Investing several thousand here or there on one or two companies seems incredibly risky, riskier than what the pros are willing to tolerate.
Perhaps it could be useful if the goal is learning oriented.
He did say he was funding college from a margin loan on his stock portfolio, however.
he said he lived in the east village, took the test in midtown
Do you think tech startups really want an investor who advises people to pirate software?
We raised some money from friends, family and angels at pre-seed, and at seed & series A, the VC didn't have single questions the cap table.
But the companies should have legal counsel, and try to use the standard YC SAFEs not to give people some weird terms. Also as a startup founder, you should make clear to family/friends/non-professional investors that investing in the startup is very risky, and as a minor investor they don't really have any rights as an investor, except hopefully have some returns for their investment.
There is some horror stories where someone gets their dentist as an investor and they start calling you every week about updates or show up at the office to chat about the business plan.
Eg. my broker (IBKR) lets me log in as a client, as a client of an advisor (who manages the account) or as an advisor (who manages an account).
Would being a legal advisor prevent me from being a independent client?
Source: I passed the series 65 and still use non-professional brokerage accounts
What rounds would you look at mostly? Assuming it's gotta be seed-ish unless you're very liquid.
I focus on seed stage as I'm seeking high risk high return exposure for this part of my portfolio (and I'm not liquid enough to participate without investing in a fund for Series A on, unless I'm leveraging as part of a transaction).
(n=1, YMMV, accredited investor)
The result is, as an individual investor, you can focus on those syndicates. Two benefits are you can spread risk by doing a wide variety of small investments, and while following more experienced individuals.
It's almost like crowdfunding for seed rounds, but still with $5k - $20k kinda checks. But it helps out a lot with the legal side of things, so you don't need an investment agreement with a dozen different investors.
https://www.finra.org/registration-exams-ce/qualification-ex...
I mean I guess it was a fun learning experience, but I'm not sure why they would go through the trouble.
One of the major differences between earth stage startup investments and normal public companies is that there is not an open market. Startups can choose their investors, and don't have to give the same price to all investors.
So yes, if you get accreditation, you will be able to find a startup to invest in... however, it isn't going to be the best startups, and you aren't going to get the same valuation that big VCs get.
One thing I didn’t understand from this article is what “giving investment advice” has to do with being an accredited investor and investing into startups. Can someone clarify that?
The article addresses this: the SEC accredited investor classification has several ways to qualify, the older ones are variants of “rich enough to presumably know what they are doing” and the newer ones added are “has one of a specified list of professional licenses/certifications that directly relate to knowing what they are doing with investments”, and the particular one that the author chose to pursue for that purpose was related to giving investment advice.
You invest as much as you can access through a credit card cash advance because:
a) FOMO
b) YOLO
c) TMI
d) TL;DR
e) ABCD
> the unspoken secret is that accreditation — at least when investing in individual startups, and especially if the founder is a good friend of yours — is just a box you can check that nobody verifies
I've heard this as well, and it's a very sad thing, because it is one of those 'secrets' that if you knew, it'd open up a lot more opportunities for you. There are few 'secrets' separating the rich and poor, but this is unfortunately one of them.
In fact from anecdotal observation people do not invest in friends in general. It is people one or two removed who take the plunge.
A friend might say they are willing to lose 100% of their investment, but if you fail and the money is gone, there is likely to be negative effects on your friendship from both parties. Also if the financial state of your friend changes, like getting a mortgage or losing their job, they can get buyers remorse.
If you do make it big, then your friends might be annoyed they couldn’t invest (although if they are really twisted about it then perhaps they are not a great friend anyway).
The problem is variance. If 70% fail and only 10% produce meaningful returns, you want >>10 so you have a reasonable chance of getting average returns.
It's possible to get lucky with 5-10 startup investments but the common result is "lost everything" with "broke even" a close second.
This applies to working for startups as well....
Its Super effective!
Also note, outside of SV - the rate is nowhere near 2/10 billion valuations.
Making sure an investor has financial acumen helps founders focus because it is hard enough raising money from angels/VC's in $10k+ amounts - imagine if you only raised $100-$1k per person. Egad! Crowdfunding might be an exception to this - but it is fairly new.
