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Isn't this kind of thing the whole reason we have accredited investor laws? This might be an unpopular opinion, but if we want to protect people from themselves

by NickM 8y ago

Isn't this kind of thing the whole reason we have accredited investor laws? This might be an unpopular opinion, but if we want to protect people from themselves, maybe we should stop banning people from investing in private equity and start worrying more about exotic stuff like crypto. It seems utterly absurd to me that I'm not allowed to buy a single share of Uber or SpaceX, while sinking my life savings into whatever obscure cryptocurrency I choose is perfectly legal.

tptacek 8y ago
I'm unclear on why we wouldn't just ban both things. The reason you can't buy a share of Uber or SpaceX is, effectively, that those companies don't want your money. Both could easily do a public offering and admit you as a shareholder, but choose not to. Further clarity: I'm "accredited", and I don't think I can buy a share of either company either.
- nathan_f77 8y ago
  That's not the only reason you can't buy a share of Uber or SpaceX. There are probably hundreds of employees who would jump at the chance to sell some of their vested shares. There are some secondary markets where you have to be an accredited investor, but most startups will block the transaction. P.S. I think it would be a very good idea to buy some Uber shares before their IPO. Maybe try EquityZen [1]. [1] https://equityzen.com/trending/uber/ https://equityzen.com/trending/uber/
  - deleted 8y ago
    [deleted]
  - jondubois 8y ago
    Yes, the whole startup-to-corporate-acquisition-or-ipo funnel is an elaborate fraud and even the government is in on it. It's why many people invested in crypto in the first place.
- NickM 8y ago
  They could do public offerings, but that comes with a lot of legal and regulatory requirements and expenses, accounting rules, disclosure rules, etc. etc. Not all of those things are necessarily bad; ostensibly they are there to protect public investors, but they do sometimes discourage companies from going public that might otherwise want to do so. But sure, maybe Uber and SpaceX aren't the best examples. Not sure if I'd even necessarily invest in either of them myself, but I thought they made for relatable examples. For a more real-world case, I'd love to be able to invest some money with the solar funds run by Wunder Capital, and that seems a lot safer than crypto, but that's off-limits to people like me as well.
  - tptacek 8y ago
    Most well-run startups do not want to sell you their shares, among other reasons because they become liable for a whole bunch of new investor relations torts once they do so. It's not just Uber or SpaceX that won't take your money; it's (I believe) most startups that ever hope to raise money institutionally later on.
jondubois 8y ago
Regulations were never designed to protect the working class. They're designed to protect the bourgeoisie from the working class. Regulations rarely work as advertised; however, their 'unintended' side effects do seem to be quite effective in terms of creating artificial barriers to prevent the working class from moving up.

by NickM 8y ago

tptacek 8y ago

I'm unclear on why we wouldn't just ban both things. The reason you can't buy a share of Uber or SpaceX is, effectively, that those companies don't want your money. Both could easily do a public offering and admit you as a shareholder, but choose not to. Further clarity: I'm "accredited", and I don't think I can buy a share of either company either.

nathan_f77 8y ago
That's not the only reason you can't buy a share of Uber or SpaceX. There are probably hundreds of employees who would jump at the chance to sell some of their vested shares. There are some secondary markets where you have to be an accredited investor, but most startups will block the transaction. P.S. I think it would be a very good idea to buy some Uber shares before their IPO. Maybe try EquityZen [1]. [1] https://equityzen.com/trending/uber/ https://equityzen.com/trending/uber/
- deleted 8y ago
  [deleted]
- jondubois 8y ago
  Yes, the whole startup-to-corporate-acquisition-or-ipo funnel is an elaborate fraud and even the government is in on it. It's why many people invested in crypto in the first place.
NickM 8y ago
They could do public offerings, but that comes with a lot of legal and regulatory requirements and expenses, accounting rules, disclosure rules, etc. etc. Not all of those things are necessarily bad; ostensibly they are there to protect public investors, but they do sometimes discourage companies from going public that might otherwise want to do so. But sure, maybe Uber and SpaceX aren't the best examples. Not sure if I'd even necessarily invest in either of them myself, but I thought they made for relatable examples. For a more real-world case, I'd love to be able to invest some money with the solar funds run by Wunder Capital, and that seems a lot safer than crypto, but that's off-limits to people like me as well.
- tptacek 8y ago
  Most well-run startups do not want to sell you their shares, among other reasons because they become liable for a whole bunch of new investor relations torts once they do so. It's not just Uber or SpaceX that won't take your money; it's (I believe) most startups that ever hope to raise money institutionally later on.

jondubois 8y ago

Regulations were never designed to protect the working class. They're designed to protect the bourgeoisie from the working class. Regulations rarely work as advertised; however, their 'unintended' side effects do seem to be quite effective in terms of creating artificial barriers to prevent the working class from moving up.