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They can't take money from non-accredited investors (those who make below $200k per year or have less than $1 million in assets). This is the reason you can't g

by wilfra 13y ago

They can't take money from non-accredited investors (those who make below $200k per year or have less than $1 million in assets). This is the reason you can't get shares or profit sharing on Kickstarter. The JOBS act loosened the regulations to open it up to anybody - but those changes have yet to be implemented and you presently still need to be an accredited investor to invest in startups. As for whether they'd even want to do it, that's another question. WeFunder (a YC company) wasn't able to convince many of their batchmates to offer shares to the public when they launched and the company I tried to fund through them (Strikingly) appears to have ignored everybody who attempted to back them through WeFunder and went with traditional investors instead (or at least that's what they've done in my case).

dragontamer 13y ago
I came here just to post this. Then I noticed that you already mentioned it. The JOBS act is new, and companies aren't taking advantage of it yet. It was only passed a month ago after all... That said, how do Co-ops work? As well as companies like REI or Vanguard? Purchasing an REI membership makes you a holder of the company, and same thing with Vanguard funds... or many credit unions. Is there a reason why the JOBS act was needed when customer-owned businesses already existed?
- nknighthb 13y ago
  Whether you realize it or not, I believe you've just asked for a dissertation on the myriad rules covering ownership of incorporated entities. I'm not qualified to give it to you, but I can say it's not nearly as simple as "IPO or accredited investors only!". You need only consider one scenario to realize this: You don't need to be an accredited investor to incorporate a company. This is not comprehensive, but it's a good starting place: http://www.sec.gov/info/smallbus/qasbsec.htm http://www.sec.gov/info/smallbus/qasbsec.htm
  - dragontamer 13y ago
    Thanks for the link, I'll give it a look over :-)
OldSchool 13y ago
The accredited investor requirement is right on. It doesn't stop crooks who don't care about law, but without it we'd have rampant 1920's-style fleecing of individuals by smooth talking con artists. That's not to say there aren't some wealthy people out there whose only successful product was stock, but at least they were forced to do it through proper channels and often endured the boilerplate shareholder lawsuit that's in the top drawer at certain law firms during economic downturns.
dragonwriter 13y ago
> They can't take money from non-accredited investors (those who make below $200k per year or have less than $1 million in assets). That should be an "and" not an "or" (meeting either the income test or the asset test qualifies for "accredited investor" status.) And there are several conditions under which firms can make accept limited numbers of non-accredited investors along with unlimited numbers of accredited investors. > The JOBS act loosened the regulations to open it up to anybody That's not entirely accurate. The JOBS Act requires the SEC to do two main things in this area: 1. Remove the requirement prohibiting general solicitation and advertising for investment opportunities, if those opportunities are restricted exclusively to accredited investors and the firm seeking the investments takes steps to verify that the investors qualify as accredited investors. 2. Allow "Crowdfunding" with specified per-investor limits of up to $1 million in a 12 month period, via an SEC-registered intermediary. Neither of these really opens things up to people who couldn't invest before: the first option allows public advertising but is expressly restricted to accredited investors; the "Crowdfunding" option is basically similar to the Rule 504 "seed capital" option, both of which have a $1 million in a 12-month period limit, and neither of which is restricted to any particular class of investors ("seed capital" restricts general solicitation but allows the firm to sell securities directly, "crowdfunding" allows general solicitation but requires the firm to act through an SEC-registered intermediary.)

by wilfra 13y ago

dragontamer 13y ago

I came here just to post this. Then I noticed that you already mentioned it. The JOBS act is new, and companies aren't taking advantage of it yet. It was only passed a month ago after all... That said, how do Co-ops work? As well as companies like REI or Vanguard? Purchasing an REI membership makes you a holder of the company, and same thing with Vanguard funds... or many credit unions. Is there a reason why the JOBS act was needed when customer-owned businesses already existed?

nknighthb 13y ago
Whether you realize it or not, I believe you've just asked for a dissertation on the myriad rules covering ownership of incorporated entities. I'm not qualified to give it to you, but I can say it's not nearly as simple as "IPO or accredited investors only!". You need only consider one scenario to realize this: You don't need to be an accredited investor to incorporate a company. This is not comprehensive, but it's a good starting place: http://www.sec.gov/info/smallbus/qasbsec.htm http://www.sec.gov/info/smallbus/qasbsec.htm
- dragontamer 13y ago
  Thanks for the link, I'll give it a look over :-)

OldSchool 13y ago

The accredited investor requirement is right on. It doesn't stop crooks who don't care about law, but without it we'd have rampant 1920's-style fleecing of individuals by smooth talking con artists. That's not to say there aren't some wealthy people out there whose only successful product was stock, but at least they were forced to do it through proper channels and often endured the boilerplate shareholder lawsuit that's in the top drawer at certain law firms during economic downturns.

dragonwriter 13y ago

> They can't take money from non-accredited investors (those who make below $200k per year or have less than $1 million in assets). That should be an "and" not an "or" (meeting either the income test or the asset test qualifies for "accredited investor" status.) And there are several conditions under which firms can make accept limited numbers of non-accredited investors along with unlimited numbers of accredited investors. > The JOBS act loosened the regulations to open it up to anybody That's not entirely accurate. The JOBS Act requires the SEC to do two main things in this area: 1. Remove the requirement prohibiting general solicitation and advertising for investment opportunities, if those opportunities are restricted exclusively to accredited investors and the firm seeking the investments takes steps to verify that the investors qualify as accredited investors. 2. Allow "Crowdfunding" with specified per-investor limits of up to $1 million in a 12 month period, via an SEC-registered intermediary. Neither of these really opens things up to people who couldn't invest before: the first option allows public advertising but is expressly restricted to accredited investors; the "Crowdfunding" option is basically similar to the Rule 504 "seed capital" option, both of which have a $1 million in a 12-month period limit, and neither of which is restricted to any particular class of investors ("seed capital" restricts general solicitation but allows the firm to sell securities directly, "crowdfunding" allows general solicitation but requires the firm to act through an SEC-registered intermediary.)