€ 300,000.00||€ 3,800,000.00||€ 19,300,000.00||€ 43,900,000.00|
|Trade Fees||€ 12,000.00||€ 152,000.00||€ 772,000.00||€ 1,756,000.00|
|Trade Fees BDRF||€ 3,000.00||€ 38,000.00||€ 193,000.00||€ 439,000.00|
|Cash Fees pa (@€25.00)||€ 87,750.00||€ 256,500.00||€ 607,500.00||€ 1,176,750.00|
Tradeqoin’s business model is to suck off investors and grants for years ‘until they make a profit’.
Here are their exact words:
Mid 2014 – 2017
TradeQoin will grow quickly the coming years. We aim to have about a 5.000 membership and establish a trade volume of approximately 44 million in 2017. By then the company will be profitable.
To achieve this target, we are currently raising equity investments through various channels.
With losses projected for years, this makes for sorry reading and a lot of questions:
|Profit before tax||€ 383,600-||€ 1,012,600-||€ 426,500-||€ 1,015,500|
Aside from the outright insanity of expecting to have 5000+ paying members, it is perfectly possible to make a profit within the first year with even a hundred paying members! Tradeqoin like the previous failures by the Qoin principals** can and will NEVER make a profit!
Tradeqoin is another business modelled after Rob van Hilten’s and Edgar Kampers’ previous business failures which exist only because of expensive public-funding. It is unlikely to raise €150,000.00 certainly not via crowdfunding, thus the funds pledged to date will not be called upon. The currency is a non-starter. It’s not even just another barter/trade exchange, it’s actually a poorly structured business with a seriously flawed business model. Serious investors (by way of the crowdfunding campaign or directly or by grants) should stay away from both the offer and the business. Sure, philanthropists wishing to assist pay the bills and wages of Qoin could invest comfortably but it won’t be an investment, it will be a gift. My prediction is that unless there is injection of more and substantial grant-money, Tradeqoin will cease to exist, certainly in its current format, probably shortly after the crowd-funding campaign fails.
My advice: Don’t invest.
Second Disclaimer: For this story I contacted the reference advised by Tradeqoin (Gert Meeder) who bumped me on to Rob van Hilten. Rob connected to me via Skype. I advised him of the post and offered Tradeqoin the opportunity to peruse and correct any facts prior to publication. After supplying him with an entire advance copy of this post, Rob responded simply, “Denis, I’m not going to respond to this“. For the record, and for those who have the tendency to lash out at me about hidden agendas and ulterior childish motives, I could have attacked people personally for misrepresenting facts, questioned their motives, and personal benefits, and past history, but I haven’t and have talked only about the business model and their investment offer. I actually just have a big problem with people seeking funding from individuals on the back of BS and dodgy business plans. Just like conman Daniel Evans’ Ormita fraud, and Bartercard’s dodgy IPO Prospectus, Tradeqoin fits that profile to a T!
* I did my detailed research throughout September/October 2014. My Dutch team actually phoned every Tradeqoin Member in person (no digital communication was entered into) and three key questions asked relating to their intentions, their opinions and their trading. When we were unable to get a response, we called up to three times at different times of the day/night before abandoning contact attempts. Actual numbers of members was hard to establish and various figures given by the Tradeqoin website, listings verified by phoning and Tradeqoin marketing materials varied by up to 25%. My take is that there are a lot less than 200 members and that they’d be lucky to have a couple of dozen members ready and willing to pay fees and trade at commercially viable levels. It’s simply not a business!
** Stories differ depending on the audience (a clear lack of integrity) thus bankruptcy becomes “an experimental project” but in other interviews the facts are revealed that ” In 2002 gingen we failliet.” [In 2002 we became bankrupt] and removal of funding causing business failure becomes “political reasons” for the failure.
*** The actual number on their website when you count all the listings is 176 including the 41 Achterhoek members (who will never pay anything according to the Achterhoek Board Member). Take out the house accounts, the owners’ accounts, football and business clubs and you have about 156.