4 ms·

The website looks very well put together! In case you guys missed it, the SEC in Title II of the JOBS Act rolled out TODAY. That means startups can now raise f

by vu0tran 13y ago

The website looks very well put together! In case you guys missed it, the SEC in Title II of the JOBS Act rolled out TODAY. That means startups can now raise funds from accredited investors on Wefunder site itself. This is HUGE but that's not all. Next summer SEC will roll out Title III which means EVERY SINGLE AMERICAN can now invest in startups for as little as $100. This will be a massive boost for all startups everywhere, especially for non-traditional startups that couldn't get funding before. I'm very excited to see all the new startups coming out of this. Great job Wefunder! The website looks amazing!

3pt14159 13y ago
This is the beginning of Bubble 2.0. I'm a libertarian, but this decision is fucking scary. I invest a lot of money for people in my life (for free), so I fairly regularly get emails effectively saying: "Oh look at this stock my friend forwarded to me (pump and dump scam)" which I then have to explain why it isn't going anywhere. So it is already pretty bad (especially on venture exchanges), BUT when thirty thousand startups start taking investments from mom and pop investors the consequences are going to be massive. We're talking tens or hundreds of thousands of dollars from MILLIONS of people. Right into the lap of startups that don't even have a merchant account. So the lesson here is get in on this early, profit harvest, and get the fuck out before it crashes due to irrational exuberance.
- 7Figures2Commas 13y ago
  > So the lesson here is get in on this early, profit harvest, and get the fuck out before it crashes due to irrational exuberance. Investments in early-stage startups are highly illiquid so in most cases, getting in early won't mean a thing because you will never be able to get your money out.
  - 3pt14159 13y ago
    Not if you are the one starting the startup and not if they make it easy for Joe American to invest in startups.
  - dnautics 13y ago
    I think he means 'get in on the phenomenon in general', not any one particular startup. I mean, looking at the portfolio, I think even with wefunder, most of the companies "look like crap" (although I'm sure that some of them will be alright), and if I could clear the requirements, I'd only invest in two of them.
- npt4279 13y ago
  I can understand your viewpoint, and I'm usually pessimistic about human nature... But in this one thing, I'm an optimist. I think it's a problem that the rich and well-networked effectively had a government-protected oligarchy to investing in the best private companies. Much of the capital appreciation in this country over the last couple decades went to private companies before they IPO, of which mom and pop investors had no access too... because the government 'protected' them by not allowing them to invest their money where they see fit. The JOBS Act has a good balance. No one making $90k will be able to invest more than 5% of their income in startups. That makes sense.
  - 7Figures2Commas 13y ago
    I don't have strong feelings one way or the other about the JOBS Act although I do think it will be interesting to see how everything develops. But let me play devil's advocate for a moment. From the standpoint of a founder, I know that raising small chunks of money from lots of investors is more likely to be problematic than it is likely to be beneficial. There are numerous logistical and legal downsides to this. From the standpoint of an investor, I know that spray and pray investing rarely produces great wealth. And I would have to assume that general solicitation and the willingness to raise money from lots of investors are signals, and not necessarily good ones. Taking both of these things into consideration, I would have to conclude that companies taking advantage of the JOBS Act to raise money are, in theory, probably going to be less attractive as investments than companies that don't have to. In other words, the JOBS Act might create more opportunities for me, but it would be foolish of me to assume that these are the same opportunities the rich and well-networked have access to.
