4 ms·

I've wondered this in some ways too, but then I'm curious whether it makes sense in the long run. Normal people can't understand the risks associated with inve

I've wondered this in some ways too, but then I'm curious whether it makes sense in the long run. Normal people can't understand the risks associated with investing in startups, even if it might be very small amounts of stock purchases. The risks are significantly higher if they only invest in ~5 companies, which many might do. From what I've read, angel investing starts to even out when you hit upwards of 20 companies. You would also have to start dealing with intense regulation. < sarbox+being a normal public company, but something way more than a traditional reg d filing. One alternative MIGHT be: Start a small angel fund where people can get in with a small buy in (500? 1,000?). Then you'd have 500 investors and I don't know if you can legally do that. (Saying that in the I have absolutely no f'ing clue sense).

alain94040 16y ago
True that the general public would be clueless. But on the other hand, in Silicon Valley there is a market of educated, startup-aware entrepreneurs, who'd love nothing more than play the startup stock market.
- jasonlbaptiste 16y ago
  VERY very good point. Do you keep it invite only then? I'd certainly buy in. Then again, why not just make it an invite only fund where the buy in is a monthly commitment of $500-$1000. 100 entrepreneurs at 1k a month, is 1.2 million. Invest that at 25k across 40 deals (leaving 200k left over as a reserve for legal,etc. though it may not be that high using standard docs).
  - alain94040 16y ago
    If it's just one fund, there's one guy who decides what to buy. It's not a market. If you have $50K, you can contact any number of real VCs and give them your cash. You thus become a member of the prestigious LP club and are allowed to complain about the dismal returns. I think the fun part is being able to individually look at the startups listed and buy whenever you see something you like. It makes you feel good (you are helping a good idea take off), and you may make a lot of money from it (or lose it all). I was at TechCrunch50 last year and discussed this idea with some people, and I got pushback from pros. Their argument: if you are a good startup, you can raise money the "normal way". So such a market would only attract losers... Not good of a reputation to have for a stock market.
arethuza 16y ago
You could set the legal entity up somewhere like the UK, which doesn't have anything like SOX or (as far as I know) the concept of an "accredited investor".
webwright 16y ago
I've never been a fan of "normal people can't be trusted with this kind of risk". We allow normal people to start companies, buy houses they can't afford, get credit cards, smoke cigarettes, drink alcohol, ride motorcycles, and do all sorts of things that are pretty darn risky. If a person wants to max out their credit cards to start a business selling left-handed scissors, they can do it. If a person wants to dump their ENTIRE FORTUNE into a single penny stock, they can do that, too.

alain94040 16y ago

True that the general public would be clueless. But on the other hand, in Silicon Valley there is a market of educated, startup-aware entrepreneurs, who'd love nothing more than play the startup stock market.

jasonlbaptiste 16y ago
VERY very good point. Do you keep it invite only then? I'd certainly buy in. Then again, why not just make it an invite only fund where the buy in is a monthly commitment of $500-$1000. 100 entrepreneurs at 1k a month, is 1.2 million. Invest that at 25k across 40 deals (leaving 200k left over as a reserve for legal,etc. though it may not be that high using standard docs).
- alain94040 16y ago
  If it's just one fund, there's one guy who decides what to buy. It's not a market. If you have $50K, you can contact any number of real VCs and give them your cash. You thus become a member of the prestigious LP club and are allowed to complain about the dismal returns. I think the fun part is being able to individually look at the startups listed and buy whenever you see something you like. It makes you feel good (you are helping a good idea take off), and you may make a lot of money from it (or lose it all). I was at TechCrunch50 last year and discussed this idea with some people, and I got pushback from pros. Their argument: if you are a good startup, you can raise money the "normal way". So such a market would only attract losers... Not good of a reputation to have for a stock market.

arethuza 16y ago

You could set the legal entity up somewhere like the UK, which doesn't have anything like SOX or (as far as I know) the concept of an "accredited investor".

webwright 16y ago

I've never been a fan of "normal people can't be trusted with this kind of risk". We allow normal people to start companies, buy houses they can't afford, get credit cards, smoke cigarettes, drink alcohol, ride motorcycles, and do all sorts of things that are pretty darn risky. If a person wants to max out their credit cards to start a business selling left-handed scissors, they can do it. If a person wants to dump their ENTIRE FORTUNE into a single penny stock, they can do that, too.