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The SEC Just Voted To Lift The Ban On General Solicitation

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Re: The SEC Just Voted To Lift The Ban On General Solicitation

#61

Post by fr0sty »

pessimizer wrote: post #56
wissler wrote: post #45

Earlier quoted context omitted.

First of all, it's none of anyone's business what some individual wants to invest their money in. It's a moral obscenity to forcibly prevent him from investing. It's not only presumptuous to say "if someone's not rich, they must not be smart enough to invest", it's a self-fulfilling kind of thing, isn't it? Nothing prevents people from gambling in Vegas. So clearly these laws are not about protecting fools from their…

>Nothing prevents people from gambling in Vegas. The only reason that people gamble in Vegas is because every other place created laws to protect fools from their own foolishness. Vegas, a city built by organized crime figures who normally had to operate illicitly, didn't.

> "every other place"

Vegas is not the only location of legal casino gambling. It is by far the largest but there is significant gambling activity elswhere in the US.

Wikipedia mentions these markets:

    1. Las Vegas Strip $5.550 billion
    2. Atlantic City $3.943 billion
    3. Chicago region $2.092 billion
    4. Connecticut $1.448 billion
    5. Detroit $1.36 billion
    6. St. Louis $1.050 billion
    7. Tunica Resorts, Mississippi $997.02 million
    8. Biloxi, Miss. $833.50 million
    9. Shreveport, La. $779.65 million
    10. Boulder Strip (Las Vegas) $774.33 million
    11. Reno, Nevada $715.23 million
    12. New Orleans, La. $653.05 million
    13. Downtown Las Vegas $523.82 million
    14. Laughlin, Nevada $492.51 million
source: https://en.wikipedia.org/wiki/Casino#By_region

There are also numerous casinos on Indian reservations across the country.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#62

Post by 7Figures2Commas »

jmj42 wrote: post #42
ChuckMcM wrote: post #8

I think this is a mixed blessing. I agree that the ban has been a hindrance on people trying to find investors but lifting it may not be the best solution. If you look at the way YC demo day works, its a pretty reasonable way for potential investors to find startups which are compatible with their investment goals. I think this addresses the challenge of the general solicitation rule (finding the startups) without th…

> I think this addresses the challenge of the general solicitation rule (finding the startups) without the negative of creating a bunch of unvetted startups advertising for dollars. Not really. We, here on HN, tend to frame things around tech startups, but there's a larger world out there that incubators don't (and often can't) address. Consider this (real life) example: Recently a local pub came up for sale. The ask…

>... getting investment funding for small businesses is very hard. This rule change makes it much easier.

That isn't necessarily true. Just because small businesses can freely solicit investment doesn't mean that actually raising it will be easier.

People seem to be making the assumption that there's this huge untapped market of rich people (read: accredited investors) who are not actively investing in businesses today simply because they haven't seen an ad or received an email inviting them to get in on the ground floor of a great opportunity.

I don't see much evidence that this is the case, and based on my experience, the reality, for better or worse, is that you're either tapped into funding channels (or can work your way into them) or you're not. This doesn't mean that no money will be raised in the fashion you describe, but the notion that there's going to be a flood of wealthy individuals writing checks to people and companies they just met is absurd.

As far as the specific situation you described, $200,000 is a modest amount. If you had a wealthy individual, or group of individuals, truly interested in owning a bar, it's far more likely that they'd purchase it themselves and hire an experienced person to run it. What incentive would they have to give any equity ownership and control to a group that couldn't "even come close" to putting up $200,000 themselves? "Accredited investor" doesn't necessarily mean "intelligent investor" but a lot of the comments around this general solicitation change assume that there's an abundance of accredited investors who are, for lack of a better description, utter fools.

This discussion around the lifting of the ban on general solicitation also seems to assume that this will most greatly affect startups/Silicon Valley and small business, when in fact this will almost certainly most greatly benefit Wall Street and the financial establishment.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#63

Post by derekp7 »

diminoten wrote: post #51
wissler wrote: post #45

Earlier quoted context omitted.

First of all, it's none of anyone's business what some individual wants to invest their money in. It's a moral obscenity to forcibly prevent him from investing. It's not only presumptuous to say "if someone's not rich, they must not be smart enough to invest", it's a self-fulfilling kind of thing, isn't it? Nothing prevents people from gambling in Vegas. So clearly these laws are not about protecting fools from their…

We could use this argument to remove warning labels from all dangerous things. If you want to drive your vehicle without a seatbelt, who am I to force you to? Your seatbelt choices have no impact on anyone else except you, right?!

That is exactly right. Also, if I want to ride my bicycle without a helmet, or go rock climbing, or cross the street without being wrapped in bubble wrap, that is my business too.

Although the seat-belt thing does have some legitimacy, in that it keeps the drive in front of the wheel during an accident, allowing him to potentially keep some control over the car.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#64

Post by ChuckMcM »

jcnnghm wrote: post #39
ChuckMcM wrote: post #8

I think this is a mixed blessing. I agree that the ban has been a hindrance on people trying to find investors but lifting it may not be the best solution. If you look at the way YC demo day works, its a pretty reasonable way for potential investors to find startups which are compatible with their investment goals. I think this addresses the challenge of the general solicitation rule (finding the startups) without th…

I'm just waiting for this to blow up like it did right before all these rules were added (i.e. the great depression). Startup investments are hugely speculative, the vast majority turn a lot of cash into nothing. The public is risk adverse; look at the last financial downturn, there is still a subset of people pushing legislated guaranteed stock market returns because they don't understand the risk/return relationshi…

Having lived through the first dot-com bubble, my belief was that it was facilitated in part by unsophisticated investors chasing outsized returns (the so called "retail" investors). The startup market largely escaped the 'bubble' fate by virtue of the fact that the bar for investing in startups was high enough that the people who qualified either understood the risks are were willing to lose everything in their bet (pure gamblers).

