Smarter Web's Capital Structure and MORE Preferred

Hi everyone, welcome back to Stephan Livera Podcast. Joining me today is Andrew Webley. He is the CEO and founder of Smarter Web Co in the UK. Welcome to the show, Andrew.

Thank you for having me. Nice to, nice to be here.

So Andrew, give us a bit of a background on yourself and like how you got into Bitcoin and then we'll sort of get into how you, you know, decided to turn Smarter Web Co into a Bitcoin treasury company.

Yeah, so I started my career in 1999 and I joined a very small company that became one of the biggest companies in the UK, Hargreaves Lansdown, the largest retail broker in the UK today, about 40% market share.

So I joined this very, very small company. The internet was really just starting, you know, Google didn't exist at the time. And, and I was lucky, I suppose, and they had the right business model, the internet turned up and, and, and that changed the business model away from effectively a lot of direct mail to web-based activity. And, and I was a key part of that team. We listed it on the stock market. I left the business in, 2009 after 10 years, you know, I was the head of online. And I, I often describe it to people as, as a well-paid apprenticeship. And then I'd always wanted to run my own business, you know, Steve, Steve Lansdown and Peter Hargreaves were very aspirational people to work for. And, and I was about 30 at the time and And I figured that if I didn't set up my own business, you know, I would never do it, you know, and, and, and it took me a while to make that decision, maybe two or three years, perhaps. You know, when I made that decision, my, my son were, I think he is one and a half, he's, he's now 18. So, you know, I just moved into a new house, all this sort of stuff, which I still live in today. So, you know, it was a difficult decision, but I felt that at the age of 30, if, if I didn't do it, I would never do it, and, and it was one of the most satisfying things that I ever did, you know, setting up what was, you know, effectively a profitable but small business.

Yeah.

And then to the

Bitcoin side of things?

Yeah, so, so I did that and for a period of time, and I'd always been interested in investing, and I've invested in lots of different things over the years, you know, good and bad. But about 10 years ago, I stumbled across Bitcoin. and being completely honest with you, I didn't really understand what it was at the time. I didn't see it in the same way that I see it today. You know, I didn't know whether it was a, a medium of exchange, you know, a store of value or, or just something that you could speculate on, you know, and maybe the truth is that the first, at the first experience of it was, was it, it was a bit of all of that. And, and, you know, in some people's eyes today, it still is a bit of all of that. But then it wasn't until Saylor pivoted Strategy, and I, I luckily saw Strategy, and, and I, for me, because I had, you know, money in, in, in pensions and ISAs and things like this, which you can't, now you can kind of buy Bitcoin or things that have got Bitcoin on the balance sheet, of course. but it wasn't until Saylor pivoted Strategy that I saw it as a credible store of, of long-term value, really. So I often say to people that was my Bitcoin moment, which was, what, six years ago? And then very, very quickly, you know, maybe another two years after that or something, I started to think that we should have such a thing in the UK, and, and I looked for years, and, and, and we didn't, and I couldn't find one, and that's, that's how this next phase of our businesses has, has come about.

Yeah. And so walk us through the timeline there, because, you know, there were a couple of years where everything sort of just went really, you know, probably late 2024 to 2025 is when, like, you sort of saw, like, Metaplanet and then Like 2025 was obviously like a big year for all the, treasury companies, but also, you know, a lot of them dropped a lot from the high. Talk to us about, you know, those few years for you at Smarter Web Co.

Yeah, so I, I, I looked for several years to find a UK version of Strategy, and I couldn't find one. So, we got to, I don't know, around about September of 2024, and, and that's when I decided that I would list my business on the stock market. So, Metaplanet was, I think, you know, doing the strategy then. Capital B in France, you know, that's, that's a good company. I think they'd either just started or were just about to start, but it wasn't anything like, you know, the, the heady days of 2025. And then we managed to get our business listed in April 2025. And so the serious work began in, in December 2024, and it started to accelerate a bit in January into February, March. And, and I remember at the time, you know, you've got to remember here that, that we did a pre-IPO funding round of about 1.1 million pounds. And then we did an IPO, which was about 50% retail and 50% small investors that, that had either supported or, or were going to support the pre-IPO. That was about another million pounds. So you're talking about a combined 2.1 million pounds there. And the reason why it was so small is, is everyone told me that this will not work in the UK. You cannot do this in the UK. People do not want this in the UK. So it wasn't until April 2025, towards the end of that month, that we actually started

