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That's now how investing works. What you're asking for is a "gamble" with no guarantee of a return on investment. Ideas are everywhere, ideas are endless. Some

That's now how investing works. What you're asking for is a "gamble" with no guarantee of a return on investment. Ideas are everywhere, ideas are endless. Some of the greatest "ideas" make no profit because there's no market for them, consumers don't care for it's implementation, or the team doesn't work well together. So many things have to go just right for an "idea" to become a business. Sometimes you have a great idea, great implimentation, great team, and it all still fails. Investors want you to have already gone and proven you're not a gamble by at least building a minimum viable product, have some sort of team already assembled and working, and have started making some kind of revenue or growth in users. If you have nothing then you're the type of investment that's really a gamble. Winamp has a return on investment (a slow one but still a return), your ideas on the other hand are a gamble. I don't mean to discourage you I just want to save you some time. Also asking random people to invest in your ideas is also illegal. You have to have a pre-existing relationship with someone /or/ join a community like AngleList to solicit investment. Angel investors also must have an income over a certain amount of money. Some of these laws may change in the near future with crowd funding becoming so popular but in the mean time be careful.

ywyrd 13y ago
"asking random people to invest in your ideas is also illegal" 1) You learn something new every day. 2) I don't want to live on this planet any more.
- ajasmin 13y ago
  Wouldn't that rule apply to a Winamp fund as well?
  - saraid216 13y ago
    Winamp isn't an idea.
  - ChrisNorstrom 13y ago
    Good question... I want to say yes, but technically ewam hasn't specified that people in the fund will share equity. It sounds like a donation but it obviously isn't. If you have $100,000 to buy a software mp3 player chances are you're not the type of person the SEC is trying to protect from bad investments. So shhhhhh, we'll just keep quiet.
- ChrisNorstrom 13y ago
  Oh don't worry, you can still do it, just head over to AngleList and you can grab yourself some investors. They all meet the qualifications (have a certain income level) and since it's a platform specifically for investing it's not a random solicitation so you don't have to know them personally before asking. Here's an example: https://angel.co/makespace?ref=startup_card https://angel.co/makespace?ref=startup_card
  - ywyrd 13y ago
    I would hate to see the legislative definition of "random".
    - ChrisNorstrom 13y ago
      I should have said "general solicitation" meaning "general audience". People who don't know what they're getting themselves into. If you set up an event like "demo day" at Y-Combinator where investors and founders meet and discuss equity and terms that's perfectly legal. That's NOT general solicitation. Everyone there knows what they're getting themselves into. No one can be "tricked" into investing like the general public can.
possibilistic 13y ago
wrt my post, s/ideas/unique project with preexisting code and hardware/. Granted it's no MVP with a proper income strategy. Are my ideas on how to proceed correct? I'm not sure--perhaps I should validate on my own. I can't afford to scale yet (time and money), so perhaps I should seek to "wow" and then seek interest. I can at least do that on my own. That said, your post was really insightful. As another already mentioned, I wasn't aware about the solicitation rule.
- ChrisNorstrom 13y ago
  I wasn't either until someone told me. Most startups and businesses fail. The released failure numbers are way too low because they don't take into account that most small business owners don't even bother registering their business so when they close them down there's no paper trail to add to the statistic. Think of how gullible the average American is (look at all the things infomercials convince them to buy) If it weren't for that rule a lot of innocent people would lose their life savings because a lot of them 1) believe in the goodness of people and 2) don't understand finance or investing. Those rules were created to prevent your old folks from investing in a miracle snake oil business or a new hair growth tonic business from a traveling salesman.
  - officialjunk 13y ago
    what about kickstarter/indiegogo type investments?
    - ChrisNorstrom 13y ago
      Those are not investments, you do not get a percentage of the company. Those are donations with a gift. What you get out is a gift, t-shirt, your name in the credits, prototype, free account before everyone else, etc... People can pay $5,000 for a prototype of a drone they helped back on Kickstarter but that $5,000 is not equity, nor a gamble. It's a donation. The backer knows they are kissing that $5,000 good bye and are only given a chance at receiving a prototype drone. It's a donation with a gift. An investment is when there is an expected return. I put in $5,000 but I expect to one day receive that $5,000 or more back. I own a tiny piece of the company. To help the average person know what they're getting themselves into the SEC has specified rules that a company must follow in order to solicit and accept public investors (aka going public / IPO). They MUST release certain financial information at certain time intervals, they must use certain accounting methods so as to not hide money, not hide profit, not hide losses, and discourage insider trading, etc... If a company hides losses it causes a huge mess (ENRON). So is there a Kickstarter for companies that are public and allow the average person to "invest" in them? Yes, Scottrade & E-trade & stock brokers are basically the kickstarters of public companies. Those companies are all public and registered and you can go and see how they've been doing historically and invest however much you want in them.

