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“We find it very hard to believe that any attractive companies will use” non-accredited investor crowdfunding On any given day, there are millions of English-s
by sillysaurus3 12y ago
“We find it very hard to believe that any attractive companies will use” non-accredited investor crowdfunding
On any given day, there are millions of English-speaking people on the internet. If you can capture the hope and imagination of those people, they will give you money, and the total amount you receive will be significant. Alternatively, if you can convince a small number of them to give you a large sum of money (à la Occulus), your result will be the same. This, obviously, requires the right sort of idea; one that resonates with large numbers of people, or resonates so strongly with a small number of people that they're willing to part with hundreds of dollars. But it's quite possible, and I see no reason why a serious company wouldn't explore this possibility.
On the other hand, after reading some history about the concept of the stock market, I think legal protections aren't a bad thing. The goal is to protect uninformed consumers from predatory behavior. It's an important goal, because no one likes admitting they're uninformed (least of all to themselves) so you end up in a situation where people are throwing around their nest eggs at emotional appeals (companies who convince you that they can make your fantasy happen). It's easy for people to convince themselves they've stumbled onto a big opportunity, and it's rather easy for them to believe in it so strongly that they're willing to invest large sums of money; sums they sometimes can't afford. If their investment disappears, so does their ability to participate in the economy. The history of the idea of stocks is filled with this sort of behavior, and sometimes the consequences can be disastrous. Due to information asymmetry, those tempted to invest in a new phenomenon are usually the ones least qualified to judge whether the phenomenon will yield returns. Hence, predatory behavior, and the original motive for protective legislation.
There's a balance to be struck between taking advantage of small sums of money from millions of people, and protecting those people from dumping money they can't afford into a new phenomenon. Some tasteful regulation isn't necessarily a bad thing.
- Cyther606 12y agoI completely agree. The refund rates of popular limited-time only specials, 10-20%, would suggest unsophisticated "investors" are willing to do desperate things including risk far more money than they can afford to lose, when an emotional appeal is powerfully made to them. This can very often lead to financial woes. This is a very real problem. However, I have an especially hard time believing the government can make Internet-based regulatory initiatives work at all. In the modern day, where what is right and what is wrong is increasingly fought for over social media, I have to wonder what the role of government will be. Saying we need regulation is a nice thought, but it's going to run up against some practical realities that make the current regulatory regime particularly ineffective. For example, Counterparty [1] enables anyone, located anywhere in the world, to raise money from anyone else anonymously with Bitcoin. It's "pseudonymous", but come on. Is the SEC ready for that world? We are about to witness a completely unregulated global securities market take shape, and we have a government that can't make Healthcare.gov! The most interesting question to consider is how do we protect consumers in a new world where they will be faced with countless, potentially anonymous securities offerings from complete strangers, many of whom will be located overseas or engaged in gray area trades. Talk about a nightmare for slow-moving bureaucracies. 1: https://counterparty.co https://counterparty.co
- qq66 12y agoThe same government that regulates the sale of stock is the one that ensures the company gives you the stock, voting, and dividends you are owed. If you buy unregulated securities with Bitcoin, what stops the seller from "vanishing" your securities overnight?
- vehementi 12y agoSibling replier Cyther606, you have been hellbanned and most poeple can't see your posts unbeknownst to you.
- Cyther606 12y agoOh no, what did I do? I thought it was an interesting point
- vehementi 12y agoMaybe you replied with a big long post too quickly after creating your account and some auto thingy ganked you as spam?
- sillysaurus3 12y agoCyther, it looks like you just made a new account. Since your comment was autokilled, I'm guessing you're posting through Tor. HN autokills comments from new accounts if they're made through Tor due to past abuses. If you email hn@ycombinator.com and include a link to this subthread then they'll mark your account as legit. Your comment was good. The autokill was unrelated.
- dang 12y agoThat is correct. We unkilled the comment.
- InclinedPlane 12y agoIndeed, the argument is self-refuting. People are willing to dump billions into crowd funding without any equity and with all the same risks. Moreover, a sizable percentage of crowd funders chose not to receive any "rewards" or to receive only trivial rewards (thank-yous, t-shirts, postcards, etc.) That shows a willingness to fund projects even when absolute no return is expected. The idea that people would not do the same and more when equity is involved is just blind ignorance of reality.