trading on the Aquis market in London, which is one of the two exchanges in the UK. You've got the London Stock Exchange and Aquis. So, you know, I took a big personal risk because I basically sold my business to the vehicle that became the public company of the same name. And I believed in it. And I was very fortunate that the other Shareholder in the business, my wife believed that it was the right thing to do and, and, and was incredibly supportive of it. But, you know, even what's that 18 months ago now, even then, the market was very different to what it is today. But we believed in it. And then I think what you can see is from once we became a public company, how many other people believed in it. And, and obviously alongside all of this, you know, you know, 101 plus other companies sprung up, you know, not just in the UK, in the world, you know, all doing similar, but different elements of a Bitcoin treasury strategy. So, you know, I remember being in, in New York in September last year. At a, at a conference, Michael Saylor described it as, you know, this is, this is the first year of the industry, you know, even though his company had been following this strategy for, what, five years at the time. But, but 2025 to me was the start of the industry. And, and if you compare it to say the dot-com crash, you know, which was, I don't know, 2000 or 2001, whenever that was, you know, it's, it's the same sort of thing then, you know, when you've got something that, in my opinion, is, is, is going to create

the companies that are going to be the most valuable companies in the world, at the outset, you're bound to have a lot of volatility. You're bound to have a lot of companies that, that then don't go on to doing the same thing in the future, you know, and that's just the normal way that markets work. But what, what we tried to do last year is right from the start, we were very clear on risk. And we've always tried to be very, very clear with people that, you know, we believe in this strategy, but you will get a lot of volatility. See, and I think we've done that quite well in, in terms of trying to give everyone the positives and the negatives at all time because you, you, you have to remember that we're not only a public company, so there's, there's, there's rules that you have to comply with. But I like to think that we're pretty good human beings and, and, and because of that, I think that you need to be very transparent with everyone about the risks. You know, everyone likes things when they go well, but you have to prepare for when things don't go so well so that everyone, you know, understands that, that they were taking the risk. You know, they're, them, the, the investors are making the decision to invest in us and there's been a lot of people that have made a lot of money, but then of course, there's a lot of people that if they've sold, you know, they've, they've also lost money and, and so, so we always try and be balanced and I think that's really, really important.

Yeah. Let's talk a bit about the structure, at least as it exists today and some of the high level stats as I understand. So you have about, last I checked, or last I can see here, you have about 2,747 BTC. Today's the 5th of October. And so at today's prices, you have about $236 million worth of Bitcoin on your balance sheet. Can you talk to us a bit about the debt side of the question? I believe you had a convert, but that's now being repaid.

Yeah, sure. So what I've tried to build is a is a clean and relatively easy to understand balance sheet. So of course, the the most exciting part of the balance sheet is is the Bitcoin that we hold. And to own that much Bitcoin, you need to have money. It's come from somewhere. In our case, we've sold a lot of equity. So in the US, you would call that common stock, and in the UK, we call it ordinary shares. And I like selling equity because equity is the thing that puts everyone on the same terms. You know, if you and I both own shares in a company, we've bought them at a certain price. You know, ideally, whatever the market price was at the time, we've never done a fundraiser at a discount. But then, of course, in any balance sheet, including ours, there's other things. So, so last year, we wanted to add some lev, to add some leverage to our balance sheet. We didn't want to take on traditional debt because we felt that whilst we believe that Bitcoin's going to go a lot higher, that, of course, it's not going to be a straight line. And we didn't want to add something that would potentially impact on the sort of the, the short term or the medium term of what we're doing. So we copied the instrument that we, we implemented from Capital B in France, but we, we changed it so that they do five-year converts and we did a one-year convert, you know, very, very short, short duration. And we did that because we figured that we could raise, in our case, it was $21 million. then if Bitcoin and our equity kept on performing

well, that would most likely convert. Into equity. So it would have been more accretive than doing a fundraise at the time because effectively it's a slightly higher price. But then on the downside, if it didn't work out, then because the effective loan is, is tied to the price of Bitcoin, then we would just be handing the Bitcoin back. So we tried it. because of the, the, the way that the market moved, it didn't convert, and we repaid that in full. We actually repaid it a couple of weeks earlier than we had to, because we were going through the process of cleaning up our balance sheet. We've also got some warrants, which are almost all of the warrants have now been exercised, apart from some that I own, which are exercising due course, of course. And they came from our pre-IPO funding round, and the reason why we did warrants was, you know, you've got to cast your mind back to the time. There wasn't a Bitcoin treasury company in the UK. Everyone was telling me it wouldn't work. It was very difficult to get that 1.1 million pounds together, and, and, the trade-off to the investors, because they were also investing in effectively an unquoted business at the time, was, you know, we'll give you some warrants as well.

