Marginal Revolution | Tyler Cowen | Bond markets in everythingAwesome. Check out the comments on that post as well.
British high-end chocolate maker and retailer Hotel Chocolat, which currently operates over 40 stores in the UK, the Middle East and the US, wants to expand even further. But rather than turning to banks or big investors for money, they're inviting customer to buy bonds. Bonds that will pay chocolate returns.The link is here and hat tip goes to Eric John Barker.
Two values of Chocolate Bond will be issued: both with the return paid in monthly Tasting Boxes. Holders of a GBP 2,000 Chocolate Bond will receive six free tasting boxes a year worth GBP 107.70 per year, and those holding a GBP 4,000 bond will receive thirteen boxes, worth GBP 233.35 per year. Which comes down to a 5.38% return. After an initial term of three years, and on every anniversary thereafter, bond holders can redeem their bond for a full return of their investment. If they decide to continue to hold the bond, the monthly boxes will keep on coming.
This seems like a fantastic idea. It would be even better for a software company though, since the marginal cost of providing the coupon payments would be zero. I'm picturing someone like Netflix raising money for an expansion by offering premium services for X years in exchange for buying a $Y bond.
This might be good for newspapers and magazines that need immediate cash infusions as well.
I know of several donation-driven entities that will do something like put your name in for a drawing whenever you donate some cash. If not for the accounting headaches, this model could work for them as well: as long as you let them take the float on your money they add your name to the hat.
It might be a good option for school-based groups because they have a natural maturity. Instead of paying some activity fee or booster club membership you buy a four-year bond. I bet you'd get a lot parents who wouldn't bother to redeem it when they were eligible to at their child's graduation, so that's an extra bonus.