I recognize that this isn't a pyramid scheme, but it does look a lot like a multi-level marketing structure. MLMs can be viable, real businesses, but this may open the opportunity for abuse. I'm very interested to see how the SEC handles this. I understand the founders want rapid growth, but accredited investors can make mistakes, and big ones. They are not professional investors, just accredited.
Good points, but the folks at Funders Club are professional investors. The referrers only get a kickback when FundersClub chooses to invest, and FundersClub will only do so if they think the company will be sufficiently successful. A standard which is likely higher than an unprofessional accredited investor's.
Thanks, I completely misread the article. I thought it was suggesting that FoundersClub would pay an investor who brings in another investor. I didn't understand that FoundersClub would pay an investor who brings in a company.