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> For example, I used to be skeptical about accredited investor requirments. Turns out, they're super necessary! This is one area I keep going back and forth o

by craigc 8y ago

> For example, I used to be skeptical about accredited investor requirments. Turns out, they're super necessary! This is one area I keep going back and forth on in my head. On one hand, obviously scams are bad, and the fact that people are throwing their life savings into some of these companies is awful. That said, I am not sure it should be up to Governments to decide who can and can’t invest in early stage startups and how people should be allowed to spend their money. Much of the reason that crowdfunding (Kickstarter, Indiegogo, ICOs) has become popular is because of the lower barrier to entry for contributing to projects/startups. There are a number of companies I would love to invest in, but can’t because I am not a millionaire. I do not really find that fair. Creating an open market around funding will teach people a lot of hard lessons about money. VCs know that 90% of startups are going to fail. I don’t think it is that crazy to believe that regular people can learn that as well. All it takes is one really bad investment to learn the lesson.

palakchokshi 8y ago
You have to beware of overreaction to the bad investment. Generally folks are not savvy investors. Just look at the large number of small investors in the stock markets. When greed takes hold or FOMO does and lots of people lose money it will lead to an overreaction against investors wanting to put money in companies. This will lead to VC/angel investment drying up which in turn will curb startups. Remember we live in a country where a cafe has to put the following disclaimer on Hot coffee paper cups "Caution: The contents of this cup could be hot!!"
- craigc 8y ago
  Very very true. A lot of people make extremely poor decisions with their money. Perhaps there could be a threshold then? Like you are allowed to invest x% of your income/savings? I don’t really know the answer. I think the cup example may actually be more to prevent restaurants/cafes from lawsuits vs. to actually protect their customers from burns. I suppose it could be a combination of the two though.
  - palakchokshi 8y ago
    The cup example was to show that people are dumb enough to sue a cafe because they got burned by hot coffee. It's an example of overreaction. Instead of thinking "I ordered a hot coffee, maybe this cup is going to be hot and I should be careful", people think "I ordered a hot coffee and because the cafe gave it to me in a cup I am going to assume it's the cafe's responsibility to make sure I don't get burnt" When people get burned they react by finding scapegoats.

by craigc 8y ago

palakchokshi 8y ago

You have to beware of overreaction to the bad investment. Generally folks are not savvy investors. Just look at the large number of small investors in the stock markets. When greed takes hold or FOMO does and lots of people lose money it will lead to an overreaction against investors wanting to put money in companies. This will lead to VC/angel investment drying up which in turn will curb startups. Remember we live in a country where a cafe has to put the following disclaimer on Hot coffee paper cups "Caution: The contents of this cup could be hot!!"

craigc 8y ago
Very very true. A lot of people make extremely poor decisions with their money. Perhaps there could be a threshold then? Like you are allowed to invest x% of your income/savings? I don’t really know the answer. I think the cup example may actually be more to prevent restaurants/cafes from lawsuits vs. to actually protect their customers from burns. I suppose it could be a combination of the two though.
- palakchokshi 8y ago
  The cup example was to show that people are dumb enough to sue a cafe because they got burned by hot coffee. It's an example of overreaction. Instead of thinking "I ordered a hot coffee, maybe this cup is going to be hot and I should be careful", people think "I ordered a hot coffee and because the cafe gave it to me in a cup I am going to assume it's the cafe's responsibility to make sure I don't get burnt" When people get burned they react by finding scapegoats.