So, so the, the warrants are almost cleaned up. we've got a small number of warrants that are paying 50, related to a fundraise that we did last year. I think it's less than 10 million shares in total. And then the final bit of the jigsaw puzzle, as we're talking today, you know, obviously next week we'll be, we'll be adding something onto the, the, the explanation. But as we're talking today, we, we've also got a Coinbase credit facility. So what we decided this year was, we, we had a sort of a perceived overhang of the warrants that were outstanding. So we wanted to buy them back effectively from some of the investors. But because it was a tough market, and, and it still is a, a tough market, we didn't have, you know, ample capital to do that. And we didn't want to sell Bitcoin to do that. So we decided that because Bitcoin had come off about 50%, which we felt at the time was probably the bottom of the current cycle, you know, whether it is or not, we'll, we'll see in the fullness of time, but I'm pretty confident it, it was and is. We felt that a sensible thing to do then is to add leverage, you know, if you think about it and, and take preferred equity out of the equation here, but, but when's the right time to add leverage? That's when the asset is, is, is ideally cheap. And when's the wrong time to add leverage and the right time to pay it back is when the asset's more expensive, you know, in, in terms of, you know, what it's going to be, you know, in a year or two that follows. So this year was the perfect time to add leverage and we added, we went up to about 20.8 million

pounds, which is probably, what's that, 26, 27 million dollars or something. And, and we did that by borrowing, from Coinbase at a rate of, it's a variable rate, so, you know, it's currently 6.25%, but it's collateralized against our Bitcoin holdings. So if Bitcoin fell significantly, you know, call it to 10, 15,000 dollars, that starts to get quite awkward. Of course, there's things that you can do. And then what we've been doing recently, last Monday and Then again this morning is because our equity's got more of a premium in it now. There's more liquidity in the market. We've been reducing that down. So, so we've, we've taken it down to as of this morning, 17 million pounds, which is probably going to be something like 20, I don't know what that is, 22 million dollars or something off the top of my head.

I see.

Yeah, and, and, and, and that's the right thing to do because, because of where we're going, the Coinbase credit facility is a fantastic facility in a lot of ways. You know, the big positive is the interest rate. The big negative is the collateralized obligation of it. And the, the, there's other pros and cons, but it, it was the right thing to, to start reducing it and we intend to continue reducing it.

On the question of debt, I'm just looking on your website now, Smarter Web Company and the leverage ratio on the analytics page. So it looks here, you have debt over NAV, so that's about 10.5% as a overall leverage. So can you give us an idea what is your, let's say your target, do you have a target range that you believe that should stay within? Talk to us about your percent of debt and how you think about that going forward.

Yeah, so the first thing to say is, that we, we, we, we state our debt in a more conservative way than many people would. So a lot of Bitcoin treasury companies, and we will change to this in the, the, the later part of next week, they show their debt relative to their Bitcoin, as opposed to how we show it, because our, our, our debt is shown relative to, as you say, our net asset value. and the net asset value is not only your Bitcoin, but then it's reducing it by, by your liabilities, you know, your debt. So if, if we were showing it relative to the Bitcoin holdings, it would be lower than that percentage. So we, we state it in an overcautious fashion, and we do that for a couple of reasons, but we feel that where we're going in the future, it's the right thing to change it to show debt relative, to the Bitcoin holdings. In terms of a percentage, I think we went up to about 15-ish percent. We said internally, you know, we'd probably be comfortable with maybe 20%. Maybe slightly more. What, what you also have to factor in there, though, is that say you're happy with, let's say, 20% for argument's sake, then Bitcoin goes down, obviously that, that ratio goes up. So it's, it's at a moment in time, and that's, that's why I think the companies that are happy with, you know, a responsible level of debt at the moment are, in my opinion, making the right choice. And because I believe the asset's going to go up, therefore the ratio is going to come down. Now, if you then put in other types of funding into the mix, like preferred equity, I think you can go

an awful lot higher. In our prospectus that we released a week or so ago, we said initially we would go up to about 35%. So that would be a combination of your preferred equity in our case, plus your Coinbase credit facility, reduce that by your cash assets, and then use that as a ratio against your total Bitcoin holdings. You know, I, I got asked the question over the weekend, you know, would you, would you go higher than 35%? If you look at strategy at the moment, I think they're about 40%. I think Strive last time I I checked, you know, making an adjustment in my head of probably about 50%, maybe, maybe a bit more. I'm not sure. And the answer to that is yeah, we, we, we, we can see how mathematically that works, but the reality is we don't have to make that decision at the moment. We need to get to 35% and then see what we do from there. And the, the beauty of that sort of thought process is that, like a lot of the things that we've done, we've been, been able to learn from other companies. So when we need to make a certain decision, we've been able to benefit from what people have done before. And I would like to think that, that that goes two ways so that those other companies that are looking at what we're doing can see what we do well and what we do not so well, and they can learn from that as well. And that's the great thing about our industry. You know, we can all learn from each other.

