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Comment by arcticbull | Hacker News Reader

You’ve got this backwards. Anyone can sell securities to any investor if the company they’re selling shares in can commit to providing regular audited financial disclosures showing they’re not frauds. It’s on the product being brought to market to show it’s fit for sale, not for the investor to show they’re “sophisticated.” If they show they’re sophisticated they can elect to waive the reporting requirements. You could do this for your personal C Corp, it’s just a lot of overhead you may deem not a good use of capital.

Kik is choosing not to become a “public” company in that they don’t want to file disclosures. They’re trying to circumvent the rules that show they’re operating above board.

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>Anyone can sell securities to any investor

can being the operative word. There is a very significant market for investments where "sophisticated" – er – Accredited Investors get access to purchase securities that are not available to the public.

Frustration from people who want to but cannot access this market is real and arguably valid, a balancing act between preventing fraud and granting access which is tipped a bit too far towards not necessarily preventing fraud but restricting access for the benefit of a few. (on the other hand before you go public there is a benefit to only having investors that really know what they are doing, the rabble of small time less knowledgable investors can be a business risk before your company is ready for the public)

What I am saying is that the people spouting nonsense come from a place where there is truth, but so many people know so little about it that good discussions are hard to come by.

I do agree with you, though access to private market equity isn’t a sure win by any means. A startup fails to raise their next round of funding 90% of the time every time. The riches are survivorship bias largely. This also doesn’t solve for deal flow which you have to figure out yourself anyways, and to get the equity “clearly” headed for the top you better be able to demonstrate value. You can already access “private market” equity via crowdfunding terms in the JOBS act but those exchanges exhibit heckin adverse selection issues.

The reality is if you’re a high profile founder with a great idea and traction you can get money from mostly everyone while maintaining a nice clean cap table. If you aren’t, you then raise from “suckers” (see the ICO market).

It's as though some of the libertarian leaning commenters think these rules were brought in because the government was tired of seeing so many poor people become wealthy. The reality is the government was tired of seeing so many poor people get rekked and thrown into the welfare system, what little of it there is here.

tl;dr: getting rich isn’t easy and deregulation is likely to cause more harm than good.

Except the reporting requirement are cost prohibitive for a company that is seeking seed funding to file an s-1 or a reg—a even.

So us, poor unsophisticated plebs, can’t invest in anything until post IPO. Which seems to be way after the majority of the gains have been captured.

Ironically people are trying to build fully automatic DAOs, such that the use of funds is fully transparent. Effectively baking in the reporting into the organization.

> seems to be way after the majority of the gains have been captured.

And also after the point where most of the failed companies have collapsed. Don't let survivorship bias run your investment decisions.

It's more than that. They received money from "investors" without giving away any equity.

Good point, I didn’t address that.

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