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I have little doubt that this will accelerate the super-seed trend, wherein small startups avoid VC for extended periods of time. One thing that struck me: the

by hapless 13y ago

I have little doubt that this will accelerate the super-seed trend, wherein small startups avoid VC for extended periods of time. One thing that struck me: the wefunder guys clearly believe this is going to be a big deal for small-time investors. How will firms accept those "$1000" checks? As far as I know, privately held securities can be issued to only a very small number of investors. Will Facebook/Goldman style investment vehicles become a common mode of skirting the law? Is the SEC going to loosen that 500 investor limit?

gbelote 13y ago
Good questions. The Facebook/Goldman style investment vehicles have been blessed by the SEC in the form of a No Action letter back in March. For readers unfamiliar: an LLC fund is created that investors invest in, and that fund makes a single investment in the target company. The company only has one investor listed on their cap table and it makes several things (e.g. collecting signatures) significantly simpler. Investors maintain financial rights, but don't have voting rights in the company. We can offer that vehicle to companies as a fundraising option. We also have a standard convertible note specifically for a large number of small investors that we've been using ourselves which addresses "large number of investor" concerns in a different way. The JOBS act has already increased the accredited investor limit to 2000, and once the unaccredited investor legislation takes effect, those unaccredited investors won't count against that total.