ywyrd 13y ago

"asking random people to invest in your ideas is also illegal" 1) You learn something new every day. 2) I don't want to live on this planet any more.

ajasmin 13y ago
Wouldn't that rule apply to a Winamp fund as well?
- saraid216 13y ago
  Winamp isn't an idea.
- ChrisNorstrom 13y ago
  Good question... I want to say yes, but technically ewam hasn't specified that people in the fund will share equity. It sounds like a donation but it obviously isn't. If you have $100,000 to buy a software mp3 player chances are you're not the type of person the SEC is trying to protect from bad investments. So shhhhhh, we'll just keep quiet.
ChrisNorstrom 13y ago
Oh don't worry, you can still do it, just head over to AngleList and you can grab yourself some investors. They all meet the qualifications (have a certain income level) and since it's a platform specifically for investing it's not a random solicitation so you don't have to know them personally before asking. Here's an example: https://angel.co/makespace?ref=startup_card https://angel.co/makespace?ref=startup_card
- ywyrd 13y ago
  I would hate to see the legislative definition of "random".
  - ChrisNorstrom 13y ago
    I should have said "general solicitation" meaning "general audience". People who don't know what they're getting themselves into. If you set up an event like "demo day" at Y-Combinator where investors and founders meet and discuss equity and terms that's perfectly legal. That's NOT general solicitation. Everyone there knows what they're getting themselves into. No one can be "tricked" into investing like the general public can.

possibilistic 13y ago

wrt my post, s/ideas/unique project with preexisting code and hardware/. Granted it's no MVP with a proper income strategy. Are my ideas on how to proceed correct? I'm not sure--perhaps I should validate on my own. I can't afford to scale yet (time and money), so perhaps I should seek to "wow" and then seek interest. I can at least do that on my own. That said, your post was really insightful. As another already mentioned, I wasn't aware about the solicitation rule.

ChrisNorstrom 13y ago
I wasn't either until someone told me. Most startups and businesses fail. The released failure numbers are way too low because they don't take into account that most small business owners don't even bother registering their business so when they close them down there's no paper trail to add to the statistic. Think of how gullible the average American is (look at all the things infomercials convince them to buy) If it weren't for that rule a lot of innocent people would lose their life savings because a lot of them 1) believe in the goodness of people and 2) don't understand finance or investing. Those rules were created to prevent your old folks from investing in a miracle snake oil business or a new hair growth tonic business from a traveling salesman.
- officialjunk 13y ago
  what about kickstarter/indiegogo type investments?
  - ChrisNorstrom 13y ago
    Those are not investments, you do not get a percentage of the company. Those are donations with a gift. What you get out is a gift, t-shirt, your name in the credits, prototype, free account before everyone else, etc... People can pay $5,000 for a prototype of a drone they helped back on Kickstarter but that $5,000 is not equity, nor a gamble. It's a donation. The backer knows they are kissing that $5,000 good bye and are only given a chance at receiving a prototype drone. It's a donation with a gift. An investment is when there is an expected return. I put in $5,000 but I expect to one day receive that $5,000 or more back. I own a tiny piece of the company. To help the average person know what they're getting themselves into the SEC has specified rules that a company must follow in order to solicit and accept public investors (aka going public / IPO). They MUST release certain financial information at certain time intervals, they must use certain accounting methods so as to not hide money, not hide profit, not hide losses, and discourage insider trading, etc... If a company hides losses it causes a huge mess (ENRON). So is there a Kickstarter for companies that are public and allow the average person to "invest" in them? Yes, Scottrade & E-trade & stock brokers are basically the kickstarters of public companies. Those companies are all public and registered and you can go and see how they've been doing historically and invest however much you want in them.