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Note that funding for such things used to come from individuals who could easily buy shares. Univac for instance, started in just this way, selling shares for

Note that funding for such things used to come from individuals who could easily buy shares. Univac for instance, started in just this way, selling shares for a few dollars apiece. In these times, however, lawyers and government have strangled such bootstrap methods. Whether Tesla is a success or not, that the govt was needed indicates a failure in some other part of the system.

nicholassmith 14y ago
I'd say it doesn't necessarily indicate failure in part of the system, just a significantly different set of priorities for investors and the global economy. Investors seem in general more interested in quick returns (there's exceptions, Amazon for instance), rather than putting money in for a slow burn and contributing toward a company. This isn't necessarily just down to investors being money machines, but in part due to the fact that the global economy is improving but still massively fragile, even if that $500m was split 5 ways, you'd have to convince an investor that $100m in a business that could go belly up is a safe bet, even though the economy could rapidly go wrong and ruin luxury items like electric cars. Plus lets be honest, if you play it on the investment game there's every risk people will buy in, get cold feet and dump the stock pretty quick, ruining confidence in the business and creating a negative public perception. I will tack on at the end, I'm not an economist so I could be way, way off base.
makomk 14y ago
Lawyers and governments haven't strangled those bootstrapping methods - scammers have. Selling a few shares at a time to individuals is a really expensive and time consuming way of raising money, so the only reason to do it is if you can't raise money from larger investors. Now, sometimes there's a non-shady reason for this, but more often than not the reason is that small-scale investors can't afford the same level of due diligence to detect scams and can't afford to take legal action if the whole thing implodes. (We saw this with the Perma-Pave ponzi recently - it took one of the larger investors investigating, finding evidence it was a ponzi, and suing for anything to happen. The smaller investors were stuck flailing around amongst misinformation from people involved in the scam.)

nicholassmith 14y ago

I'd say it doesn't necessarily indicate failure in part of the system, just a significantly different set of priorities for investors and the global economy. Investors seem in general more interested in quick returns (there's exceptions, Amazon for instance), rather than putting money in for a slow burn and contributing toward a company. This isn't necessarily just down to investors being money machines, but in part due to the fact that the global economy is improving but still massively fragile, even if that $500m was split 5 ways, you'd have to convince an investor that $100m in a business that could go belly up is a safe bet, even though the economy could rapidly go wrong and ruin luxury items like electric cars. Plus lets be honest, if you play it on the investment game there's every risk people will buy in, get cold feet and dump the stock pretty quick, ruining confidence in the business and creating a negative public perception. I will tack on at the end, I'm not an economist so I could be way, way off base.

makomk 14y ago

Lawyers and governments haven't strangled those bootstrapping methods - scammers have. Selling a few shares at a time to individuals is a really expensive and time consuming way of raising money, so the only reason to do it is if you can't raise money from larger investors. Now, sometimes there's a non-shady reason for this, but more often than not the reason is that small-scale investors can't afford the same level of due diligence to detect scams and can't afford to take legal action if the whole thing implodes. (We saw this with the Perma-Pave ponzi recently - it took one of the larger investors investigating, finding evidence it was a ponzi, and suing for anything to happen. The smaller investors were stuck flailing around amongst misinformation from people involved in the scam.)