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What is to prevent someone from gathering some money to create a business that will only provide a revenue stream. Let's say I have no intention of going publ

What is to prevent someone from gathering some money to create a business that will only provide a revenue stream. Let's say I have no intention of going public, or selling the company.... just raise some money & then run the company. Can an equity fundraise be offered with a plan to distribute the correct % of earnings to investors?

Dwolb 10y ago
I don't think this is exclusively an issue with crowdfunding. For example, this issue exists in the public markets. Both Amazon and Google have never declared nor paid dividends. As an equity holder in these scenarios, you do own a share of the underlying assets, but are unlikely to see any distributed cash flows.
- suresk 10y ago
  The important distinction being, I can sell my shares of Amazon or Google almost instantly on the open market. The same cannot be said for a company that chooses to remain private.
deleted 10y ago
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mdorazio 10y ago
As far as I can tell, nothing. You're basically just saying a crowd-funded mutual fund would be possible, which seems correct provided the company filed the proper paperwork for it. I'm not sure why investors would go with something like this over just putting money into Vanguard, though.
- pessimizer 10y ago
  Religious, racial, or cultural affinity? The impression of exclusivity by putting a ceiling on the number of investors and raising it in increments? The whiff of possible insider knowledge based on bluster and one or two Amazon bestsellers, some press releases, a TED talk, an appearance on Shark Tank, or instagram pictures partying with captains of industry and celebrities? A magical belief system? Why do people put money into anything but Vanguard now?
wehadfun 10y ago
Yea, I wondered the same thing when I want to a crowdfunding workshop a year back. I asked how do you get your money out if the business never sells. Are the companies required to pay dividends? The people running the workshop kept saying it is the same as buying stock in Amazon and Apple. And I was thinking you really are telling me that buying stock in Bob's Tire Shop is the same as buying stock in Apple. GTFO

Dwolb 10y ago

I don't think this is exclusively an issue with crowdfunding. For example, this issue exists in the public markets. Both Amazon and Google have never declared nor paid dividends. As an equity holder in these scenarios, you do own a share of the underlying assets, but are unlikely to see any distributed cash flows.

suresk 10y ago
The important distinction being, I can sell my shares of Amazon or Google almost instantly on the open market. The same cannot be said for a company that chooses to remain private.

deleted 10y ago

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mdorazio 10y ago

As far as I can tell, nothing. You're basically just saying a crowd-funded mutual fund would be possible, which seems correct provided the company filed the proper paperwork for it. I'm not sure why investors would go with something like this over just putting money into Vanguard, though.

pessimizer 10y ago
Religious, racial, or cultural affinity? The impression of exclusivity by putting a ceiling on the number of investors and raising it in increments? The whiff of possible insider knowledge based on bluster and one or two Amazon bestsellers, some press releases, a TED talk, an appearance on Shark Tank, or instagram pictures partying with captains of industry and celebrities? A magical belief system? Why do people put money into anything but Vanguard now?

wehadfun 10y ago

Yea, I wondered the same thing when I want to a crowdfunding workshop a year back. I asked how do you get your money out if the business never sells. Are the companies required to pay dividends? The people running the workshop kept saying it is the same as buying stock in Amazon and Apple. And I was thinking you really are telling me that buying stock in Bob's Tire Shop is the same as buying stock in Apple. GTFO