Why is a US bank account necessary while being a US citizen is not required?
Probably due to anti-moneylaundering requirements...
Republic – Now everyone can invest in startups
41–50 of 84 posts
Re: Republic – Now everyone can invest in startups
#42Wow, I'm blown away by the negativity in this thread. I know Silicon Valley is conservative but this is killing it. In Europe (of all places), this sort of stuff has been going on for a number of years now. The first startup I worked for had gathered its €150k preseed funding from over 20 people. Not even with a convertible note, they really all went to the lawyer's office together. It was pretty nuts, but it got the…
> Why is it stupid to invest $5k in a startup but not to invest $500k in a startup? Because if you invest $500k, you get information rights, and a significant number of votes. If you invest $5k, you get nothing, and you just have to hope the company makes good decisions. It's like buying a $5k lottery ticket -- it's an investment based entirely on trust without any information, accountability, or influence over the o…
> it's an investment based entirely on trust without any information, accountability, or influence over the outcome
Assumes that an investor's extra-monetary 'influence' on a company is +EV.
Re: Republic – Now everyone can invest in startups
#43Interesting. These appear to be JOBS act short-form mini-IPOs.[1] That's something new, which just became possible this year and hasn't been used much. Here's Farm from a Box's SEC filing.[2] Typical crappy terms - no voting rights, no anti-dilution, no transferability for one year, insiders have control. Nobody associated with the project has a farming background. They have two employees. One is a liberal arts major…
Regardless of the terms, all of these companies appear to be just terrible investments.
"Youngry" - A newsmedia property built a supplement entrepreneur and professional "entrepreneurial-advice" entrepreneur that aims to make money by creating sponsored content and e-commerce products (webinars, digital books) for early-stage, young entrepreneurs.
Re: Republic – Now everyone can invest in startups
#44The general counterargument to the "we're in a bubble" observation has been that it's all private equity, that people aren't risking their houses or 401(k)s on startups this time around. This would appear to be a move in that direction.
It's the modern day equivalent of public investment in penny stocks.
Re: Republic – Now everyone can invest in startups
#45Wow, I'm blown away by the negativity in this thread. I know Silicon Valley is conservative but this is killing it. In Europe (of all places), this sort of stuff has been going on for a number of years now. The first startup I worked for had gathered its €150k preseed funding from over 20 people. Not even with a convertible note, they really all went to the lawyer's office together. It was pretty nuts, but it got the…
"Why is it stupid to invest $5k in a startup but not to invest $500k in a startup?"
In addition to the $500k buying more information and actual shareholder rights, someone who is investing $500k is likely doing so from a fund, or otherwise isn't going to miss the $500k if the investment goes belly up. The $5k investor would probably be hurt a lot more by losing the $5k, AND they don't get the information necessary to make an informed decision.
Re: Republic – Now everyone can invest in startups
#46Earlier quoted context omitted.
> Why is it stupid to invest $5k in a startup but not to invest $500k in a startup? Because if you invest $500k, you get information rights, and a significant number of votes. If you invest $5k, you get nothing, and you just have to hope the company makes good decisions. It's like buying a $5k lottery ticket -- it's an investment based entirely on trust without any information, accountability, or influence over the o…
> it's an investment based entirely on trust without any information, accountability, or influence over the outcome Assumes that an investor's extra-monetary 'influence' on a company is +EV.
They get votes. If they invest enough, they get enough votes to have influence.
Re: Republic – Now everyone can invest in startups
#47Republic - Invest in the startups real investors won't invest in
That strikes me as a very cynical view, and I consider myself to be a pretty cynical guy. You could also make the same argument about other market platforms:
"Ebay - Buy things real shoppers won't"
"Uber - Get a ride somewhere real taxis won't go"
"Monster.com - Hire people real employers won't"
Is it really that different?
Re: Republic – Now everyone can invest in startups
#48Earlier quoted context omitted.
> Why is it stupid to invest $5k in a startup but not to invest $500k in a startup? Because if you invest $500k, you get information rights, and a significant number of votes. If you invest $5k, you get nothing, and you just have to hope the company makes good decisions. It's like buying a $5k lottery ticket -- it's an investment based entirely on trust without any information, accountability, or influence over the o…
> it's an investment based entirely on trust without any information, accountability, or influence over the outcome Assumes that an investor's extra-monetary 'influence' on a company is +EV.
Even if it's not, they have information about the finances and plans of a company that are highly relevant to the decision to invest.
And it also protects them against the worst case, where management acts in ways that are plainly hostile to shareholder interests.
Re: Republic – Now everyone can invest in startups
#49Republic - Invest in the startups real investors won't invest in
This is actually a great way to test your idea. If lots of people find it promising, it will at least remove one concern when building a startup.
Re: Republic – Now everyone can invest in startups
#50Earlier quoted context omitted.
I think you have to get in early and hope for an IPO. But anyone who buys after the IPO is probably a sucker.
10 million dollar companies don't IPO
The idea of the JOBS act mini-IPO was to let 10 million dollar companies IPO. There are dollar and number of investor limits, but they're generous. ($1BN and 2000 investors, I think.) Above that, the regular IPO rules apply.
TrueCar, Zoës Kitchen, GlycoMimetics, ChannelAdvisor, and Malibu Boats all went public via this route, but on a larger scale, around $100M each. They did a proper IPO, where investors got publicly tradeable shares, not this weird "SAFE" thing.