Without getting into a very detailed discussion, let me put it this way. I think a convoluted system is the price of such a system. It boils down to the need to define startup. This is something we are better off not doing. Once you give startups special rights of some sort, companies & people have an incentive to be 'startups' rather than just companies. People might have an incentive to be startups rather than professionals. This is the kind of distortion I was talking about.
I think that attempts to minimise distortions by not letting them come into play in the market is closing loopholes. They are usually problematic in themselves.
The ideas posed by pg & this article are that the small issue of defining startup can be easily worked around by piggybacking on the implicit definition of startup used by investors. Either ask them (panel) or use their investment as a qualifier. My criticism of the latter approach is that you can't just assume that investors' actions will be uninfluenced by their newfound superpower. It will allow them to get better terms, for example. It may allow them to get the deal in the first place.You hear of cases startups want an investor primarily for the contacts and advice, rather than capital. I could easily imagine the visa being the primary reason. Since being a 'recognized investor' is such an advantageous position, others will want to do this too. Are YC type organizations more likely to be recognized? If so then this distorts the market in favour of them. YC will become an immigration path (like study is).
The panel approach is also problematic. You are creating a bureaucratic gatekeeper. These tend to be the worst kind. First, the panel decides if a startup is worthwhile. then, the market gets its turn.
My pick out of the two would be a panel. It avoids the need to have recognized investors, only recognized startups. But apart from corruption, expect to have decisions made by bureaucracies before the market gets a crack.
Barriers to immigration are like barriers to trade. Barriers this high in trade would be under incredible pressure.
*I have no problem with immigration. I am not American or in America. i am an immigrant myself (in Australia). My preferred long term solution would be lowering or even removing barriers to immigration completely by some point.
Comments
Without getting into a very detailed discussion, let me put it this way. I think a convoluted system is the price of such a system. It boils down to the need to define startup. This is something we are better off not doing. Once you give startups special rights of some sort, companies & people have an incentive to be 'startups' rather than just companies. People might have an incentive to be startups rather than professionals. This is the kind of distortion I was talking about.
I think that attempts to minimise distortions by not letting them come into play in the market is closing loopholes. They are usually problematic in themselves.
The ideas posed by pg & this article are that the small issue of defining startup can be easily worked around by piggybacking on the implicit definition of startup used by investors. Either ask them (panel) or use their investment as a qualifier. My criticism of the latter approach is that you can't just assume that investors' actions will be uninfluenced by their newfound superpower. It will allow them to get better terms, for example. It may allow them to get the deal in the first place.You hear of cases startups want an investor primarily for the contacts and advice, rather than capital. I could easily imagine the visa being the primary reason. Since being a 'recognized investor' is such an advantageous position, others will want to do this too. Are YC type organizations more likely to be recognized? If so then this distorts the market in favour of them. YC will become an immigration path (like study is).
The panel approach is also problematic. You are creating a bureaucratic gatekeeper. These tend to be the worst kind. First, the panel decides if a startup is worthwhile. then, the market gets its turn.
My pick out of the two would be a panel. It avoids the need to have recognized investors, only recognized startups. But apart from corruption, expect to have decisions made by bureaucracies before the market gets a crack.
Barriers to immigration are like barriers to trade. Barriers this high in trade would be under incredible pressure.
*I have no problem with immigration. I am not American or in America. i am an immigrant myself (in Australia). My preferred long term solution would be lowering or even removing barriers to immigration completely by some point.