    - gbelote 13y ago
      > From the standpoint of a founder, I know that raising small chunks of money from lots of investors is more likely to be problematic than it is likely to be beneficial. There are numerous logistical and legal downsides to this. We've fixed this with WeFunds - our LLC fund that bundles many small investors into a single item on a cap table, relieving the logistical and legal downsides. We also believe in the crowd as a value-add investor. For example, Casetext (YC S13, SV Angel) is raising on Wefunder because they'd love to have lawyers who are outside the Silicon Valley bubble invest in them.
- EGreg 13y ago
  It's kind of funny. Some libertarians who want economic freedom might actually be against it. And I am for it, even though I am in favor of a welfare state with safety nets. I guess it's all about what we are faced with on a day to day basis.
  - 7Figures2Commas 13y ago
    I don't have a problem with the JOBS Act, but I would also point out that you cannot look at the JOBS Act in a vacuum: 1. "Accommodative" monetary policy has created an ultra low yield environment that has punished savers and made life incredibly challenging for many investors. 2. The environment has "encouraged" (others might use the word "forced") savers and investors to reach for yield and returns. 3. This reach has resulted in capital misallocation and malinvestment and has artificially inflated numerous asset classes from real estate to publicly-traded equities. 4. A good number of investors who have significant exposure to these asset classes have significant gains (realized and unrealized), which influences their investment decisions. 5. Risk is dramatically being underpriced. You don't even need to look at, say, the corporate debt market. Just look at the terms being offered on some of the Wefunder deals and you can see that risk is being underpriced in the angel market. Making it easier for companies to publicly solicit investment at the same time monetary policy has pushed significant amounts of money into riskier and riskier asset classes may, in hindsight, prove to be a bad combination for investors who are less sophisticated and/or greedy.
  - 3pt14159 13y ago
    I agree that it is strange, but here is something to think about: Imagine a world where people are conditioned to believe that they can't make a very bad mistake even if they want to. Objectively they should be able to make this mistake, but if we allow them to, who is at fault? Is it the person who allowed them to make the mistake? I don't think so. Same idea for libertarians. If we all knew we were going to be in the battle pit, we'd all done hardened armour, but we mostly think we'll be ok, so we don't.
    - EGreg 13y ago
      Safety nets have a moral hazard of course. Nothing is perfect. People do fall through the cracks, others take excessive risks and some even game the system (risking being caught and put in jail). But on net (no pun intended) welfare has reduced poverty. Consider limited liability companies and corporations. They can afford to go bankrupt and starve of resources. The free market discipline can apply to them. But when it comes to living beings such as humans, we need to mitigate the loss.
- tlrobinson 13y ago
  How does JOBS Act (and platforms like Wefunder, FundersClub, AngelList) handle small investors selling their stock, pre-IPO? i.e. is it even possible to "get the fuck out"?
krmmalik 13y ago
With Title III - does that mean anyone can invest, say outside of America?

