Financial markets are expensive and inefficient.

According to the Global Policy Forum, in 2011 only 0.6% of foreign exchange could be traced to genuine international trade in goods and services. Most of the rest is for price discovery and speculation.

Each month 10% of the total value of the world’s stock markets is traded. Most of these trades are for price discovery and speculation.

In 2015 the NYSE raised 136 Billion in new equity.  The NYSE has a total capitalisation of 25 Trillion.  New equity is a fraction of a percent of a market capitalisation.  Raising equity through stock markets is expensive and so most development funds come from expensive bank loans.

The cost of operating foreign exchange markets and stock markets is high.  These costs increase each year with the derivatives markets adding further costs.

Stock market prices follow a random walk pattern. Randomness increases uncertainty and risk. Investors and companies pay to reduce the risk with insurance, hedge funds and the like. These overheads increase the cost of establishing prices.

If we had a complementary way to discover prices in money markets the overheads would drop.

Sustainability through Sustainable Funding

Sustainability starts with communities of common interests.  These communities cooperate to create sustainable regions. Regions group together to build sustainable nations and nations working together make a sustainable world.

In a sustainable world, funds to build comes from the community of interest customers of goods and services.  Envesting is pre-purchasing the right to buy goods and services for a discount.  Consumers envest in local producers by pre-purchasing the right to buy discounted goods and services.  The size of the customer discount depends on how long since they received the right to buy.

To protect envestors, the community of interest suppliers agree to accept pre-payments from other suppliers.  But, they do not give a discount.  Fur further protection envestors can sell rights to pre-purchase goods and services.

Trading Suppliers Value

Trading ownership in shares is trading future profits. We assume the profits of the company go to the owners of a company. But the size of future profits and whether the profits will go to shareholders is uncertain. Many factors influence the returns to shareholders.

The value of future unit sales of goods and services is well defined. Using future sales estimates is easier to predict than company profits. It may be difficult to predict when the sales will occur or if there will be sales. But, if they do occur we have confidence in their value.

In addition to a regular market in the share of ownership, we can establish a market in future sales of goods and services. We can create a market where companies can sell rights to buy future output. This same market can be a secondary market where holders of the right to buy future output can buy and sell their rights.

Conditions applied to the rights are defined at the time of sale. The conditions can differ for each sale.

Rights to buy does not change shares and share trading. It is an addition to, rather than a replacement of, share trading to transfer value in a Company.

We still need shareholders to look after the company. But, they can be repaid in the right to buy output rather than dividends. Companies have less need to keep large cash reserves or have expensive bank loan facilities. It provides a base price for shares. All these factors reduce the volatility in share price.

There is less market contagion. A drop in price in the value of one company is less likely to affect the value of another company. What happens in another country or market has little influence on the sales of a company. A change of central interest rates has little effect on output.

Any entity, including individuals, not for profits and government bodies, can raise funds for funding infrastructure and other capital works. Envestment is available for any capital raising by any entity. Having a common way for any entity to finance capital works allows for easy movement of capital between types of entities.

The Loans

We treat a conditional right to buy as a long-term unsecured loan. If the right to buy includes a discount, then the right to buy becomes an investment. To distinguish this investment from a bank loan, we call it an envestment.

Each envestment can have unique rules and terms and conditions. The tokens representing future output are transferrable. They are a form of money, but they can only be used to pay for goods and services from a given entity. The conditions make them different to futures which are for a specified product or service at a specified time. They are different to bank loans as they are repaid with goods and services and they earn discounts, not compound interest.

Typical Rules for Envestments

An Entity will issue loans with the following conditions.

The loans are repaid with goods or services supplied by the Company.
The loans can be sold to other envestors.
On delivery, of goods and services, a discount of X% per annum applies.
On delivery, the loan value increases by CPI inflation.


The loans are repaid with goods or services supplied by the Company.
The loans can be sold to other envestors.
On delivery of goods and services, there is a 50% discount.

The rules and regulations around envestment loans are the same as the buying and selling of goods and services. These are well known, easy to administer and fit within existing taxation regimes.


Shareholdings and shares operate the same as they do today.

However, shareholders can convert their shares into envestment loans at any time. The value of the loan is the price of the shares set by the directors times the number of shares. Directors would have preset rules on how to calculate the share value. A possible rule could be the cost of the shares with double the current loan discount applied since the purchase of shares.

Other variations might be that shareholders can purchase loans with an initial discount.

This approach reduces the volatility of the market because shareholders have a minimum value of shares. They know how much their shares are worth as they can convert them into loans. Investors who do not wish to risk buying shares can still get good returns by buying loans.

Sharing Risk with Envestment Loans

Investors put money into banks, and the banks make loans. Banks take on the risk of investment. The banks charge for taking on the risk. With envestment loans, it is possible to distribute the risk across cooperating entities.

One way to do this is to get small sets of entities to cooperate on the issuing of envestment loans. A percentage of the money envested in any one entity goes to other entities. These envestments go into an envestment pool. The company receiving the envestment receives less but repays the whole envestment.

Cooperating entities agree to the use of other entity envestment loans to pay for their products and services.  But, the envestment loans have no discount if used for goods and services from other enterprises. If an entity fails and cannot provide products and services, the cooperating entities are compensated from the pooled envestments.

For the envestor, their risk is now the risk of the group of cooperating entities failing.  If a group fails, it has little impact on other entities outside the group.

Having a stable price for envestment loans means the value of shares stabilises.  A known value for shares reduces the need for share trading to establish prices.


Once an Entity has significant sales or the potential for sales, they can raise money by selling envestment loans rather than issuing shares or taking out bank loans. Envestment loans are lower cost than bank loans as payment is in goods and services. The cost of funds goes directly to envestors as prepaid output. The direct saving is the cost of compound interest on regular loans.

An entity can raise money with envestment loans without being on a regular stock market. However, groups of entities can cooperate to reduce the risk to envestors. Secondary markets for envestment loans within the group increase the liquidity of envestment loans. The advantage of a market is that the market operators add value through oversight of companies, of trades, and through mechanisms to share the risk of failure.

Existing stock markets can add these new services to existing companies without changing their operations.

Envesting works for any size or type of entity because there is no need for entities to sell ownership. Envesting amounts can be small or large.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s