My fear is that opening up startup investing to a wider pool will not only fund a lot of startups that should not have been funded (just like the dot.com boom rewarded companies that should not have been rewarded) it will result in a catastrophic correction down the road where a lot of people will have lost everything and will be asking the government to use taxpayer money to make them whole again.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#65

Post by [deleted] »

jcnnghm wrote: post #39
ChuckMcM wrote: post #8

I think this is a mixed blessing. I agree that the ban has been a hindrance on people trying to find investors but lifting it may not be the best solution. If you look at the way YC demo day works, its a pretty reasonable way for potential investors to find startups which are compatible with their investment goals. I think this addresses the challenge of the general solicitation rule (finding the startups) without th…

I'm just waiting for this to blow up like it did right before all these rules were added (i.e. the great depression). Startup investments are hugely speculative, the vast majority turn a lot of cash into nothing. The public is risk adverse; look at the last financial downturn, there is still a subset of people pushing legislated guaranteed stock market returns because they don't understand the risk/return relationshi…

[deleted]

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#66

Post by jcnnghm »

[deleted] wrote: post #65
jcnnghm wrote: post #39

Earlier quoted context omitted.

I'm just waiting for this to blow up like it did right before all these rules were added (i.e. the great depression). Startup investments are hugely speculative, the vast majority turn a lot of cash into nothing. The public is risk adverse; look at the last financial downturn, there is still a subset of people pushing legislated guaranteed stock market returns because they don't understand the risk/return relationshi…

[deleted]

Take a step back and look at the secondary market offerings like Twitter.

A company with a speculative run-up and no business model is very high risk. Also, the limiting reagent in secondary market trading is investor count. At 500, the company has to go public, so many companies contractually limit secondary sales to avoid the additional reporting requirements.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#67

Post by clavalle »

7Figures2Commas wrote: post #62
jmj42 wrote: post #42

Earlier quoted context omitted.

> I think this addresses the challenge of the general solicitation rule (finding the startups) without the negative of creating a bunch of unvetted startups advertising for dollars. Not really. We, here on HN, tend to frame things around tech startups, but there's a larger world out there that incubators don't (and often can't) address. Consider this (real life) example: Recently a local pub came up for sale. The ask…

>... getting investment funding for small businesses is very hard. This rule change makes it much easier. That isn't necessarily true. Just because small businesses can freely solicit investment doesn't mean that actually raising it will be easier. People seem to be making the assumption that there's this huge untapped market of rich people (read: accredited investors) who are not actively investing in businesses tod…

Is it a fact that only accredited investors can be solicited?

I remember reading when the Jobs Act was first floated that non-accredited investors could invest as well but were capped at how much they could invest in a given year based on their income.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#68

Post by anigbrowl »

ChuckMcM wrote: post #8

I think this is a mixed blessing. I agree that the ban has been a hindrance on people trying to find investors but lifting it may not be the best solution. If you look at the way YC demo day works, its a pretty reasonable way for potential investors to find startups which are compatible with their investment goals. I think this addresses the challenge of the general solicitation rule (finding the startups) without th…

lift on advertising prescription drugs. That really hasn't been a 'win' for me

I can't judge whether your analogy to startup funding is correct, but I agree that direct advertising of prescription drugs to the general public is a total disaster.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#69

Post by anigbrowl »

derekp7 wrote: post #63
diminoten wrote: post #51

Earlier quoted context omitted.

We could use this argument to remove warning labels from all dangerous things. If you want to drive your vehicle without a seatbelt, who am I to force you to? Your seatbelt choices have no impact on anyone else except you, right?!

That is exactly right. Also, if I want to ride my bicycle without a helmet, or go rock climbing, or cross the street without being wrapped in bubble wrap, that is my business too. Although the seat-belt thing does have some legitimacy, in that it keeps the drive in front of the wheel during an accident, allowing him to potentially keep some control over the car.

If you suffer a serious accident, it imposes an external cost on society. You may get presented with a bill afterwards, but even at the point of having the accident it's highly disruptive. Consider a car accident where you're berely inured and shaken up, v. one where you are ejected through the windscreen into the road. Which one is going to disrupt traffic for longer?

keeps the drive in front of the wheel during an accident

So you think passengers should not wear them?

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#70

Post by Dylan16807 »

diminoten wrote: post #51
wissler wrote: post #45

Earlier quoted context omitted.

First of all, it's none of anyone's business what some individual wants to invest their money in. It's a moral obscenity to forcibly prevent him from investing. It's not only presumptuous to say "if someone's not rich, they must not be smart enough to invest", it's a self-fulfilling kind of thing, isn't it? Nothing prevents people from gambling in Vegas. So clearly these laws are not about protecting fools from their…

We could use this argument to remove warning labels from all dangerous things. If you want to drive your vehicle without a seatbelt, who am I to force you to? Your seatbelt choices have no impact on anyone else except you, right?!

People without seatbelts often end up in emergency rooms at public expense. People with bad investments won't often end up on welfare from their decisions.
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