This article is from WeChat official account:Sixingren (ID: guixingren123)< span class = "text-remarks">, author: Doutzen, edit: Vicky Xiao, title figure from the visual China

Talking about many well-known technology companies, everyone knows that they were born on the narrow land of Silicon Valley; but what many people don’t know is that there was once a beautiful “utopia” incubating on the waters of Silicon Valley:< /p>

A company called Blueseed tried to set a cruise ship on the high seas 12 nautical miles away from the coast of Silicon Valley and let a thousand entrepreneurs from all over the world work on it. In this way, they can travel to and from the United States more frequently and conveniently with a business visa, negotiate financing, interview employees, etc.[1].

This project sounds very good, but unfortunately it didn’t take shape in the end. However, it is Silicon Valley’s first attempt to create a “startup city state” attribute.

Behind this attempt is a new but old idea: a for-profit organization manages a piece of territory-whether it is on the sea or on land. For specific needs, managers can formulate policies, rules and regulations, and even laws applicable to this territory.

It is ancient because the former East India Company used a similar system in the colonies; it is novel because it is rejuvenating in a new form.

Back to today, the “startup city-state” is heating up again.

Próspera, a brand newThe entrepreneurial city-state project was established on the island of Roatán in the Gulf Islands Province of Honduras in Central America. (Roatán). And behind it is NeWay Capital, a startup city-state development company headquartered in the United States.

Interestingly, there is Peter Thiel among the external investors of this project. It seems that he has never given up the idea of ​​building a “private city”.

The aforementioned Blueseed is led by the Seasteading Institute, an institution invested by Thiel; he also participated in Pronomos Capital, a fund that specializes in entrepreneurial city-state projects, which is one of the shareholders of Próspera.

As for Promonos, its founder is Patri Friedman, the founder of Seasteading Institue, a former Google employee who believes in the idea of ​​a startup city as well as Thiel. Friedman is also the grandson of the well-known free market economist and Nobel laureate in economics, Milton Friedman (Milton Friedman) .

Peter Thiel and Patri Friedman

According to Próspera’s plan, this piece of land on an island in the Caribbean Sea will be developed into a beautiful model that can only be seen in commercial real estate advertisementslike : The streets and lanes are spacious and bright. Office buildings and parks are scattered with exquisite appearance. Citizens will live in houses designed by Zaha Hadid and enjoy the beautiful scenery of tropical ocean islands and all the conveniences of life and living brought by boutique communities. .

Such a seemingly livable city has officially broken ground recently, and the recruitment of the first batch of “e-residents” (e-residents) and commercial organizations is also underway.

What attracts these e-residents and commercial organizations? This city-state will create a long-awaited “paradise”. In addition to a beautiful and modern life experience, there are also relatively lower company registration thresholds and more favorable tax policies-all people have a The things that entrepreneurial paradise aspires to. More importantly, it may become an “enclave” with independent laws and governance systems.

Many years before Próspera was formally established, Honduras had already laid a legal and policy foundation to allow this new governance structure to exist. Próspera seems to be more reassuring compared to the very few and failed attempts of such startup city-states in the world before.

But… Honduras? How can a small Central American country that is little-known in the field of technological innovation come up with the wonderful talent tree of entrepreneurial city-states?

Ultra-low threshold, entrepreneurial paradise

Próspera almost satisfies all entrepreneurs’ imaginations of an “outside the law” entrepreneurial paradise: cheap labor, convenient entry procedures, almost non-existent registration thresholds, and friendly political and economic systems and laws for startups.

It has a governance structure designed specifically for the “profitability and sustainable growth” of the company it settles in.

“Our unique legal platform benefits from Honduras’s Economic Development and Employment Special Zone Act. This governance structure creates a business environment that is very different from the rest of Honduras. After entering, companies from all over the world will feel To the familiarity and innovation of the Próspera architecture.” The official website of the project wrote.

The so-called “innovation” mainly lies in that this is a corporate-led governance structure; as for “familiarity”, there is no doubt that it is here that can provide those companies with long sleeves that they are familiar with, similar to the United States of Delaware. The tax haven treatment of states, British Virgin Islands and Panama.

The Próspera project website shows that registering an entity here requires only 3 steps, which is less than the average of 6 steps in the United States and 11 steps in Honduras. The review time is only one day, which is significantly less than the average of 4 days in the United States. 42 days in Honduras.

As for the cost of a complete set of procedures, the minimum is US$540 depending on the company’s business scale and situation, which is also significantly lower than the US$775 and Honduras’s approximately US$1000; in addition, although the cost of registering a company in Próspera Up to $1840, but this fee already includes the liability insurance required for the registration of a limited liability company, and the registrant will automatically charge a minimum of $540 for every subsequent entity registration here.