So obvious kind of question right now is, you know, everything, all the treasure companies are down from their high, right? The recent high, the high from last year. What do you think of as the scenario, you know, for that to change? Is it just, you know, Bitcoin price goes up, like what, what do you think is the main catalyst, if any? And I guess the other question would just be, do you think, you know, most of the surviving treasury companies will come back to that level? Or talk to us a bit about, you know, where you see things going. Or I, I suppose, actually, to be fair to you, I'm not sure about, you know, forward-looking statements and that sort of thing. So maybe we should just keep it to kind of,

I guess, let's talk a bit about the preferred. I think that'd be interesting as well, or at least what you can say about it. It's called MORE, right? What, what's the, what, what, what is the structure of that?

Yeah, so, so I'm, I'm happy to give you my opinions of, of the industry as long as, you know, we, we take it purely as, as an opinion, you know, more than happy with that. And, and of course, the preferred side of things, you know, in, you know, we, we often talk about price discovery, don't we, with markets, you know, and, and, and that's the great thing about Bitcoin. You know, I think it's still in that price discovery state, stage, and it probably will be in that stage for quite a few more years because, you know, Bitcoin is so unknown by, by the wider public. You know, we often forget that when we only think about Bitcoin and nothing else. You know, the reality is that most institutions haven't got any Bitcoin exposure. Most individuals haven't got any Bitcoin exposure. You know, there's a, there's, there's a, a lot more hate than there is love towards Bitcoin. A lot of people still include Bitcoin when they talk about crypto and things like this. Now, of course, it's getting better, and it gets better all, all of the time, but price discovery is really important. So if you then take that sort of thinking of what is price discovery and you apply that to a new industry, like Bitcoin treasury companies, I think it's, it's, it explains, you know, volatility and stuff, and it explain, explains investors trying to get to understand what is a Bitcoin treasury company. And, and of course, that isn't a single thing. That's something that, you know, lots of different Bitcoin treasury companies are positive things, and lots of those companies will evolve, and they will change over time, just like Smarter Web has

evolved and changed in, in quite a short time period. Now,

I think one of the things that investors have lost sight of when they're looking at different Bitcoin treasury companies is, is basically the investor returns. So if you look at our company, Smarter Web, from the start until today, you know, we've increased Bitcoin per share by, I don't know, let's call it 60x. You know, that's fantastic, right? But then, is that really that important to investors? You know, because, you know, the business owns the Bitcoin and the investors own the business, I think maybe a better metric to look at is total return, for example. So if you look at Smarter Web, you know, we're probably up 3,000% since our IPO, you know, 30x, which is half. You know, roughly speaking, the Bitcoin per share figure. And I think that's probably something that people will focus on a lot more into the future. So, you know, I'm a big shareholder of Smarter Web. I've said to everyone all the time that all of our decisions will be based on medium to long-term results. And we won't make decisions for very, very short-term things. And

we believe that that's the right approach. But to our investors and also to think about new capital coming into the company, you know, you need those investor returns just like any other equity, you know, if you're going to attract more capital. So I think that's one thing that will come out a lot more.

Yeah. So while we're there, actually, it would be a good spot to talk about this concept of attracting capital. So I guess investors, you know, globally are looking at various things. Some of them want to have a Bitcoin allocation. Some of them may go to, you know, the Bitcoin ETFs. They may look globally. How are you seeing Smarter Web, you know, in that mix? Where does Smarter Web have a differentiating factor there.

