U.S. Startups Fail to Attract Expected Crowd of Small Investors
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Re: U.S. Startups Fail to Attract Expected Crowd of Small Investors
#2Yup. And this is because if you're a startup and you take investment from these "small investors" I can't recall the actual classification (class 3 maybe or something like that?) VC and accelerators simply won't touch you. So there's no point. And then, if you're a "small investor" and you had, say, $5,000 to kick toward a startup for speculative investing, the VCs simply say that it's not enough money and they're just not interested in your small change.
Re: U.S. Startups Fail to Attract Expected Crowd of Small Investors
#3I thought the whole deal with startup investing was: Invest in a few dozen companies and hope you get one hit so big it makes up for all the others, which you expect to all go down in flames.
That can work if you have millions to spend and the time, connections, and access to pal around with dozens of founders, looking for the good eggs. For a "small investor" who has a small fraction of a middle-class paycheck to spend and access only to the web, it would just be the most boring form of gambling ever invented.
Who "expected" a crowd of small investors for this, exactly?
Re: U.S. Startups Fail to Attract Expected Crowd of Small Investors
#4Honestly I thought there would be some marginally ethical VCs that would team up with similar salespeople to scale up this type of investing.
I'm a little surprised this void hasn't been filled.
Re: U.S. Startups Fail to Attract Expected Crowd of Small Investors
#5Not only that, the ones that are can be quite scammy.
Highlights from this startup raising money:
-Advertised with TV commercials by former Seinfeld actor
-$160k in assets, raising $50million at >$200million valuation
-CEO was formerly barred from leading companies by the SEC due to security fraud
-The management team has a few more planned IPOs in the biomed and aeronautical industries, and has a graveyard of past businesses that got investor money and went bankrupt.
http://www.businessinsider.com/yayyo-ipo-ads-tv-ramy-el-batr...
Re: U.S. Startups Fail to Attract Expected Crowd of Small Investors
#6I would be willing to buy into a crowdsourced VC fund- I give money to the fund for a slice of it, which in turn vets and invests in early stage startups. They hit a big payout, my slice becomes more valuable.
The thing is, I don't want to do any work. I want someone else to do the vetting and the paperwork to invest. Obviously, they get a bigger piece of pie.
Basically, I want an index fund for early stage startups. It would be high-risk, but it's the same risk (in principle) as VC firms have.
Re: U.S. Startups Fail to Attract Expected Crowd of Small Investors
#7I would be willing to buy into a crowdsourced VC fund- I give money to the fund for a slice of it, which in turn vets and invests in early stage startups. They hit a big payout, my slice becomes more valuable. The thing is, I don't want to do any work. I want someone else to do the vetting and the paperwork to invest. Obviously, they get a bigger piece of pie. Basically, I want an index fund for early stage startups.…
Iirc VC as an industry loses money (or has poor returns), with the top 10 firms dominating the returns and some small number of startup firms posting great returns (iirc this is from a Jason lwmkin's post)
So i think your index fund performs quite poorly.
Re: U.S. Startups Fail to Attract Expected Crowd of Small Investors
#8I wonder how they are letting people know about this. I wasn't aware this was possible and I still had in mind that you had to be "credited" investor, even as a Hacker News reader, somehow this was flying under my radar. I don't expect a lot of people to know about it.
Re: U.S. Startups Fail to Attract Expected Crowd of Small Investors
#9I think that if they actualy want a crowd to do this that they have to improve discovery of not only the ability to do this and the companies that want to be crowdfunded. Up until know I vaguely knew that the JOBS act contained this wording (and I presumed that something changed about the JOBS act) which was false. The other part is discovery which could be helped by either partnering with Kickstarter or making an independant website that would do this.
On the other hand it could be that Kickstarter is performing crowdfunding to the point that the technique of using the Jobs act is not needed. Adding up 2 or 3 large kickstarter projects and you get the total amount raised. Currently Kickstarter has funded around $3 billion dollars.
Re: U.S. Startups Fail to Attract Expected Crowd of Small Investors
#10I would be willing to buy into a crowdsourced VC fund- I give money to the fund for a slice of it, which in turn vets and invests in early stage startups. They hit a big payout, my slice becomes more valuable. The thing is, I don't want to do any work. I want someone else to do the vetting and the paperwork to invest. Obviously, they get a bigger piece of pie. Basically, I want an index fund for early stage startups.…
Why do you say it would be high-risk?