Próspera is a new place to start and operate a business with predictable and understandable rules and fees. Próspera is what is called a “startup city”. The founders of Próspera refer to it is an economic “platform”. Próspera physically exists as a 600+ acre special economic zone or “ZEDE” on the tourist island of Roatán, which is part of Honduras. But the ZEDE government is just the first element of a set of web-based services that are available to “e-residents”. The combination of the legal authorization from the government of Honduras, the attractive physical setting in a tropical paradise, and the government and business tools developed by the founders provide a compelling opportunity for entrepreneurs.
The Próspera ZEDE is a piece of innovative governance technology inspired by the success of places like Hong Kong as attractors and generators of economic capital. The concept of creating a low-regulation, low-tax free enterprise project in Central America has been talked about for years, with economist Paul Romer being a leading advocate. The Próspera ZEDE operates under the Honduran constitution as policy approved by the legislature, but local administration inside the physical 600-acre space as well business regulation and taxes are in the domain of the ZEDE. Criminal matters are still under Honduran law, enforceable by local and state police.
In terms of economic and business regulation, businesses can choose to follow any ruleset in the OECD. This allows e-residents to run a business according to rules the rules of their home country (or another country) with no extra regulatory overhead in Próspera. Income taxes are 10% currently and the contract restricts the directors of Próspera to a maximum total percentage of 7.5% of the ZEDE’s GDP. Fees to the ZEDE are payable in Bitcoin. The general setup is an attempt to create as little friction for business owners as possible, by creating flexibility within the best-of-breed governments around the world, and providing a clarity and straightforwardness through governance-by-contract. A journal of legal matters can be found here.
The Próspera platform is more than a mere legal mechanism to authorize business activities. It is a technical and business toolset, which brings to mind the idea of a software API, but what I would call the starting points of a business ecology. The first component is the Próspera Arbitration Center, which is the default place to resolve labor and business disputes in the ZEDE. Arbitration helps create a less costly business environment by reducing the downside risks for all parties of merely fighting a lawsuit in court. The Próspera Arbitration Center will stand on its reputation for the fairness of its judgments, which is a libertarian approach to providing justice.
Further, when you setup a company with Próspera, you need a registered agent with the ZEDE. Próspera Employment Solutions is ready in place. Beyond furnishing a business address, they are a full service human resource agency, doing recruiting and payroll, as well as managing benefits and regulatory compliance. It appears to be a plug-and-play business service.
The most cutting edge component is probably the newly announced Bitcoin bond authority, which enables investors to buy equity (in the form of security tokens) in bonds issued by municipalities in Honduras. This works as a way of providing development financing. What the risks are of such investments is material for many future articles, but suffice it say that if Roatán and other areas of Honduras are able to leverage such investments, it could be a huge win all around.
Honduras on the whole does have significant poverty and crime, to the degree that the U.S. State Department urges Americans to reconsider their travel there. However, Roatán has a much higher safety and stability level. It sits 40 miles off the coast as one of the Honduran Bay Islands. Roatán has a reputation for being a beach-life and scuba-diving location. The tourism industry brings in money and of course requires enough safety to remain viable. Another feature of Roatán is that it is English-speaking, which makes it more accessible to many Westerners.
The Próspera property, like much of the island, is not yet developed. Próspera operates out of an initial “Beta Building”, reflecting the startup nature of the project. The first housing units, designed by Zaha Hadid Architects, are being constructed. Próspera has also acquired the neighboring Pristine Bay beach resort, which sits next to Roatán’s only golf course. They are looking for entrepreneurs to build the usual kinds of local businesses, retail and services, as well as high-end surgeries, banking, and finance. Some business ideas are listed here.
One business that has already hung a shingle in Próspera is the Academy of Thought and Industry, a Montessori/Socratic-inspired school that operates online and in a number of affluent cities in the United States. Much like the mission of Próspera, the Academy of Thought and Industry encourages students to put ideas into practice and by doing so to attain higher freedom.
To get started with Próspera you pay a $130 fee to apply for “e-Residency” which involves disclosing identifying and background information. In order to weed out criminal or undesirable elements, which helps it support its legitimacy as a government, Próspera uses background checks, including a check with OFAC at the U.S. Treasury Department. To become an e-Resident, you sign a contract agreeing to waive your right to popular-sovereignty (within the ZEDE) and to use a ZEDE-approved arbitration firm (by default the Próspera Arbitration Center). To create a business entity it costs between $540 and $1840 depending on whether you purchase liability insurance which is recommended, or may be required. For digital businesses, payment service Payoneer is already plugged into Próspera. Próspera is administered through a sophisticated web portal, which turns around applications very quickly. Conceptually, a business owner with a website could be in business in less than a week.
I personally am very excited about this project. I have become an e-resident and registered an LLC with Próspera. I am developing my digital business which I will publicize soon. If you are currently developing a business on the Próspera platform, or have a questions or thoughts about the project, please feel free to comment below.
Feedback & Engagement
You can comment on this article by creating a free account and signing in.
I can be reached on Twitter (@3rdeconomy).
To get updates from this blog, subscribe to the mailing list here.