Yeah, so like people, and it's fascinating, you see. So when, when we started raising capital, we used to think that institutions think differently to retail investors, but they don't. They, they've got similar things and, and in some ways they've got more restrictions. So, you know, what, what I always used to think was when you get to 20 million, 30 million, 40 million market cap, you know, there's a queue of institutions that are saying, right, you're now a bigger company. Now that's not actually true. You know, like a lot of institutions will not invest in you unless you're 300, 400, 500 million pound market cap. You know, it's, it's way bigger than, than I thought it was before I started, you know, sort of having these conversations. In terms of what investors look for, then what you have to appreciate with institutional investors is that, you know, they've got their jobs on the line. So whereas you and I can take a long-term view on something, they don't. Necessarily have that flexibility because they're judged quarterly as an example, you know, in terms of their performance. So they, they can't necessarily say, you know, Bitcoin's at a low, you know, and we think in two years time it'll be a lot higher and, you know, buy some and, and, and, and wait it out because, you know, their, their funds performance will be impacted by those sorts of decisions. Which is frustrating, but it is how it is. I think the other thing that's quite surprising for people is that, you know, a lot of institutions are more momentum driven as well, and

they're also very driven by liquidity, which is one of the reasons why we put a lot of work into the liquidity of our equity. And so we, we, we really work hard on our communication because we believe in transparency, but we put a lot of work into trying to making sure that, that everyone understands what's, what's going on because that then transposes to liquidity. When you speak to a new institution, they will look at, basically your average, say, three month liquidity, and they will say, right, you know, I can size this based on, I don't know, two weeks worth of that liquidity. And that's not because they want to sell it immediately, but that's because that's an average, and they need to know that they can sell it if they want to sell it. So, so that's been quite interesting for us.

You know, the, the, the, the other thing is timescales. You know, everyone's got different timescales. And, you know, and that's okay as well, you know. So lots of people will use our stock for different things. Not everyone cares about our Bitcoin metrics. You know, some people care about the volatility in the stock. some people want to buy our stock for a couple of weeks. Other people want to buy it for a couple of months, you know. So what you have to sort of get used to when you're running a public company like this is, is there's lots of different people that want to use your stock for lots of different reasons. My job is to grow the business and to make sure that the strategies, the business is pointed in the right direction for the medium to long term. And then the market is a, is, is a different thing there really. You know, I don't control, obviously, the share price. You know, I have to monitor the share price so I can use it, for example, the ATM, for example, you know, which are third-party controls. But, you know, obviously, we keep a very close eye on because that impacts on When it comes into the business. But it's a fascinating area, the whole, the whole market and investor side of things.

Yeah. And when people are comparing, let's say, ETFs or other treasury companies with Smarter Web, how does that conversation normally go?

Yeah, so, like, a lot of people don't understand the concept of what a Bitcoin treasury company is, you know, and, and this is just from my perspective. So, you know, a Bitcoin treasury company is something that's quite unique in the financial world because we are an operating business with a Bitcoin treasury, and that means we can do certain things that other structures cannot do. So, effectively, what that boils down to is that we've got the ability to increase Bitcoin per share. So, if we compare, say, an ETF, And we compare Bitcoin, and we compare a Bitcoin treasury company, those three things are different. So, you know, an ETF, if you buy, you know, a thousand pounds worth of Bitcoin exposure through an ETF, what's that going to do? Well, the first thing is that's going to correlate very closely to Bitcoin, so that's a, that's a good thing. The second thing is that the value of that exposure is going to decrease in time because of the fees. So, let's say you bought one Bitcoin's worth of an ETF. You know, in, I don't know, 10 years time, you're going to have, you know, less than that because the fees are going to, you know, reverse compound into the value of that exposure. And then if you compare that to Bitcoin, so, you know, you can buy some Bitcoin, you know, after fees, and let's say you buy one Bitcoin, then in 10 years time, you are going to own one Bitcoin in theory, you know, obviously you take the responsibility

of the custody and things like this, but, but, but that's still going to be worth one Bitcoin. Now, if you buy a Bitcoin treasury company, which is not a proxy for Bitcoin, it's a business that holds Bitcoin on its balance sheet that may or may not, over the medium to long term, correspond to the value of its balance sheet, and you put a lot of additional risk into that because you're aligning yourselves with, say, the management, for example, they might make the wrong decisions. But the big positive is that if you buy a well-run Bitcoin treasury company that increases its Bitcoin per share and grows its balance sheet in a smart way using things that most of us cannot do personally, which is, you know, leverage up our balance sheet sensibly, you know, in our case, sell preferred equity, you know, and all these sorts of things. You should end up with, with, with the equivalent in terms of shares of, of a higher amount. So, so the work that we do is explaining more to the institutions, because the retail shareholders get it, you know, what a Bitcoin treasury company is actually trying to do, and, and it's quite an unknown concept in the traditional finance world. But, but, but, but that's why it's so interesting. You know, our job is to put the work in with these, these investors over many, many years.