For some franchise licenses required by companies operating specific businesses, it only takes one step to apply in Próspera, fill out a 1-2 page form, the review time is one day, and the fee ranges from $50 to 200 ——Compared to the United StatesThe country’s $8317 and Honduras’s $13,000, it can be said that you just gave it away without any money……

Regarding the legal compliance process of some specific businesses, here comes a cooler place: Próspera even allows the settled company to directly submit an application to the management authority, creating a new set of rules under the entrepreneurial city-state’s own legal framework. Safe harbor regulations in favor of one’s own. (To the effect, set Set a wide enough range, and then declare that as long as there is no violation of the law within this range, such a law is a safe harbor law.)

Under this framework, companies that settle in can have more freedom in international business. After all, their registered place is in this entrepreneurial city-state and is protected by the law here. If they are subject to civil prosecutions, they can only pass through the The arbitration tribunal resolved.

To put it plainly: everyone come to us to start a company. You write the law yourself. Anyway, it’s good for you and me, it’s no problem!

Regarding taxation, Próspera claims that only commercial companies and individuals are levied income tax of 1% and 5%, respectively. The domestic consumption tax is approximately 2.5%, and the land tax is 1%, and it only applies to land.Sales, no house renovation tax. Finally, the project is expected to tax the entire jurisdiction not to exceed 7.5% of GDP, which is lower than 23% in Honduras and 33% in the United States.

Of course, this is only the approximate cost of registering and operating an entity in Próspera, which is already very cheap overall.

The CEO of the project and the Próspera chief executive Erick Brimen, who is currently and for at least 7 years in the future, estimate that most of the residents in the initial stage are just so-called e-residents (e -residents)——Just exist on paper as an entity legal person, and may not even set foot on this land for a long time.

If you feel that Próspera’s electronic residential project sounds a bit like Estonia, then yes, the designer of this project, Ott Vatter, happens to be the designer of the same-functional electronic residential project in Estonia.

Of course, for pure electronic residents who do not have physical resident status, if you want to come here to see it, there is no problem, you can stay in a short-term residence through daily/weekly/monthly passes… Is this really not a Disney park?

According to statistics, if you want to become a “legal resident” of Próspera and do live here, you still need to pay about $1300(foreigners) or The annual resident fee of $260(Honduras citizen), the government website platform usage fee of $130, and other insurance costs are about $260.

Actually, it’s better than some typical immigrant destination countries in the worldIt’s much cheaper, and the approval process is simpler, highlighting a principle: just pay for it…

Online one-click house purchase

Próspera almost satisfies all people’s imagination of the best emigration destination:

Its urban design style combines modernity and local culture. The complete design of the living space comes from the firm established by the late acclaimed architect Zaha Hadid, and the platform-based and modular architectural plan” It is perfectly integrated with the unique climate, soil and other natural environments of Roatan Island.

On the Próspera website, future settlers can even design their own houses.

From the harmony of the houseThe grid and appearance color, to the layout and size of different functional rooms, can all be customized. The website can also instantly generate a quotation based on user-defined results, allowing users to buy online-think Tesla’s online car booking is cool enough? In Próspera, you can also buy a house online!

The project party claims that it can display this website for potential clients who have submitted an application or expressed interest.

In terms of specific construction, the project party claimed that the local timber and other natural resources will be sustainably mined for the construction of new houses. Not only that, in consideration of humanitarian assistance, the project team also plans to invest heavily in the education and training of local surrounding residents to create jobs for them and participate in the construction of houses and infrastructure in the entire Próspera area.

Not long after the ground was broken for the entire area project, everything still exists in the design plan…but the project party eagerly hopes that future settlers believe that in Próspera, settlers will be able to truly enjoy their personalized living experience . If many people are longing for an annual overseas holiday, moving to Próspera will allow them to have a good life that can only be enjoyed temporarily in Ibiza or Cancun.

Not only that, but the project party also considered the needs of timeshare investors and stated that it is cooperating with a world-class hotel management group to assist future landlords to transform their built houses into standard-run boutique hotels.

“Because ofPróspera’s unique regulatory environment, the house construction process can take a shorter time and lower costs, and landlords can enjoy lower tax policies and regulatory burdens, and increase investment returns. “The project website reads.

As this is a brand-new entrepreneurial city-state project, it is inevitable to encounter discussions about the negative effects of the gentrified community on the surrounding poor communities. It may be because of the need to appease potential investors and look more humanely. For every house sold in the Próspera area, the project party also promised to build a similarly modern house in the surrounding community.

Who will manage this “outside the law”?

In 2009, Honduras’ ruling Kuomintang politicians proposed a policy called “Economic Development and Employment Zone” (ZEDE).

The essence of ZEDE is the Chartered City special city, which is the kind of “startup city” we are discussing today. After being written into the law in 2013, ZEDE officially gained legality.

Beth Geglia and Andrea Nuila, researchers who have long studied the ZEDE model, pointed out in an article they wrote that the ZEDE law has brought this new model, which was quite novel at the time, to future ZEDE project participants. Unprecedented legislative, governing, judicial and economic autonomy” as an exchange for their in-depth participation in urban construction and various investment projects.

The passage of the ZEDE legislation has attracted the attention of some venture investors mainly from the United States. However, due to the national conditions of Honduras, the implementation of the policy is still relatively slow. However, as of now, there have been two ZEDE projects in Honduras. One of them is Próspera.

