I am willing to invest some money into risky startup-stage businesses. Naturally enough, I would like to invest in as many projects as I can in order to diversify my risks. Sometimes I am willing to invest/donate into a company that could serve an important social role or bring change without actually expecting profits. I suspect there are plenty of people like me.<p>The success of the Kickstarter site is stunning. I would like to see something similar for investment projects.<p>I am wondering why there is no such project.
Securities regulations. As soon as you're issuing stock, there are many legal requirements, and you can't just advertise/issue stock to the general public without the same complexity that accompanies being listed on big stock exchanges.<p>If all you want from an 'investment' is warm fuzzies and perhaps some token product/service or swag – like Kickstarter campaigns offer – then Kickstarter itself can be the Kickstarter of donating to risky startup projects.<p>If you're an accredited investor and savvy about angel investing, you could see about joining a dealflow-matcher/community of angels like AngelList (<a href="http://angel.co/" rel="nofollow">http://angel.co/</a>).
There sort of is: Profounder. More info here: <a href="http://techcrunch.com/2010/11/30/profounder-launches-to-help-small-businesses-crowdsource-fundraising" rel="nofollow">http://techcrunch.com/2010/11/30/profounder-launches-to-help...</a> and interesting thread of whether this is actually legal here: <a href="http://www.quora.com/Is-ProFounder-in-violation-of-any-securities-laws-with-their-crowdsourced-model-for-funding-startups" rel="nofollow">http://www.quora.com/Is-ProFounder-in-violation-of-any-secur...</a>
There's nothing stopping you from entertaining pitches from smart folks on Hacker News. Hell, I'd be happy to go first, if you invited it.<p>The nice thing about this strategy for you would be:<p>- even the dumb jerks on HN are generally really smart and working on cool projects<p>- taking initiative will make the story about you, which will bring you credibility and a higher quality deal flow<p>If you end up posting an "Ask HN: Why should I seed invest in your start-up?" let me know, and I'd bite.
We're working on a solution for this. However, the initial phase will only work in Europe as there is no need (except in the UK) for the investors to be "accredited". This venturebonsai.com service is aimed for companies looking for less than 1M€, with a share issue where individual persons can invest starting at 5000€ each. So in order to get 500K€ each investor investing 5000€, you need 100 investors. We actually have implemented the "EU regulation model" in order to take care of all the regulation related issues (like not offering the shares for more than 99 investors per country) and alike. Our blog is currently at venturebonsai.info. We call this (equity) crowdfunding, even though there are many intrepretations for what "crowdfunding" should and should not be...
I think ownership and time are the major impediments. As an investor in a company, you're going to invest more than the small amounts that change hands on kickstarter, which will probably mean you want some degree of assurance in return for your money. So there's the equity part, which could be tricky to try to automate. And time wise, the projects that come up on kickstarter seem to be much shorter term than a startup would usually be, which just underscores the need for equity as a more formal commitment.<p>I'm sure there are ways around these issues, and I think it would be great if someone (you?) sat down and figured them out. But these are the reasons why it hasn't already been done, imho. If you can make it work, I'll definitely use it!
It might have to do with the IRS definition of an 'Accredited Investor'.<p><a href="http://news.ycombinator.net/item?id=1730480" rel="nofollow">http://news.ycombinator.net/item?id=1730480</a>
I think it's more because you're a minority. Investment projects like this work because of the number of people investing at once. All invest a little and little is lost if it fails.<p>Kickstarter projects are cool and people love the idea of investing in something where they actually get to own a shiny gadget if it succeeds. Most startups are not and the thing that people own can take a long-long time to reap any value.
It seems to me the challenges would be that a) it'd be a mecca for fraud b) attract people who shouldn't be making such risky investments c) make it hard for startups to stay under 500 investors for public disclosure purposes and d) be sued into the ground due to a) and b)
Companies can have a very limited number of investors before they run foul of a different set of laws. So it does not make any sense to take small amounts.<p>How much are you thinking of investing?