3 ms·

So a “poor” but highly knowledgeable financial planner making “only” $180k a year can’t invest in their friend’s startup because the regulators deem it too risk

So a “poor” but highly knowledgeable financial planner making “only” $180k a year can’t invest in their friend’s startup because the regulators deem it too risky. But some random dentist can? https://www.bloomberg.com/opinion/articles/2018-09-24/earning-the-right-to-get-swindled https://www.bloomberg.com/opinion/articles/2018-09-24/earnin...

toomuchtodo 5y ago
The dentist can weather the poor investment. Knowledge does not make you financially solvent. It just improves your gambling odds as it relates to equity investment.
- BitwiseFool 5y ago
  From my perspective, only letting people who are well off enough to 'weather the loss' seems like something that only exacerbates the wealth gap.
  - toomuchtodo 5y ago
    Super off topic, but the wealth gap is exacerbated by not taxing the wealthiest at a high enough rate, not regulations against capital market participation in highly speculative ventures. To argue that accredited investor regulations are the problem is no different than arguing for lottery tickets or penny stocks as an investment strategy for low income citizens.
    - mschuster91 5y ago
      Lotteries are super regulated though, it's (no matter the country) an utter nightmare, even stuff like a school's trinket raffle. The reason is a shitload of people making "easy profits" by frauding people.
  - notahacker 5y ago
    The wealth gap isn't going to shrink by making it easy for startups (or "startups") that can't convince rich strangers (or friends and family, or crowdfunding platforms) they're worth investing in to convince larger numbers of less rich strangers to do it instead. Most companies funded by professionals go bust and the risk adjusted returns to VC as an asset class aren't that great: the funds that have spectacular returns being balanced out by those that lose their LPs money. And few unicorns are going to be spending their effort pitching average earners for $2k cheques. Why would we expect the average joe to invest better than the pros with less capital to diversify, no board seats and substantially worse dealflow?
    - formerkrogemp 5y ago
      You're not going to find a welcoming crowd here criticizing startups on Y-Combinator news, a site written by Paul Graham and a site catering to a startup accelator's usual audience.
  - deleted 5y ago
    [deleted]
FabHK 5y ago
There are financial criteria, or professional criteria to reach accredited investor status. In particular, any investment professional that has passed the Series 7 exam (or a few others) is an accredited investor. That regulation seems sensible to me, and not overzealous. https://www.sec.gov/education/capitalraising/building-blocks/accredited-investor https://www.sec.gov/education/capitalraising/building-blocks...

toomuchtodo 5y ago

The dentist can weather the poor investment. Knowledge does not make you financially solvent. It just improves your gambling odds as it relates to equity investment.

BitwiseFool 5y ago
From my perspective, only letting people who are well off enough to 'weather the loss' seems like something that only exacerbates the wealth gap.
- toomuchtodo 5y ago
  Super off topic, but the wealth gap is exacerbated by not taxing the wealthiest at a high enough rate, not regulations against capital market participation in highly speculative ventures. To argue that accredited investor regulations are the problem is no different than arguing for lottery tickets or penny stocks as an investment strategy for low income citizens.
  - mschuster91 5y ago
    Lotteries are super regulated though, it's (no matter the country) an utter nightmare, even stuff like a school's trinket raffle. The reason is a shitload of people making "easy profits" by frauding people.
- notahacker 5y ago
  The wealth gap isn't going to shrink by making it easy for startups (or "startups") that can't convince rich strangers (or friends and family, or crowdfunding platforms) they're worth investing in to convince larger numbers of less rich strangers to do it instead. Most companies funded by professionals go bust and the risk adjusted returns to VC as an asset class aren't that great: the funds that have spectacular returns being balanced out by those that lose their LPs money. And few unicorns are going to be spending their effort pitching average earners for $2k cheques. Why would we expect the average joe to invest better than the pros with less capital to diversify, no board seats and substantially worse dealflow?
  - formerkrogemp 5y ago
    You're not going to find a welcoming crowd here criticizing startups on Y-Combinator news, a site written by Paul Graham and a site catering to a startup accelator's usual audience.
- deleted 5y ago
  [deleted]

FabHK 5y ago

There are financial criteria, or professional criteria to reach accredited investor status. In particular, any investment professional that has passed the Series 7 exam (or a few others) is an accredited investor. That regulation seems sensible to me, and not overzealous. https://www.sec.gov/education/capitalraising/building-blocks/accredited-investor https://www.sec.gov/education/capitalraising/building-blocks...