A private high school in California makes $24M gain on Snapchat investment

This is an educational program for the kids through the school. Lightspeed is definitely not struggling to fill out a $500k allocation... a general partner of the fund just happened to be a school parent and got the school club into the deal. A very Silicon Valley and unusual thing for a school club for sure, but nothing sketchy at all.

It's named after a Catholic saint, so I kind of doubt it's a public school.

How is it clickbait? It is literally what happened.

I happen to know a lot about this situation, and there wasn't anything sketchy at all:

1) St. Francis is an expensive ($17k a year, which is actually pretty low for the area) private school, not a public school that receives funding from the government.

2) Most private schools have endowments and investment vehicles to manage those endowments. Tuition money generally isn't going into these funds, rather they're for donations and capital campaigns.

3) Many of the parents of the kids at St. Francis are tech executives or VCs, so it's not surprising that they're investing in startups instead of more traditional mutual or index funds.

> Also how are schools allowed to invest like this at all?

Companies are allowed to invest their private money however they want. Why does it make a difference if it's a school?

> but isn't this in general kind of reckless as there's no guarantee for RoI at all

Nothing has guaranteed ROI...

You know, I spent a few hours this morning almost fuming at how insanely lucky it is to get a return on $15k like that. I started panting at the possibility that I might somehow get this lucky, but of course, turns out it was $15k of a $500k investment -_-'

Missing from the article is a mention of all the people who invested $15k in something and lost it all.

Also, can you honestly say that you would have put $15k in Snapchat 5 years ago?

Historically, to protect middle class people's retirement from swindlers and high-risk business deals, companies raising equity rounds are given the choice of three options: a) go public and accept the discipline of reporting requirements (which, the theory goes, de-risks the investments relative to private companies), b) raise money only from people one has a pre-existing social connection with (so called "friends and family" investment, which the government believes are less likely to be out-and-out scams and which would be difficult to sensibly prohibit anyway), or c) solicit investment actively, but only from sophisticated investors or investors who can afford sophisticated advisors.

The vast majority of startups choose door #3, which requires that they raise from "accredited investors." There are a few ways to hit the sophistication bar; the most commonly invoked are an asset test (~$1 million in net worth exclusive of positive home equity) or an income test ($250k in income for 2 years with expectation of same in the future).

This makes many normal people in the tech industry and in the professions (doctors, lawyers) into accredited investors, but excludes much of the middle class.

Reasonable people can disagree on whether this is good policy, but it is more-or-less the law in the US. There are recently some exceptions due to the crowdfunding law, but they're as-of-yet outside of the startup mainstream.

Accredited investors can't necessarily get into any particular deal; the most desirable companies quickly fill up, and since Snap was a fairly desirable company, the fact that an investor convinced their co-investors to sacrifice allocation in favor of getting a favored charity involved was basically a charitable donation all around. Accredited investors can generally find a company willing to take their money, but most investments in startups do not go well, even when the startups are executed competently. (This is the reason we have laws preventing e.g. 40 year old teachers from taking out a HELOC to put $100k into photo sharing for dogs.)