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Obama Announces $2B Fund for Startups

whitehouse.gov

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Re: Obama Announces $2B Fund for Startups

#31

Post by gojomo »

paul wrote: post #19
gojomo wrote: post #3

Let a thousand Solyndras bloom! But seriously, exempting smaller firms and fundraising efforts from costly regulations is a good part of this initiative. Routing public funds through private investors, not so much. While they're at it, they should completely eliminate the wealth tests for 'accredited investor' status. If some fig leaf of 'accreditation' is still needed, it should be experience-based or net-worth prop…

I don't recommend angel investing for anyone who can't afford to lose a fairly substantial amount of money, which pretty much excludes anyone who isn't already an accredited investor. Finding the next Facebook or Google is a lot harder than you might think, and even if you did, they probably don't want your money. You are better off investing in your own self (education and the like). Eliminating the wealth test woul…

I wouldn't 'recommend' it either. But there's a difference between 'not recommending' and 'effectively prohibiting via a wealth test'.

We don't prevent people from spending their entire net worth, and then some via loans, on poker or state lottery tickets. Nor do we include wealth tests against investing in public stocks, derivatives, real-estate, or dubious collectables – all of which can also 'go to zero' quite quickly, especially with easy access to leverage.

Is private investing, especially in things like friends/family/personal-expertise-related startups, so much more treacherous than these other things that it alone needs special protections?

Re: Obama Announces $2B Fund for Startups

#32

Post by gojomo »

kevinpet wrote: post #15
gojomo wrote: post #3

Let a thousand Solyndras bloom! But seriously, exempting smaller firms and fundraising efforts from costly regulations is a good part of this initiative. Routing public funds through private investors, not so much. While they're at it, they should completely eliminate the wealth tests for 'accredited investor' status. If some fig leaf of 'accreditation' is still needed, it should be experience-based or net-worth prop…

The problems with proportional would be twofold: 1. How can the company taking the investment verify that the investor doesn't have other Angel investments? Remember: this is most important from a startup perspective to make sure you're able to do clean funding rounds without dealing with the fallout of non-accredited investors. 2. There's nothing to stop people from repeatedly losing 10% (or whatever percent you all…

There is nothing to protect someone who is reckless or gullible: they can lose all their money on currently-legal schemes, as well.

If an investor provides false/incomplete documentation that their investment qualifies (as an acceptable proportion of their net worth or other 'government approved' investments), then that fraud should be the investor's problem when things go south, not the receiving company. Current 'accreditation' is not verified by the government, but rather asserted to the company/lawyers with enough credibility to convince them.

Is someone who inherits a million dollars more qualified to invest $10K-$990K into a risky tech venture than someone who's actually earned $10K-$990K in the same field as that venture? Because that's the logic a dumb-money wealth test suggests.

Re: Obama Announces $2B Fund for Startups

#33

Post by westbywest »

paul wrote: post #13

Fixing the immigration and patent systems would be infinitely more helpful (i.e. stop getting in the way).

Agreed, but that would likely cost more than $2Billion in terms of legislators' time elapsed and hot air expelled. Although I do believe the supply of hot air is near infinite.

Re: Obama Announces $2B Fund for Startups

#34

Post by paul »

gojomo wrote: post #31
paul wrote: post #19

Earlier quoted context omitted.

I don't recommend angel investing for anyone who can't afford to lose a fairly substantial amount of money, which pretty much excludes anyone who isn't already an accredited investor. Finding the next Facebook or Google is a lot harder than you might think, and even if you did, they probably don't want your money. You are better off investing in your own self (education and the like). Eliminating the wealth test woul…

I wouldn't 'recommend' it either. But there's a difference between 'not recommending' and 'effectively prohibiting via a wealth test'. We don't prevent people from spending their entire net worth, and then some via loans, on poker or state lottery tickets. Nor do we include wealth tests against investing in public stocks, derivatives, real-estate, or dubious collectables – all of which can also 'go to zero' quite qui…

Public stocks and the like are heavily regulated. If we let random people invest in startups, a bunch of people would get scammed out of their money, then there would be calls for more regulation to protect investors, which would only serve to hurt startups. Meanwhile, none of those little investors would make any money because the median startup is a bad investment (vs the median public company, which is an ok investment). Nearly all of the startup returns come from a small number of outliers, and those outliers will most likely continue getting funding from larger investors.

Re: Obama Announces $2B Fund for Startups

#40

Post by bokonist »

raldi wrote: post #12
fleitz wrote: post #2

$1 trillion for banks, $1 billion for startups, you can really see how important this administration feels startups are. Why not just tell banks, lend half the money we're giving you to startups, instead of using it to prop up your balance sheets.

Where do you get the "$1 trillion for banks" number? The xkcd "money" diagram has a good illustration of this: http://xkcd.com/980/huge/#x=-10540&y=-4650&z=6 $700 billion was made available. "Only" $400 billion of this was actually spent. It was used to buy so-called toxic assets. Many of those assets were later converted back into cash: half of the $400 billion has already been repaid. Based on the value of the rema…

The real bailout happened in the shadows, while TARP was publicly paid back. Read: http://www.interfluidity.com/v2/2587.html
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