by vu0tran 13y ago

3pt14159 13y ago

This is the beginning of Bubble 2.0. I'm a libertarian, but this decision is fucking scary. I invest a lot of money for people in my life (for free), so I fairly regularly get emails effectively saying: "Oh look at this stock my friend forwarded to me (pump and dump scam)" which I then have to explain why it isn't going anywhere. So it is already pretty bad (especially on venture exchanges), BUT when thirty thousand startups start taking investments from mom and pop investors the consequences are going to be massive. We're talking tens or hundreds of thousands of dollars from MILLIONS of people. Right into the lap of startups that don't even have a merchant account. So the lesson here is get in on this early, profit harvest, and get the fuck out before it crashes due to irrational exuberance.

7Figures2Commas 13y ago
> So the lesson here is get in on this early, profit harvest, and get the fuck out before it crashes due to irrational exuberance. Investments in early-stage startups are highly illiquid so in most cases, getting in early won't mean a thing because you will never be able to get your money out.
- 3pt14159 13y ago
  Not if you are the one starting the startup and not if they make it easy for Joe American to invest in startups.
- dnautics 13y ago
  I think he means 'get in on the phenomenon in general', not any one particular startup. I mean, looking at the portfolio, I think even with wefunder, most of the companies "look like crap" (although I'm sure that some of them will be alright), and if I could clear the requirements, I'd only invest in two of them.
npt4279 13y ago
I can understand your viewpoint, and I'm usually pessimistic about human nature... But in this one thing, I'm an optimist. I think it's a problem that the rich and well-networked effectively had a government-protected oligarchy to investing in the best private companies. Much of the capital appreciation in this country over the last couple decades went to private companies before they IPO, of which mom and pop investors had no access too... because the government 'protected' them by not allowing them to invest their money where they see fit. The JOBS Act has a good balance. No one making $90k will be able to invest more than 5% of their income in startups. That makes sense.
- 7Figures2Commas 13y ago
  I don't have strong feelings one way or the other about the JOBS Act although I do think it will be interesting to see how everything develops. But let me play devil's advocate for a moment. From the standpoint of a founder, I know that raising small chunks of money from lots of investors is more likely to be problematic than it is likely to be beneficial. There are numerous logistical and legal downsides to this. From the standpoint of an investor, I know that spray and pray investing rarely produces great wealth. And I would have to assume that general solicitation and the willingness to raise money from lots of investors are signals, and not necessarily good ones. Taking both of these things into consideration, I would have to conclude that companies taking advantage of the JOBS Act to raise money are, in theory, probably going to be less attractive as investments than companies that don't have to. In other words, the JOBS Act might create more opportunities for me, but it would be foolish of me to assume that these are the same opportunities the rich and well-networked have access to.
  - gbelote 13y ago
    > From the standpoint of a founder, I know that raising small chunks of money from lots of investors is more likely to be problematic than it is likely to be beneficial. There are numerous logistical and legal downsides to this. We've fixed this with WeFunds - our LLC fund that bundles many small investors into a single item on a cap table, relieving the logistical and legal downsides. We also believe in the crowd as a value-add investor. For example, Casetext (YC S13, SV Angel) is raising on Wefunder because they'd love to have lawyers who are outside the Silicon Valley bubble invest in them.
EGreg 13y ago
It's kind of funny. Some libertarians who want economic freedom might actually be against it. And I am for it, even though I am in favor of a welfare state with safety nets. I guess it's all about what we are faced with on a day to day basis.
- 7Figures2Commas 13y ago
  I don't have a problem with the JOBS Act, but I would also point out that you cannot look at the JOBS Act in a vacuum: 1. "Accommodative" monetary policy has created an ultra low yield environment that has punished savers and made life incredibly challenging for many investors. 2. The environment has "encouraged" (others might use the word "forced") savers and investors to reach for yield and returns. 3. This reach has resulted in capital misallocation and malinvestment and has artificially inflated numerous asset classes from real estate to publicly-traded equities. 4. A good number of investors who have significant exposure to these asset classes have significant gains (realized and unrealized), which influences their investment decisions. 5. Risk is dramatically being underpriced. You don't even need to look at, say, the corporate debt market. Just look at the terms being offered on some of the Wefunder deals and you can see that risk is being underpriced in the angel market. Making it easier for companies to publicly solicit investment at the same time monetary policy has pushed significant amounts of money into riskier and riskier asset classes may, in hindsight, prove to be a bad combination for investors who are less sophisticated and/or greedy.
- 3pt14159 13y ago
  I agree that it is strange, but here is something to think about: Imagine a world where people are conditioned to believe that they can't make a very bad mistake even if they want to. Objectively they should be able to make this mistake, but if we allow them to, who is at fault? Is it the person who allowed them to make the mistake? I don't think so. Same idea for libertarians. If we all knew we were going to be in the battle pit, we'd all done hardened armour, but we mostly think we'll be ok, so we don't.
  - EGreg 13y ago
    Safety nets have a moral hazard of course. Nothing is perfect. People do fall through the cracks, others take excessive risks and some even game the system (risking being caught and put in jail). But on net (no pun intended) welfare has reduced poverty. Consider limited liability companies and corporations. They can afford to go bankrupt and starve of resources. The free market discipline can apply to them. But when it comes to living beings such as humans, we need to mitigate the loss.
tlrobinson 13y ago
How does JOBS Act (and platforms like Wefunder, FundersClub, AngelList) handle small investors selling their stock, pre-IPO? i.e. is it even possible to "get the fuck out"?

krmmalik 13y ago

With Title III - does that mean anyone can invest, say outside of America?