So that they understand what a Bitcoin treasury company is to do. And, and, and that's why it's really interesting that, that now with the, proposed launch of MORE, you know, we, we, we've got something else to talk to these investors about, a different structure,

you know, a

different way that people can get exposure.

Yeah, so give an overview, what is MORE? What's the structure of it?

Yeah, so, so we, we talked about our capital structure briefly earlier, but the thing that's changing is that we're going to have a preferred equity. So in very, very simple terms, what we'll have is two equities. So we've got SWC, which is our ordinary shares, and, and I describe that to people as a growth equity, you know, whilst, whilst making it clear that growth is not guaranteed. And then the second equity is MORE, which is a preferred equity. So that's designed to be an income equity to have Almost no growth, although if you do buy it in the IPO, there is a potential upside of 11%. And that just pays a dividend. So, you know, some people have said to me, well, why don't you just have one equity that pays a dividend? Well, you know, me personally as an investor in Smarter Web, at this stage of my life, I do not want a dividend. I want the growth. So you're basically giving people two different ways that they can have exposure to the value of our balance sheet over time, a growth equity and an income equity. And for those of your, your, your, your audience that aren't aware, this, this was invented by Michael Saylor. So preferred equities have been around for decades. They were used originally for very capital intensive projects. I don't know, like, like railways and things like this. To really capital intensive projects, which make them perfectly suitable to this industry that we're building in. And Saylor came up with this idea that you could use it as a permanent source of long duration capital and then went on to sell over 10 billion dollars worth

His most popular Preferred, STRC, STRK, and then, and then a very good company in America, Strive. They also launched a Preferred, much smaller than Strategy's, but still bigger than ours will be initially. I mean, they've sold over a billion dollars worth of their Preferred now. So we are the third issuer in the world on a major exchange to, to launch a Preferred Equity, and we're, we're pretty excited to do that.

As, you were explaining a little bit about MORE and amplification, do you want to just, explain a bit about where, if you have like a target ratio on amplification there?

Yeah, so what investors need to look at is the difference between leverage and amplification, so they understand what, what they are to start with. And, and in very simple terms, leverage is, is the same thing as amplification, but with a different capital source. So, typically it would be, you know, Say like our Coinbase credit facility or, or some other sort of borrowing, as opposed to amplification is more your preferred equity permanent capital. But ultimately it's, it's, you know, either debt or equity that's a bit like debt in, in, in, in some regards. So what that very simply means is that dependent on how you structure your balance sheet, you can take that leverage or that amplification to different levels. So with our new preferred equity, we've said in the prospectus that initially we will cap it at 35% and then the directors are able to change that should they wish in the future. We think that 35% is the right level. As far as initially, for, for two main reasons. The first reason is that we're launching a new type of equity, or a new type of equity by a new company in the UK, so we need to be cautious, we need to get investors used to it, and, and then the, the, the, the, the second thing is, is, is, you know, like, what, what, what would we allow that to do thereafter, really? The, the, the, the reason I think that people are missing is that You, you, you can have all these

different figures and you can have all these different equities and other funding sources, but ultimately you need, you need people to support them. So, you know, with us, you know, there's like a pseudo credit rating really of, of our company. So if you, if you think about the pitch to a new investor, that would be, right, we've got a two-year minimum dividend cash buffer, so that investor knows that their dividends are, are all being well going to be paid for two years. And then after that, you know, that, that, that amplification or that leverage ratio comes into play. So in our case, if you take 35% and then you take the variable dividend rate of 12%, that means that, you know, we can pay those dividends if Bitcoin stayed flat and we didn't raise any more capital, albeit, you know, the, the Bitcoin would obviously be deteriorating, for 25 years. So, you know, in excess of 25 years. So, you know, they know that their dividend cover based on that 35% is going to be X. You increase that amplification. Right, and then you decrease that, so maybe the solution is that then you increase your dividend cash buffer, because it's all about the perceived credit profile of the company. That's what the investors will be looking at. And that's the conversations that we've had with the investors that we want to support this moving forward.

Yeah, okay. And just quickly, so do you see this as like a product for UK investors or what's the goal there?

