Investing in Startups by Passing the Series 65

I thought the name of the game in VC was investing in 20+ companies and seeing what sticks. You would need enough money at that point that being an accredited investor would be a foregone conclusion according to the net worth standard.<p>Investing several thousand here or there on one or two companies seems incredibly risky, riskier than what the pros are willing to tolerate.

It’s interesting that OP living in a midtown apartment thought a 195 dollar Kaplan subscription is too much money and skimped on it while spending a lot of their time (wasting) on subpar material. Doesn’t exactly bode well for good investment acumen does it.

If you&#x27;re a college student and you put 1k into your friend&#x27;s startup, is there a risk that&#x27;s actually a negative signal for future investors? Do investors in a real series A want a cap table that has a bunch of friends and family chipping in a grand, or are they just going to ask to wipe the slate clean?

I&#x27;ve considered getting my Series 65 for this same reason, but my concern was how it would affect my other investments. e.g. your typical low-cost brokerage accounts with TD Ameritrade, Schwab, etc are not available for professionals. In fact, it seems like everything costs a lot more if you are a licensed professional.

There is still a catch, any firm using a Regulation D exception has to go public if their shareholder total goes over 500. The loophole is that they could require a minimum amount and for the smaller amounts to join together into their own fund.

What&#x27;s the minimum possible investment you&#x27;d need to be taken seriously by a startup - 5k, 10k, etc?<p>What rounds would you look at mostly? Assuming it&#x27;s gotta be seed-ish unless you&#x27;re very liquid.

For those of you who want more of an introduction to securities, checkout FINRA&#x27;s Securities Industry Essentials (SIE) Exam. It&#x27;s only $60 and open to anyone aged 18 or older, including students:<p><a href="https:&#x2F;&#x2F;www.finra.org&#x2F;registration-exams-ce&#x2F;qualification-exams&#x2F;securities-industry-essentials-exam" rel="nofollow">https:&#x2F;&#x2F;www.finra.org&#x2F;registration-exams-ce&#x2F;qualification-ex...</a>

&gt; To be completely honest, in practice, this whole process of accreditation — at least right now, for the purposes of startup investing — was sort of unnecessary. As a relatively cash-poor college student, I don’t have much investable capital to begin with<p>I mean I guess it was a fun learning experience, but I&#x27;m not sure why they would go through the trouble.

Matt Levine has written about the problems with opening up this kind of investing to everyone.<p>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&#x27;t have to give the same price to all investors.<p>So yes, if you get accreditation, you will be able to find a startup to invest in... however, it isn&#x27;t going to be the best startups, and you aren&#x27;t going to get the same valuation that big VCs get.

Prime example of why people should be allowed to do this kind of investing through a retirement account. Doesn&#x27;t require you to have money, just knowledge.

&gt; found, however, that there was an “internet adviser exemption” for advisers that give advice entirely through the internet. That sounded like an exemption I could qualify for — I would just have to commit to not giving any face-to-face investment advice<p>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 other aspect of this is that the door is open for an accreditation-specific test to become approved.

I loved the get-out clauses. Though being from UK I am a little confused, you need authorisation to buy shares in a SME in the US?

Great writeup. Been thinking of doing the same thing.<p>&gt; 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<p>I&#x27;ve heard this as well, and it&#x27;s a very sad thing, because it is one of those &#x27;secrets&#x27; that if you knew, it&#x27;d open up a lot more opportunities for you. There are few &#x27;secrets&#x27; separating the rich and poor, but this is unfortunately one of them.