For background, the JOBS Act that was recently signed removes a ton of regulation from the funding of small companies and specifically allows the creation of "funding portals" that allow non-accredited investors (ie. regular people) to invest up to $10k/year in startups.
Seems like a "curated fund" where organizations like YC pick the companies and crowdsource funds would be one of the better applications of the new legal permissions (the potential "worse applications" being boiler rooms pushing hot new photo sharing startups to midwestern pensioners).
However, it's not like YC and other funds are hurting for cash so what's the incentive for PG to need to crowdsource funds in tiny amounts like this when they have plenty of institutional funding? The limits are 2,000 investors and $10k/investor for a max of $20m of crowdsourced funding per company (assuming every investor makes $100k+ and maxes out on one company which would be stupid).
It'd be like Scrooge McDuck stepping outside his money bin to pick up pennies off the street.
I'm very interested to see how established VC firms react to JOBS Act. It's not like startups are finding it difficult to get funding right now, so doesn't this just create a subprime market for companies that the big players have no interest in? Coupled with the lifting of advertising restrictions and the appeal to amateur investors, this seems like the potential makings of the next big bubble...
The real potential for this is funding for non-tech startups. Tech can get funded (right now) but trying to get funding for a corner deli is next-to-impossible.
>Seems like a "curated fund" where organizations like YC pick the companies and crowdsource funds would be one of the better applications of the new legal permissions (the potential "worse applications" being boiler rooms pushing hot new photo sharing startups to midwestern pensioners).
The JOBS Act prohibits intermediaries from offering investment advice or recommendations on investments.
Comments
For background, the JOBS Act that was recently signed removes a ton of regulation from the funding of small companies and specifically allows the creation of "funding portals" that allow non-accredited investors (ie. regular people) to invest up to $10k/year in startups.
Seems like a "curated fund" where organizations like YC pick the companies and crowdsource funds would be one of the better applications of the new legal permissions (the potential "worse applications" being boiler rooms pushing hot new photo sharing startups to midwestern pensioners).
However, it's not like YC and other funds are hurting for cash so what's the incentive for PG to need to crowdsource funds in tiny amounts like this when they have plenty of institutional funding? The limits are 2,000 investors and $10k/investor for a max of $20m of crowdsourced funding per company (assuming every investor makes $100k+ and maxes out on one company which would be stupid).
It'd be like Scrooge McDuck stepping outside his money bin to pick up pennies off the street.
I'm very interested to see how established VC firms react to JOBS Act. It's not like startups are finding it difficult to get funding right now, so doesn't this just create a subprime market for companies that the big players have no interest in? Coupled with the lifting of advertising restrictions and the appeal to amateur investors, this seems like the potential makings of the next big bubble...
> It'd be like Scrooge McDuck stepping outside his money bin to pick up pennies off the street.
OT, but that's a pretty bad example, because he does do exactly that. A lot.
Hah, sorry, not watched Duck Tales for a while. It's still an irrational act ;)
My recollection: He will go so far as to put bubble gum on a stick to retrieve coins through a grate because it nets him $400/year tax free.
The real potential for this is funding for non-tech startups. Tech can get funded (right now) but trying to get funding for a corner deli is next-to-impossible.
>Seems like a "curated fund" where organizations like YC pick the companies and crowdsource funds would be one of the better applications of the new legal permissions (the potential "worse applications" being boiler rooms pushing hot new photo sharing startups to midwestern pensioners).
The JOBS Act prohibits intermediaries from offering investment advice or recommendations on investments.
See Section 304.b