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> So, USA makes some effort to stop ripoffs of unwitting "unaccredited" investors within the USA. The problem is that it's a dubious premise to begin with to a

> So, USA makes some effort to stop ripoffs of unwitting "unaccredited" investors within the USA. The problem is that it's a dubious premise to begin with to assume that someone's knowledge or competence is tied to their salary or net worth. It's just baseless gatekeeping.

Arainach 4y ago
It's not baseless. Those who are least able to tolerate loss and have the least time to do due diligence are precisely those most attracted to get rich quick schemes and most susceptible to deceptive practices.
- tedmiston 4y ago
  There is nothing in the premise correlated to the amount of the investment. Suppose I have a net worth of $900k and want to invest $10k each into friends and family rounds of 5–10 startups. The Accredited Investor law in the U.S. makes that impossible today. What if my net worth was $1M before the pandemic and is now ~30% below that threshold? Suddenly, I'm no longer accredited?! That makes no sense. The boundaries chosen are indeed arbitrary and baseless, designed to restrict access to opportunities for those in the case I describe. Salary is also an arbitrary rule. One could make $200k/year, spend it all, and still qualify. But if someone makes $175k, lives minimally, and saves 50%+ of that, they are "unaccredited" and are blocked from accessing such opportunities. This also makes no sense. Irrespective of my salary or net worth, I have enough experience in the tech industry to evaluate and do due diligence on small deals like that. But technicalities like this in the Accredited Investor rule block me from being able to access them. Risk assessment is a personal choice. The Accredited Investor rule does more harm than good in this country today with its arbitrary pegs blocking access to good opportunities for those that are capable of vetting them. Guardrails are for highways and bowling alleys. One can go blow their entire net worth on shitcoins and penny stocks and the Accredited Investor rule could care less. There are good and bad investment opportunities everywhere, but this rule is blatantly random and asymmetric.
  - Arainach 4y ago
    Perfect is the enemy of good. Just because we can't block all ways to take advantage of people doesn't mean that we shouldn't block any.
    - jliptzin 4y ago
      Yes, it does. Instead of a startup getting its first investment (from a non-accredited investor) which might have gone on to do amazing things, that extra $$ is instead dumped into highly leveraged options, or penny stocks, or shitcoins, or collapsing crypto exchanges, etc. Money goes down the path of least resistance. I would be okay with it if you could also become accredited by taking an exam testing your knowledge of risk tolerance, money management, etc. Otherwise it is just gate keeping. I say this as an accredited investor with several startup investments, by the way.
ehzy 4y ago
It's also about their ability to withstand losses.

Arainach 4y ago

It's not baseless. Those who are least able to tolerate loss and have the least time to do due diligence are precisely those most attracted to get rich quick schemes and most susceptible to deceptive practices.

tedmiston 4y ago
There is nothing in the premise correlated to the amount of the investment. Suppose I have a net worth of $900k and want to invest $10k each into friends and family rounds of 5–10 startups. The Accredited Investor law in the U.S. makes that impossible today. What if my net worth was $1M before the pandemic and is now ~30% below that threshold? Suddenly, I'm no longer accredited?! That makes no sense. The boundaries chosen are indeed arbitrary and baseless, designed to restrict access to opportunities for those in the case I describe. Salary is also an arbitrary rule. One could make $200k/year, spend it all, and still qualify. But if someone makes $175k, lives minimally, and saves 50%+ of that, they are "unaccredited" and are blocked from accessing such opportunities. This also makes no sense. Irrespective of my salary or net worth, I have enough experience in the tech industry to evaluate and do due diligence on small deals like that. But technicalities like this in the Accredited Investor rule block me from being able to access them. Risk assessment is a personal choice. The Accredited Investor rule does more harm than good in this country today with its arbitrary pegs blocking access to good opportunities for those that are capable of vetting them. Guardrails are for highways and bowling alleys. One can go blow their entire net worth on shitcoins and penny stocks and the Accredited Investor rule could care less. There are good and bad investment opportunities everywhere, but this rule is blatantly random and asymmetric.
- Arainach 4y ago
  Perfect is the enemy of good. Just because we can't block all ways to take advantage of people doesn't mean that we shouldn't block any.
  - jliptzin 4y ago
    Yes, it does. Instead of a startup getting its first investment (from a non-accredited investor) which might have gone on to do amazing things, that extra $$ is instead dumped into highly leveraged options, or penny stocks, or shitcoins, or collapsing crypto exchanges, etc. Money goes down the path of least resistance. I would be okay with it if you could also become accredited by taking an exam testing your knowledge of risk tolerance, money management, etc. Otherwise it is just gate keeping. I say this as an accredited investor with several startup investments, by the way.

ehzy 4y ago

It's also about their ability to withstand losses.