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Excited to see this. I hope it leads to a trend to listing sooner and giving access to retail investors much earlier. Buying Uber at a few dollars instead of $4

Excited to see this. I hope it leads to a trend to listing sooner and giving access to retail investors much earlier. Buying Uber at a few dollars instead of $42 for example. The markets will operate like they want to unless there are explicit rules to stop it. Right now it's wait to IPO as long as possible, and HFT only accessible to huge companies. Retail is left with the scraps.

mises 7y ago
Retail is left with "the scraps" because it is much riskier to invest early on. Companies that fail early aren't heard about as much, because Joe Average's pension plan hasn't invested in them, but are still plentiful. And maybe Joe Average's pension plan shouldn't be investing in what are effectively PE-stage firms. I don't know if I'm right about this, but it seems such an exchange might contribute to something like 2008. Then, it was the common man investing in over-heated real estate; now, it could become the common man investing in over-heated tech. I feel like those who work in tech often forget that it can fail, have cycles of boom and bust, etc. like any other industry. Of course, I do think it can serve a useful purpose, but there is reason early-stage, private investment is restricted to qualified investors.
- elamje 7y ago
  > Of course, I do think it can serve a useful purpose, but there is reason early-stage, private investment is restricted to qualified investors. The expected value of early stage investing is certainly higher than lotteries in the US. Every poor Joe can spend thousands on lottery tickets that expire worthless, but cannot invest thousands in real companies that Joe believes will do very well in the future. Shouldn't Joe have access to companies earlier, if he currently can access lottery games?
  - eanzenberg 7y ago
    Yes, and he can become an accredited investor which has regulations tied around it. Safeguards are needed so your Average Joe doesn't squander his family's $500k retirement and become dependent on the govt's teat.
    - thaumasiotes 7y ago
      Wouldn't those safeguards be at least as necessary for lottery tickets?
      - eanzenberg 7y ago
        Only degenerates throw $500k away at lottery tix, while significant amounts of the population invest their entire $500k in funds as found in 401k's or IRAs (or whatever). So yeah, I'd rather shield most of the country from the volatility of early stage shitfests, and make that bar high to climb if they really truly want to invest in early-stage.
        dev_throw 7y ago
        Then make them take some tests to get accredited rather than an arbitrary income barrier, or net worth gatekeeping. According to that logic, someone with $2M net worth is just as likely to lose their shirt as someone with $50k net worth if they put their entire worth into a losing fund.
        elliekelly 7y ago
        It’s not about knowledge, it’s about the amount of risk and the amount at risk. Two equally skilled investors each looking to invest $10,000 in the same company. Investor A is worth $10,000,000 while Investor B is worth $100,000. Those two investments look the same on paper but the risk for each investor is wildly different. A test won’t solve for that.
        thaumasiotes 7y ago
        I don't think you have a good sense of who's buying how many lottery tickets. By your measure here, amount invested as percentage of net worth, the lottery should definitely be illegal.
        7y ago
  - thaumasiotes 7y ago
    But the revenue from Joe would then go to early-stage companies, not the government.
    - sokoloff 7y ago
      I think what you'd find is that Joe's money would go to shysters who are today turned off by the prospect by forfeiting their money and sitting the rest of their lives in federal prison (so they become telemarkets, roofing repair dudes that follow hurricanes around, or late-night TV hucksters).
