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Raising money from random people on the internet sounds like a nightmare. Every investor you take on is there for life and has a unique set of goals. The advic
by tyre 10y ago
Raising money from random people on the internet sounds like a nightmare.
Every investor you take on is there for life and has a unique set of goals. The advice they give you is bent towards those goals, be it creating the best product, exiting in six months, IPOing in 10 years, or making a large social impact. I can only imagine the all-caps emails from first-time investors demanding the company go in one direction.
Investor relations can be a time sink to manage for an early stage company, especially if you have inexperienced investors who only read about the good times on TechCrunch.
- elastic_church 10y ago> Every investor you take on is there for life and has a unique set of goals. The advice they give you is bent towards those goals You just made the assumption that they will have a say at all! Non-voting shares are in vogue!
- jonwachob91 10y agoNon-voting shares don't save you from the emails/phone calls of naive/ignorant/stupid investors.
- cmdrfred 10y agoNo, your secretary/answering service does.
- jonwachob91 10y agoWhile I understand the spirit of your posts, I've learned the hard way that treating investors with less than the respect they deserve is a sure fire way to shoot yourself in the foot. They are often times the first and fastest method to raising additional capital when in a pinch. Naive investor or not.
- cmdrfred 10y ago>treating investors with less than the respect they deserve Is not having a direct line 24/7 less respect than a investor deserves? Especially one who was invested only a few hundred dollars?
- deleted 10y ago[deleted]
- JumpCrisscross 10y agoFrom FINRA, Delaware law and the SEC's perpsrictive, no. If you are not lawfully forthcoming the sanctions and fines will come on swiftly and heavily.
- stcredzero 10y agoHow's this for a good way to evaluate a startup while looking for employment at one: Do they talk crap about investors?
- anigbrowl 10y agoHaving seen how you talk about your investors casually, I'm in little hurry to join their number.
- anigbrowl 10y agoHaving seen how you talk about your investors casually, I'm in little hurry to join their number.
- elastic_church 10y agoso much FUD around crowdfunding from people that don't know how it works or how to mitigate problems Everything from the idea of "annoying peons", to the idea of VCs balking at a warped cap table even though the crowd can be grouped together as one Self limiting.
- ceejayoz 10y agoThis would seem to be a solved problem for publicly traded companies.
- jonwachob91 10y agoInvesting $250K in a seed round startup buys you a lot more equity stake than buying $250k of stock in Apple. Publicly traded companies solve this problem by the virtue of their size.
- ceejayoz 10y agoThe article is talking about numbers being "a couple of thousand dollars". If you're gonna put $250k in you're probably not going through Indiegogo.
- Animats 10y agoThe New York Stock Exchange used to prohibit listing shares where there was more than one class of stock. (The only exception was Ford, which predated that rule.) We need that back.
- dominotw 10y ago>Raising money from random people on the internet sounds like a nightmare. Curious how much of their userbase qualifies to be an Accredited investor. https://en.wikipedia.org/wiki/Accredited_investor#United_States https://en.wikipedia.org/wiki/Accredited_investor#United_Sta...
- cbr 10y agoThe JOBS act crowdfunding doesn't require you to be an accredited investor: http://www.finra.org/investors/alerts/crowdfunding-and-jobs-act-what-investors-should-know http://www.finra.org/investors/alerts/crowdfunding-and-jobs-... https://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act https://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startup...
- bduerst 10y agoBut still restricts non-accreddited investors more than accreddited, meaning that compliance requires a way to disseminate between the two. Last time I check the SEC interpretation of the rules in 2015, they put the onus on the crowdfunding platform to make that identification.
- pavlov 10y agoI'm familiar with the deal structure that Invesdor (https://www.invesdor.com/en https://www.invesdor.com/en) does. They have been doing this for years in the Nordic countries (thanks to very lax local laws), and nowadays have a license for the whole EU. Most companies who raise through Invesdor use an "Equity Crowdfunding Shareholders' Agreement" that each investor must sign. Its wide boilerplate language prevents the small investors from selling or transferring their shares, and requires that they vote on key issues according to instructions from the Board. That kind of agreement basically strips the investors from any actual power in the company, so their influence really is limited to "all-caps emails". Even then, my impression is that most of these small investors are reasonably well diversified (contrary to what one might expect) -- they put small amounts of money in multiple Invesdor companies, and don't expect a return any time soon. Often they're really just looking to support the business Kickstarter-style, with no actual expectation of an exit.
- joshlemer 10y ago>prevents the small investors from selling or transferring their shares You can never sell or transfer your shares? Then why would you ever invest?
- jwn 10y agoI assume the GP meant something similar to restricted stock, where you are severely limited in selling and transferring of your stock until certain preconditions are met (change of ownership, IPO, etc).
- JumpCrisscross 10y agoPrivately-held stock, i.e. restricted stock of non-reporting companies, can't be sold "to the public" and generally must held for at least one year [1], but other than that is quite transferable pre-IPO. That minimum holding time can vary, too, depending on circumstances. Most transfer restrictions are put in place by companies, not law. [1] https://www.sec.gov/investor/pubs/rule144.htm https://www.sec.gov/investor/pubs/rule144.htm
- jonwachob91 10y agoAnd it's because of the points you made that most real investors will "blacklist" any company that has raised crowd equity. However, it will be interesting to wait and see if someone (probably and accountant or lawyer) figures out a structure/vehicle that allows me utilize the positives of crowd equity while staying away from the negatives. EDIT: Maybe a crowd equity funded VC group...? Run by sophisticated investors.
- JeremyBanks 10y agoIsn't that just like a traditional investment bank?
- jonwachob91 10y agoYes, but you and I don't really have the ability to put a portion of our savings into Andressen Horrowitz. At best our money ends up at a VC fund through a middle man, be it your brokerage house putting LOTS of clients money in or a work pension fund.
- thruflo22 10y agoIt's false (at least here in the UK) that investors blacklist companies that have raised equity crowdfunding. The trend is going the other way: towards crowd equity rounds being anchored by venture funds and to VC co-investment. See eg http://lcif.co http://lcif.co and https://www.crowdcube.com/pg/not-just-the-crowd-1712 https://www.crowdcube.com/pg/not-just-the-crowd-1712 Re: edit, absolutely. Crowd investment into a portfolio / fund vehicle is a great idea. Likely to be more like a quant fund / index tracker though, rather than professionally managed -- because who wants to pay 3% annual fees. And what would you logically track? AIM or crowd equity platforms because they are your signal.
- ThomPete 10y agoLike the stock market :).
- elmar 10y agoAnd probably the people that invest ten bucks are the ones that send the most frequent and annoying e-mails :)
- cygnus 10y agoLegal structures need to be adapted. In Europe for equity crowdfunding, there is a "nominee structure" for example. It removes lots of pain for entrepreneurs, investors and the middleman.