The goal of this project is to attract at least US$500 million in foreign direct investment by 2025 and create at least 10,000 local jobs.

According to Próspera’s project book, the highest governor of the region is called the “Technical Secretary”, and the management authority responsible for the actual daily operations of the region is called the “Board of Trustees”. In addition, as the “promotion and operator” of the project, Honduras Próspera LLC(hereinafter referred to as LLC), a registered entity in the United States Will also participate in regional affairs.

The project document shows that there are 9 members of the Próspera council, including the technical secretary and 8 executive directors, with a 7-year term + no limit on the number of terms. Who controls these 9 people and the governance structure based on the board of directors are shown in the figure below:

Currently, the executive directors of the project are still relatively “diversified”, and the main real estate projects in the existing area are (such as hotels, shops, etc.) The boss, there are veterans in the American legal profession, and even blockchain entrepreneurs… But there is no doubt that Próspera has a highly capitalized management authority.

At the legislative level, the project party has long been acting as a legislator and has written a very comprehensive, 3552-page code.

As for the judicial level, Próspera will have a dual court system, including a court dedicated to hearing criminal cases, and an arbitration tribunal for handling all other cases and disputes. (PAC).

The judges of the Próspera court are still empty; the arbitration tribunal has more than a dozen arbitrators, three of whom are senior arbitrators from the United States; but the paradox is that the arbitration tribunal is governed by a company. The CEO also happens to be the legal counsel of the aforementioned LLC and the “owner” of the investor of this project.

Don’t talk about helping others decide the case, if this arbitration tribunal has problems with conflicts of interest in the future, who can judge…

Contradictions between private capital and constant disputes

It can be seen that the governance structure of Próspera is bound to cause various controversies. Not to mention the long-term, as of now, Próspera has been plagued by problems.

When the project party first came to Roatan Island, they also contacted the leaders and residents of other towns and communities near the project site. At first, these local people just thought that Próspera was just another investor who came to invest in tourism and commercial projects. After deep discussions, they discovered that this group of people came for the ZEDE system permitted by Honduras law.

After the project party disclosed some information, Hondurans discovered that Próspera’s various rules and regulations were full of discrimination against themselves. For example, the identity of settled applicants will be reviewed by the regulatory authorities, and it is obvious that foreign applicants who are significantly more affluent will receive preferential treatment; for another example, if a Honduran citizen encounters a labor dispute while working in Próspera, the value of the case For 10,000 US dollars, the arbitral tribunal charges them nearly 400 US dollars higher than the legal residents of Próspera.

Currently, Honduras has passed two ZEDE projects, including Próspera. Unlike foreign entrepreneurs, investors and tourists who are attracted by this new governance model, Hondurans are worried, what if a new ZEDE project opens at my door tomorrow?

The locals are really struggling. On the one hand, the construction of new projects requires labor, and you can make money if you go to work. On the other hand, allowing such projects to continue to expand means that their rights and interests will continue to be eroded.

Since the Próspera project was officially approved by Honduras, locals have convened many demonstrations to protest its existence. Some Honduran politicians signed an open letter, calling on more people to boycott the Próspera project. Some external institutions that were close to the project, such as the Technical University of Munich, have gradually withdrawn from the project.

The opposition of the local people in the surrounding communities to Próspera is not just their distrust of the project funder NeWay Capital. This impoverished country leaves only homeland for residents. For residents of Roatan Island, the most important thing for their livelihood is tourism resources.

Now there is another company here, chanting the slogan of some entrepreneurial city-state, while taking away the land, building their own amusement park, and enforcing their own laws.

In the eyes of ZEDE law and project researchers, Próspera’s entire governance structure, especially the “free” and “open” attributes it mentions, is misleading.

For example, the infrastructure service provider hired by the Próspera management authority is not only an outsourcer of water, electricity and coal networks, but also a very powerful presence in this governance model, because it also has a lot of power in the selection of new residents. Big decision-making power.

Zede researchers Geglia and Nuila believe that infrastructure service providers are likely to reject applications from those who may be “troublesome” in order to facilitate the long-term operation of the entire project.

Currently, the Próspera project is still in full swing. The number of employees has exceeded one hundred. The project team is doing its best to attract potential customers while struggling to cope with the increasingly intensified population and foreign capital/Honduras officials. Contradiction.

The first technical secretary, Briman, declared that he never wanted and had no right to snatch from the local anything that shouldn’t belong to him. In an interview with Bloomberg, he even said that he only wanted to make some investments in his country of origin, and help customers with the help of the US-Hong Kong labor price difference—and by the way, he also made some money.

Prior to this, no known entity “Entrepreneurship City” project has successfully launched operations in the world. Although Próspera is under a lot of controversy and there are many doubts, as a project that has at least achieved phased results, we will continue to pay attention.

[1] High Seas Incubator BlueseedStart to accept small investments for international investors

This article is from WeChat official account:Sixingren (ID: guixingren123)< span class = "text-remarks">, author: Doutzen, edit: Vicky Xiao