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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

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.
  - officialjunk 13y ago
    i see; makes sense. thanks for clarifying :)

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.
- officialjunk 13y ago
  i see; makes sense. thanks for clarifying :)