

Inside FundersClub (YC S12) The Equity Crowdfunding Platform - dsugarman
http://techcrunch.com/2012/08/20/ipo-vc-angel-fundersclub/

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steve8918
Are there any protections for the initial investors for subsequent funding
rounds, when their share could potentially be diluted to 0?

I'm still a bit leery of this idea of fundsourcing, because it sounds like a
way for retail investors to fund the most dangerous and riskiest round, and
then once a startup has traction, VCs can come in with a lot of money and
dilute the initial investors with impunity.

Is this a possibility, or are there ways for these initial investors to
protect themselves?

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kurtvarner
Wow, I'm surprised they allow me to sign up _and_ make an investment without
verifying that I'm an accredited investor. I simply checked one box, and full
access was granted. Screenshots: <http://pix.am/ui9z/> and
<http://pix.am/cdQU/>.

I realize that following through on the investment would undoubtedly get me
into legal trouble, but you'd think they would prevent this from happening.

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johnrob
As an investor, you aren't susceptible to anything - the company that takes
your money bears risk of lawsuit. In this case, given how it's structured,
fundersclub would be at risk.

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zio99
What are the rules regarding Canadian investors?

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prostoalex
Since sale of securities is done in the US, local laws apply.

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srehnborg
Any idea on when non-accredited investors can join?

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shashashasha
Seems dependent on the JOBS Act:

"FundersClub doesn’t rely on the JOBS Act that would let non-accredited
investors crowdfund startups. But if the bill is finalized without being
sterilized, the JOBS Act could make FundersClub even more of a game-changer by
letting literally anyone invest."

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pash
The JOBS Act did get signed into law with the crowdfunding provisions intact,
but the SEC has not yet implemented the rules needed to finalize the
regulatory exemption. That's supposed to happen by the end of the year. [0]

When that happens, some of the investments FundersClub is offering should
qualify for the crowdfunding exemption.

0\.
[http://www.sec.gov/spotlight/jobsact/crowdfundingexemption.h...](http://www.sec.gov/spotlight/jobsact/crowdfundingexemption.htm)

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HorizonXP
I love this idea, but my issue with it is that it turns investors into merely
a vehicle for money. If all you need is money, then it's awesome. But
presumably, there are plenty of startups out there that could benefit from the
advice, contacts, and expertise of the investors as well as their money. The
role of the strategic investor is reduced.

I understand you can still secure investment outside of FundersClub, but there
can be issues with dilution. It'll be interesting to see how this all turns
out.

(Yes, I copy-pasta'd my own comment from the article.)

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dublinclontarf
If you use Bitcoin, there is a bitcoin denominated stock market used for
funding already. glbse.com

Sites a bit slow but it's been up for over a year.

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nchuhoai
I wonder whether you'd actually want many small investors versus few big
investors?

While I love the efficiency, convenience and transparency of FundersClub, I
think the big value of investors comes from the personal relationships you can
build with them, as well as the domain expertise they can provide to you.

Plus, doesn't it make you hit the 500-shareholder limit pretty quick?

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benmathes
They probably group all the investments into one vehicle, with a single
shareholder entity. I don't know all the details, though.

