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Comment by blizkreeg | Hacker News Reader

I have a better (may be slightly insane) idea. Open up startup investing (VC rounds especially) to a wider audience through some kind of index fund. Retirement and pension funds, endowments etc are too roundabout a way of actually benefitting from the windfall in the now.

While this is obviously risky, in the 2/10 chance where the startup IPOs or gets acquired, everyone stands to benefit a big deal.

I recently heard about the case of a private school which was able to invest $15K in one of $SNAP's funding rounds (the VC partner was a parent at the school). At IPO, the school netted $50M on this investment. This school was already well off but I can imagine what this would do for a lot of public schools if this option were available to them.

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> Open up startup investing (VC rounds especially)

VC wins are done with primarily other people's money with bets spread in multiple areas and advantages accruing to people who get a larger portion of any potential gains.

So maybe please stop thinking (as I think Sam probably does) that startups are the answer to everything and that in the end everyone wins if they can be a part of that. Keep in mind also that money put into startups (that was not previously there) also takes away from money that would enter the economy and benefit other groups. In other words Uber takes away jobs from taxi drivers and Amazon takes away jobs from companies that would typically be selling if Amazon did not exist. It's not all a net win. Which is why it's laughable when (in this example) Amazon talks about opening a warehouse and creating X jobs.

Sam has a lot of time on his hands and plenty of good fortune to be in a position to ponder issues like this. Certainly tells you all of his financial needs are met and now he can try to answer to a higher calling.

I'm not saying startups are a panacea. I'm just saying that perhaps there's one more way for others to benefit from the wealth that startups are generating. This is just one among many possible ways and means.

VCs get their money from lots of sources, an article I read last year said in one year they received 30% of their funds from pensions[0]. I no longer have access to that article, but I do recall university endowments having a reportable percentage of the pie as well.

Assuming there was some way of defining an index, and there was enough liquidity to make it trackable by a fund, which are major problems for private companies:

By what definition of startup do 2/10 of them get acquired or achieve an IPO?

How would such a fund be more efficient for pensions and endowments than investing in VCs now?

Also, I think this fund would be a disfavored source of funds for founders. The big VC firms are successful in large part because they have access to the best investing options. Securing them as an investor opens doors for future rounds and for prestigious opportunities.

[0] https://news.ycombinator.com/item?id=12515731

This used to be called an IPO, but as it turns out the companies themselves don't want it.

Certainly. But there is also an order of magnitude gain available (in theory, at least) if you can get in on an early round.

This is what ICOs have recently enabled. It's not insane, in fact it's already happening.

VC investing has traditionally been a good ol' boy club, but I think that will change. Openings up investing to everyone will provide more people with an opportunity to prosper.

ICOs still feel like the wild west. They feel way more riskier than contributing to a "validated" funding round. That said, VC rounds obviously are no guarantee of good judgement either.

Investing is risky, that's just the nature of it. Most SV startups fail. Failure isn't a bad thing, it's just the process of figuring out what works and what doesn't.

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