With MORE. So we view it as a, we view it as an equity that is, is appropriate for both retail and institutional investors. now we were, we went through the process with the FCA, which is our regulator in the UK, who have been very good, on making sure that, you know, it's been designed for both of those markets, because that's really important for us. We think that this is a great equity that, that can be held by both of those two different types of investors. Now, in terms of the, the, the, the global audience, then yeah, of course, you know, this can be helped by people externally, but there's a big benefit to people that are outside of the US holding this as opposed to a US Preferred Equity in the sense that there isn't that dividend withholding tax. In the UK, there's a big benefit in the sense that it's denominated in GBP. And just as I hope we'll see Preferred Equities in Europe, you know, increasingly in the future from Bitcoin treasury companies, which would be denominated in euros, you know, because you take out that exchange rate. If you think about the Preferred Equity, and let's say that it, it performs as designed, so you can get your capital back whenever you want, you know, so you're not getting any capital appreciation, you know. If you then overlay the FX risk on top of that, you know, that could be quite significant. You know, if the dollar moved significantly against the pound, you ain't going to get your, your capital back, you know, at the rate that you intended.

But, but the other

side of that, you might Better. Yeah, yeah, of course, you know, that example works both ways, right? You could get more capital or less capital, but if you denominate your, your, your instrument in your base currency, so GBP for a lot of the people in the UK, you know, you're, you're reducing the risk of that quite considerably.

I see. Yeah. So, yeah, as you said, the currency risk, point, but there's also the dividend withholding point to understand for US-based equities or, securities. So, in terms of the operating business, I believe you still have a web agency, but is that, like, is that a profitable business? can you talk to us a bit about that and, like, the, the relative size of that? Like, I presume, because now your balance sheet is so much bigger than what it was, you know, two years ago, you know, how big is the operating business? Is it, is it, like, material or is it now, like, very small compared to the overall balance sheet?

Yeah, well, the, the, the way to answer that is that our operating businesses are tiny relative to the size of the Balance sheet because the balance sheet has grown so much, but the operating business has, before we became a public company, it was profitable every single year and in its, in its, in itself, it's still being profitable as being a public company as a subsidiary. But what we've done, and we, we were very clear about this right from the start, is we have been trying to grow our operating businesses. So we made our first acquisition, we announced that in February this year, and that, that, that massively increased our revenues. So now we've got two operating businesses, both in their own right have been profitable, and we believe that we can continue to grow them profitably into the future. But then there's other benefits as well because, you know, a Bitcoin treasury company like us does a lot of marketing, and so, you know, we're, we're our own client as well, and, and, and that's quite a useful thing. In terms of the future, will we do more acquisitions? And we've always been clear to people that we will do acquisitions at the right time. With the right structure, you know, and, and, and we won't rush them, but of course we're, we're, we're trying to grow our operating businesses, you know, but, but responsibly as well. And that's really important. I think longer term, like we may, we may sort of broaden out into other sectors as well, because, you know, web design is a, you know, it's an area that I understand, you can make good margins,

you can get good recurring revenues, you know, and all of those good things. But, you know, I think longer term, we might, we might have to, you know, sort of broaden out what we're looking for on that front. But it's very important, you know, you, you need to be, to do this strategy in the UK, you do need to be an operating business with a Bitcoin treasury. That operating business can be whatever, you know, you know, you, you've decided it should be.

So, let's also talk just to Try and be balanced where we can. What would you see as some of the risks or downsides here with, you know, with Bitcoin treasury companies? Is it just more like, you know, going through a bear market or not being able to raise capital or, you know, being on the wrong side of, you know, taking on bad terms of debt? Where do you see the risks for a Smarter Web Company?

Yeah, I think, I think there's, there's two big risks that people need to be aware of or, or certainly two that I think of. And, and one is, people need to be comfortable with volatility because Bitcoin, yes, is less volatile than it used to be, but, but it, it's still more volatile than a lot of things that people invest in. And a Bitcoin treasury company amplifies that volatility. So, you know, everyone loves that on the way up and, and most people don't like it so much on the way down. So I think, I think that if, if somebody's considering an investment in a Bitcoin treasury company that they need to understand that these are volatile investments, you know, you know, people don't like it when I say it, but you can't have it both ways. You can't have upside and no volatility, you know, that just doesn't happen. certainly that's my opinion of it. The second thing that everyone needs to understand, I'm really proud of what we've done at Smarter Web in, in this short 18 months, is they need to understand that management execution is critical. You know, management execution makes the difference between these things working and not working, and, and the management have got 101 things that they can do right or wrong. So the obvious things are things like capital structure. That's why we are very vocal about our Clean and simple balance sheet, cause we think that that's the right way to do it, or that's certainly the way that we want to do it. You know, there's, there's, there's, there's lots of different things that you can do, you know, like we've never raised money at a discount, for example, on our ordinary shares. So, you know, there's, there's things that we could do that, that,

that may allow us to grow quicker, but probably wouldn't do it in such a shareholder-friendly way. So I think that that's probably the two most important things people need to think about. The volatility of what you're buying, and, and also, you know, the, the, the management execution. Cause, you know, if we go back to your earlier question about comparing a Bitcoin treasury company with, say, Bitcoin, for example, you know, Bitcoin has no management, you know, a Bitcoin treasury company, the, the management could really, really mess it up.

