

Any way to invest $100/200 in startups ? - enjoyaol

Dear Hn,<p>Do you know any website where small investors (around $200) can invest legally into a startup ?
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pge
Short answer, no. The fundamental reason goes back to 1933/1934 when the
modern rules of public offerings were enacted. To avoid investors being
fleeced by unscrupulous business owners that falsely advertised the merits of
their businesses, stringent rules were put in place for any offering of stock
to the public. These rules continue to govern the behavior of publicly traded
companies today. As a result of these regulations, stocks cannot be offered to
a mass audience without those offering falling under the regulation of the
SEC. Exceptions are made for small numbers (<99) of Accredited Investors
($250K annual income or > $1M liquid net worth, or something close to that),
and others close to the company. In short, a company cannot offer its stock
broadly to the public without complying with the fairly onerous SEC provisions
regulating public companies.

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david927
But why can't you create a business that is an accredited investor, which
invests in companies based on its LP's choices?

In other words: Let's say I want to invest $100 in SmallCompany.com, for the
equivalent 100 shares. I make that bid, and if SmallCompany accepts the bid,
then I give Me-VC.com (the accredited VC company) $100 and Me-VC would make an
equivalent investment in SmallCompany of that amount, for that number of
shares. If SmallCompany exits, I get a return commensurate with the number of
shares Me-VC invested for me.

Edit: I developed a site to back this but I've been searching for someone to
co-found on the business/legal side, which in this case, is by far the tougher
role.

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HockeyPlayer
In your example, you would need to be an accredited investor to invest in Me-
VC.

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david927
In the U.S. But then this will happen outside of the US.

It makes me mad that in a country that has nearly zero financial regulations
from fleecing the poor, there are regulations from keeping the poor from
investing in seed stage ventures. The rich can invest in Twitter and the poor
are stuck with the lottery (i.e. mathematically constrained odds of
'impossible'). Fuck the rich.

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rradu
There was a company called Sprowtt at 2009's TC 50 that wants to do this.

They don't seem to be up and running though:
<http://www.techcrunch50.com/2009/sprowtt-marketplace/>

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applicative
Sure, send a couple hundred bucks to the folks who hack on the open source
software you use the most -- maybe add a request for an enhancement that would
do you good, so you can be sure to get a return on your investment.

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brk
There are microlending sites like kiva.org.

However, if you're talking about investing in terms of buying stock in a
typical technology startup sort of scenario, I doubt it. The legal hurdles are
one thing, the other is that for each investor a company brings in, there are
about $500-$1000 in related overhead costs. Just dealing with the legalities
and the requirements for things like sending copies of the board meeting
minutes to the investors make $200 investments a losing proposition.

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bhousel
You might be able to do this on <http://www.secondmarket.com> depending on how
established the startup is.

The site lets you trade all kinds of illiquid assets, including private
company stock.

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bradleyjoyce
I had this idea a while back and wanted to create just that... so I bought
<http://ifundedthat.com>

I'll sell it to whomever feels like taking a stab at it :-)

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armandososa
What about startups outside US? Two programmers in México could eat (mostly
tacos) a whole month for $200.

Maybe regulations for investing in latinamerican startups are looser?

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known
No. But your question is good.