  - CPLX 7y ago
    > The expected value of early stage investing is certainly higher than lotteries in the US. That’s arguable. State lotteries are highly regulated and transparent and typically return 50% of their capital to participants.
    - elamje 7y ago
      That’s fair. For the overall game you can expect to lose 50% though, with a handful of outsized windfalls going to 1/1000000 people. In principle it’s more about why a poor person can access lotteries but not private investments, not the exact math on E[X]
- bufferoverflow 7y ago
  A Joe Average is legally allowed to walk into a casino and lose all his money, pretty much guaranteed over long term. A Joe Average is legally allowed to play all kinds of lotteries, pretty much guaranteed loss over long term. A Joe Average is legally allowed to invest his 401k in the riskiest penny stock one can find. This has nothing to do with risk, it's 100% gate keeping.
  - trophycase 7y ago
    Yep, penny stocks, options and margin trading are all available to a retail investor. But hey, I want to invest in a new business? I want to buy Bitcoin? I want to participate in an ICO? Sorry. It's all about gatekeeping and not letting me do what I want with my money.
    - verall 7y ago
      I don't like the gate keeping either but so called "entrepreneurs" would just go around washing people. The point is that you have enough money so no-one cares that the space mining company you invested in only hires website designers. Pumping penny stocks is illegal, but when it wasn't, salespeople were washing people.
    - govg 7y ago
      It could also merely be convenience - as a startup you want to raise a few millions or whatever, and you want it all to come from a few sources, not too many. If you opened this up to an average investor, it will be a headache consolidating all of them. Also, there are offerings by banks for wealthy clients who can invest in the banks' PE or VC arm, this allows access to the clients, and since it's one bank providing liquidity the people obtaining it don't have to manage anything.
  - vinceguidry 7y ago
    The reason investing is treated with greater scrutiny than gambling is because of the psychological factor. When you gamble, you're under no illusion that you're guaranteed to win. But it's easy to be fooled into thinking there's a way to hedge risk without putting in the time and effort to learn how. Every single time I see democratized access to riskier financial markets actually make it to the public, I can hold my breath and wait for the news reports to come out about the scams and grifters that come out of the woodwork to take advantage of little old grandmas, who wouldn't ever think of pulling the cash out from under the mattress that she's saving for little Penny's college fund and going to Vegas, but can easily be talked into "investing" it in the brand new wave of "tech" sweeping the nation. It's not Joe Average these laws protect. It's Joe Average's less cognitively-blessed parents. It's so easy to fool old people that if we don't take positive steps to stop it from happening, it becomes an industry. You can't get rid of all of it, but you can at least push the wolves out to the periphery.
- sideshowb 7y ago
  2008 wasn't about the common man making poor investment choices. It was about banks extending credit to people who weren't credit worthy, but pretending to their investment customers that they were.
rb666 7y ago
You can already do this, it's called crowd-funding!
- scribu 7y ago
  If by "crowdfunding" you mean Kickstarter, then no, that's not like investing at all. Putting money into a Kickstarter project doesn't entitle you to any future profits. However, equity crowdfunding platforms do exist. One example is CrowdCube.

