Comment by Animats | Hacker News Reader

Comment by Animats | Hacker News Reader

Interesting. These appear to be JOBS act short-form mini-IPOs.[1] That's something new, which just became possible this year and hasn't been used much.

Here's Farm from a Box's SEC filing.[2] Typical crappy terms - no voting rights, no anti-dilution, no transferability for one year, insiders have control.

Nobody associated with the project has a farming background. They have two employees. One is a liberal arts majors from UC Berkeley and one has an unspecified degree from UCLA. They do not have a working prototype farm according to the SEC filing.

The filing for Youngry [2] is more interesting. They want to start a glossy web site for young entrepreneurs. They claim lots of good contacts. (Miss Las Vegas?) They're only asking for $50K, which isn't enough. Two-person business.

Republic takes a 5% cut; that's how they make their money.

This is a reasonable concept, but the current set of deals isn't very impressive. These are people looking for Series A funding and would probably be rejected by YC. The idea behind the JOBS act short-form IPO was supposed to be that when your startup got too big for angel/friends and family/Kickstarter funding, there was a next level and an exit strategy for the original funders. It wasn't intended for startups this early.

You can look up these companies on the SEC's EDGAR system. If you scroll down all the way to the end of Republic's pages, there's a link.

[1] https://media2.mofo.com/documents/120416-pli-quick-guide-job... [2] https://www.sec.gov/Archives/edgar/data/1679373/000167937316... [3] https://www.sec.gov/Archives/edgar/data/1679372/000167937216...

It sounds like you might be thinking of Title IV of the JOBS Act (Reg A fundraises, more details here: https://www.sec.gov/oiea/investor-alerts-bulletins/ib_regula...), which are akin to "mini IPOs" and are intended for later-stage companies.

Republic operates exclusively under Title III of the JOBS Act, which was enacted in May of this year and is intended for early-stage companies.

On deal terms, generally speaking it would be impractical for a startup to fundraise via equity crowdfunding if the hundreds or thousands of investors, each putting in as little as $10, were to have voting and information rights. The non-transferability component is actually a legal restriction put in place by the SEC, not a term that any companies raising on Republic have put in place.

Each deal page has a discussion section, if you have questions for the founding team of each company, please do ask :)

On deal terms, generally speaking it would be impractical for a startup to fundraise via equity crowdfunding if the hundreds or thousands of investors, each putting in as little as $10, were to have voting and information rights.

Yeah, right. I get an annual report, a 10-K, and voting rights on every public stock for which I own at least one share.

Companies raising under Title III file annual reports with the SEC. That said, public companies in which you own stock and private, early-stage startups have vastly different capacities to deal with these issues. The basis for investment in each is also quite different. Apples and oranges.

Actually, both Apple and Orange are public companies :D

pmen is right. We considered crowd investments for our own startup, and concluded it's too much work, hassle and inflexibility. Republic's model seems to mitigate this somewhat, but (probably?) only works in the US and even they state on their site:

"The tradeoff for the benefits of investment crowdfunding is the complex regulatory requirements that companies must follow. The general spirit of the law is simple: companies should provide complete and accurate information so that the public can make informed investment decisions. Incorrect or misleading information comes with severe legal consequences. In addition to the following, you should also consult your attorneys and accountants to ensure full compliance with all legal and accounting requirements. Republic as a funding portal is not authorized to and does not provide legal, accounting or investment advice."

Sounds like it could very well still be too much for us.

Regardless of the terms, all of these companies appear to be just terrible investments.

Never stopped terrible products on Kickstarter from goosing thousands of dollars from naive backers.

"Youngry" - A newsmedia property built a supplement entrepreneur and professional "entrepreneurial-advice" entrepreneur that aims to make money by creating sponsored content and e-commerce products (webinars, digital books) for early-stage, young entrepreneurs.

That's my impression too. Some, like Cringle on Companisto, looks OK-ish, but most of it is crap. At worst it's "delightful" candy subscriptions and at best it's a slightly better implementation of something that already exists.

EDIT: Having just looked at Companisto's page I now get lots of advertisements all over the web from them. So that's why no good start-ups bother with crowd-investing - because the portals take a big fat cut and so the start-up effectively gets a lower valuation.

So interesting. Seems like we now have two ways for the public to buy shares in companies. On the stock exchanges, we've made it so difficult and expensive (Sarbox and other requirements) - that many companies have chosen to delay or avoid going public. So the government passed more laws to make it easier for companies to go "public" (in a different way), and we now have another system that seems to be a real wild west.

Oh government... solving unintended consequences with more unintended consequences.

No, what's happened is that low interest rates have made borrowing, or investment with borrowed capital (which is what much "private equity" really is) more attractive than going public. That's why we have overvalued "unicorns". If Uber went public, they'd have a far lower market cap than their current valuation.

This also has a lot to do with the tax advantages of debt.

I imagine there are very few good startups that would offer the general public voting rights in early stages without first being able to vet those investors.

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