Dear Hn,
Do you know any website where small investors (around $200) can invest legally into a startup ?
Any way to invest $100/200 in startups ?
1–10 of 14 posts
Re: Any way to invest $100/200 in startups ?
#2Short answer, no. The fundamental reason goes back to 1933/1934 when the modern rules of public offerings were enacted. To avoid investors being fleeced by unscrupulous business owners that falsely advertised the merits of their businesses, stringent rules were put in place for any offering of stock to the public. These rules continue to govern the behavior of publicly traded companies today. As a result of these regulations, stocks cannot be offered to a mass audience without those offering falling under the regulation of the SEC. Exceptions are made for small numbers ( $1M liquid net worth, or something close to that), and others close to the company.
In short, a company cannot offer its stock broadly to the public without complying with the fairly onerous SEC provisions regulating public companies.
Re: Any way to invest $100/200 in startups ?
#3There are microlending sites like kiva.org.
However, if you're talking about investing in terms of buying stock in a typical technology startup sort of scenario, I doubt it. The legal hurdles are one thing, the other is that for each investor a company brings in, there are about $500-$1000 in related overhead costs. Just dealing with the legalities and the requirements for things like sending copies of the board meeting minutes to the investors make $200 investments a losing proposition.
Re: Any way to invest $100/200 in startups ?
#4Short answer, no. The fundamental reason goes back to 1933/1934 when the modern rules of public offerings were enacted. To avoid investors being fleeced by unscrupulous business owners that falsely advertised the merits of their businesses, stringent rules were put in place for any offering of stock to the public. These rules continue to govern the behavior of publicly traded companies today. As a result of these reg…
But why can't you create a business that is an accredited investor, which invests in companies based on its LP's choices?
In other words: Let's say I want to invest $100 in SmallCompany.com, for the equivalent 100 shares. I make that bid, and if SmallCompany accepts the bid, then I give Me-VC.com (the accredited VC company) $100 and Me-VC would make an equivalent investment in SmallCompany of that amount, for that number of shares. If SmallCompany exits, I get a return commensurate with the number of shares Me-VC invested for me.
Edit: I developed a site to back this but I've been searching for someone to co-found on the business/legal side, which in this case, is by far the tougher role.
Re: Any way to invest $100/200 in startups ?
#5No. But your question is good.
Re: Any way to invest $100/200 in startups ?
#6Sure, send a couple hundred bucks to the folks who hack on the open source software you use the most -- maybe add a request for an enhancement that would do you good, so you can be sure to get a return on your investment.
Re: Any way to invest $100/200 in startups ?
#7You might be able to do this on http://www.secondmarket.com depending on how established the startup is.
The site lets you trade all kinds of illiquid assets, including private company stock.
Re: Any way to invest $100/200 in startups ?
#8There was a company called Sprowtt at 2009's TC 50 that wants to do this.
They don't seem to be up and running though: http://www.techcrunch50.com/2009/sprowtt-marketplace/
Re: Any way to invest $100/200 in startups ?
#9Short answer, no. The fundamental reason goes back to 1933/1934 when the modern rules of public offerings were enacted. To avoid investors being fleeced by unscrupulous business owners that falsely advertised the merits of their businesses, stringent rules were put in place for any offering of stock to the public. These rules continue to govern the behavior of publicly traded companies today. As a result of these reg…
But why can't you create a business that is an accredited investor, which invests in companies based on its LP's choices? In other words: Let's say I want to invest $100 in SmallCompany.com, for the equivalent 100 shares. I make that bid, and if SmallCompany accepts the bid, then I give Me-VC.com (the accredited VC company) $100 and Me-VC would make an equivalent investment in SmallCompany of that amount, for that nu…
In your example, you would need to be an accredited investor to invest in Me-VC.
Re: Any way to invest $100/200 in startups ?
#10Short answer, no. The fundamental reason goes back to 1933/1934 when the modern rules of public offerings were enacted. To avoid investors being fleeced by unscrupulous business owners that falsely advertised the merits of their businesses, stringent rules were put in place for any offering of stock to the public. These rules continue to govern the behavior of publicly traded companies today. As a result of these reg…
But why can't you create a business that is an accredited investor, which invests in companies based on its LP's choices? In other words: Let's say I want to invest $100 in SmallCompany.com, for the equivalent 100 shares. I make that bid, and if SmallCompany accepts the bid, then I give Me-VC.com (the accredited VC company) $100 and Me-VC would make an equivalent investment in SmallCompany of that amount, for that nu…
For what it's worth, there are many mutual fund -> hedge fund relationships similar to what you have described. Average investors can't invest directly in a hedge fund, but they can buy into a mutual fund which has major holdings in one (or several). It's not the one-to-one relationship you described though.