Right, yeah, as you said, so they, so one risk you mentioned is things like dilutive raises, maybe taking on bad terms of debt, maybe too much debt, be, be having, you know, and we have I've seen some treasury companies that, you know, started and either failed or pivoted out of the strategy. So that is certainly a risk that, you know, listeners should be aware. Now, I guess Do you have any thoughts on, like, how, how Bitcoin treasury companies should weather a bear cycle? Now, I know we could argue, we don't know for sure, maybe this bear market is over, but what do you think about surviving a bear cycle as a Bitcoin treasury company?

I think it's, it's probably the same when you're not in a bear market as well without sort of dodging the question, which is you have a clean balance sheet, right? And you run it properly so that you can respond to all market conditions, cuz the only guarantee I can make to you is that today or tomorrow or the next day, Bitcoin's going to be higher, lower, or the same. So, the truth is that none of us know over the short term or, or, or, or even slightly longer term. We all believe that Bitcoin's going to go up considerably over the long term, but time is the thing that we don't know. So, what you need to do if you're running a Bitcoin treasury company or, or if you're looking at one to invest in is you need to make sure that the balance sheet is structured to allow that company to work. We're really lucky. Because we're by far the biggest Bitcoin treasury company in the UK. We've got a lot of liquidity in our stock. So even if things get pretty, pretty bad, all else being equal, we can generate money by selling equity, you know. We've got a clean balance sheet. So even today with the Coinbase facility that we've got, we could borrow more if we wanted. You know, we are about to launch a Preferred Equity into the UK, so we could sell more of that if we wanted. So we've got lots of these different levers that we can use so that we can weather the storm, should we wish. But, you know, the, the, the, there isn't any, ever any guarantee that you can get capital from the place that you want to get capital. so I think that's what people need to understand and, and, but then it's hard

for the management as well, you've got to appreciate because, you know, none of us believe in the value of the pound, as an example. So, I personally keep pretty much nothing in fiat currencies. Now, that sometimes make the, makes discussions with, with my wife a little bit. Awkward, you know, but, you know, I don't believe in the value of it. So, for me, running a Bitcoin treasury company has been a bit of an eye-opener because I've had to keep more cash in the business than I would otherwise want to keep because, you know, I'm running a balance sheet for the benefit of the shareholders and not, you know, my personal balance sheet, which, you know, I can take different amounts of risk with. But yeah, you, you need to look at the ability to weather the storm and, you know, you always need to look at it worst case scenario as well. So we all, well, certainly I do, I always hope for the best, but you hope for the best and plan for the worst. So, you know, I, I think that that's why the, you know, let's say we, we, we do what we're expecting here, which is we have three glorious years of Bitcoin. You know, like, I think what you need to be watching is those companies that are probably toning down the, the leverage, maybe not increasing the amplification, maybe increasing the amount of cash that they hold when things get incredibly Exciting over the course of the next few years and those sorts of things, you know. But then the other thing that we've got as well is, you know, we've always got the ability to sell Bitcoin, right? You know, which I know is, is something that we didn't talk about last year, you know, and,

and, you know, that's another thing that we, we should all be very grateful that Saylor has okayed. He's got the use, the market use to the fact that you can sell Bitcoin, you know. We, I'll give you an example, when we repaid our Smarter Convert facility, which we repaid with a specific amount of Bitcoin, you know, we, we executed that trade in seconds and, and, and then we sent the, the, the dollars, I think it was, I can't remember what it is, dollars, euros, or pounds back to, back to the investor. You know, we, we, we're sitting on a balance sheet that's built on not only the best capital in the world, in my opinion, but one of the most liquid types of capital in the world. So, you know, you know, you, it's, it's about balance sheet strength. That's, that's what, if you read our Prospectus, the new prospectus for MORE, you know, it's, it's all about building a balance sheet. And, and that's what a Bitcoin treasury company is. It's a balance sheet built on the best capital in the world.

Excellent. Well, I think that's all we've got time for, so we'll have to leave it there. Thanks for joining me. This is Andrew Webley from Smarter Web Co. Thanks, Andrew.

Thanks again.