mises 7y ago

Retail is left with "the scraps" because it is much riskier to invest early on. Companies that fail early aren't heard about as much, because Joe Average's pension plan hasn't invested in them, but are still plentiful. And maybe Joe Average's pension plan shouldn't be investing in what are effectively PE-stage firms. I don't know if I'm right about this, but it seems such an exchange might contribute to something like 2008. Then, it was the common man investing in over-heated real estate; now, it could become the common man investing in over-heated tech. I feel like those who work in tech often forget that it can fail, have cycles of boom and bust, etc. like any other industry. Of course, I do think it can serve a useful purpose, but there is reason early-stage, private investment is restricted to qualified investors.

elamje 7y ago
> Of course, I do think it can serve a useful purpose, but there is reason early-stage, private investment is restricted to qualified investors. The expected value of early stage investing is certainly higher than lotteries in the US. Every poor Joe can spend thousands on lottery tickets that expire worthless, but cannot invest thousands in real companies that Joe believes will do very well in the future. Shouldn't Joe have access to companies earlier, if he currently can access lottery games?
- eanzenberg 7y ago
  Yes, and he can become an accredited investor which has regulations tied around it. Safeguards are needed so your Average Joe doesn't squander his family's $500k retirement and become dependent on the govt's teat.
  - thaumasiotes 7y ago
    Wouldn't those safeguards be at least as necessary for lottery tickets?
    - eanzenberg 7y ago
      Only degenerates throw $500k away at lottery tix, while significant amounts of the population invest their entire $500k in funds as found in 401k's or IRAs (or whatever). So yeah, I'd rather shield most of the country from the volatility of early stage shitfests, and make that bar high to climb if they really truly want to invest in early-stage.
      - dev_throw 7y ago
        Then make them take some tests to get accredited rather than an arbitrary income barrier, or net worth gatekeeping. According to that logic, someone with $2M net worth is just as likely to lose their shirt as someone with $50k net worth if they put their entire worth into a losing fund.
        elliekelly 7y ago
        It’s not about knowledge, it’s about the amount of risk and the amount at risk. Two equally skilled investors each looking to invest $10,000 in the same company. Investor A is worth $10,000,000 while Investor B is worth $100,000. Those two investments look the same on paper but the risk for each investor is wildly different. A test won’t solve for that.
        thaumasiotes 7y ago
        I don't think you have a good sense of who's buying how many lottery tickets. By your measure here, amount invested as percentage of net worth, the lottery should definitely be illegal.
        7y ago
- thaumasiotes 7y ago
  But the revenue from Joe would then go to early-stage companies, not the government.
  - sokoloff 7y ago
    I think what you'd find is that Joe's money would go to shysters who are today turned off by the prospect by forfeiting their money and sitting the rest of their lives in federal prison (so they become telemarkets, roofing repair dudes that follow hurricanes around, or late-night TV hucksters).
- CPLX 7y ago
  > The expected value of early stage investing is certainly higher than lotteries in the US. That’s arguable. State lotteries are highly regulated and transparent and typically return 50% of their capital to participants.
  - elamje 7y ago
    That’s fair. For the overall game you can expect to lose 50% though, with a handful of outsized windfalls going to 1/1000000 people. In principle it’s more about why a poor person can access lotteries but not private investments, not the exact math on E[X]
bufferoverflow 7y ago
A Joe Average is legally allowed to walk into a casino and lose all his money, pretty much guaranteed over long term. A Joe Average is legally allowed to play all kinds of lotteries, pretty much guaranteed loss over long term. A Joe Average is legally allowed to invest his 401k in the riskiest penny stock one can find. This has nothing to do with risk, it's 100% gate keeping.
- trophycase 7y ago
  Yep, penny stocks, options and margin trading are all available to a retail investor. But hey, I want to invest in a new business? I want to buy Bitcoin? I want to participate in an ICO? Sorry. It's all about gatekeeping and not letting me do what I want with my money.
  - verall 7y ago
    I don't like the gate keeping either but so called "entrepreneurs" would just go around washing people. The point is that you have enough money so no-one cares that the space mining company you invested in only hires website designers. Pumping penny stocks is illegal, but when it wasn't, salespeople were washing people.
  - govg 7y ago
    It could also merely be convenience - as a startup you want to raise a few millions or whatever, and you want it all to come from a few sources, not too many. If you opened this up to an average investor, it will be a headache consolidating all of them. Also, there are offerings by banks for wealthy clients who can invest in the banks' PE or VC arm, this allows access to the clients, and since it's one bank providing liquidity the people obtaining it don't have to manage anything.
- vinceguidry 7y ago
  The reason investing is treated with greater scrutiny than gambling is because of the psychological factor. When you gamble, you're under no illusion that you're guaranteed to win. But it's easy to be fooled into thinking there's a way to hedge risk without putting in the time and effort to learn how. Every single time I see democratized access to riskier financial markets actually make it to the public, I can hold my breath and wait for the news reports to come out about the scams and grifters that come out of the woodwork to take advantage of little old grandmas, who wouldn't ever think of pulling the cash out from under the mattress that she's saving for little Penny's college fund and going to Vegas, but can easily be talked into "investing" it in the brand new wave of "tech" sweeping the nation. It's not Joe Average these laws protect. It's Joe Average's less cognitively-blessed parents. It's so easy to fool old people that if we don't take positive steps to stop it from happening, it becomes an industry. You can't get rid of all of it, but you can at least push the wolves out to the periphery.
sideshowb 7y ago
2008 wasn't about the common man making poor investment choices. It was about banks extending credit to people who weren't credit worthy, but pretending to their investment customers that they were.

rb666 7y ago

You can already do this, it's called crowd-funding!

scribu 7y ago
If by "crowdfunding" you mean Kickstarter, then no, that's not like investing at all. Putting money into a Kickstarter project doesn't entitle you to any future profits. However, equity crowdfunding platforms do exist. One example is CrowdCube.