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Comment by 3pt14159 | Hacker News Reader

It's just a shame that programmers like myself can't invest randomly in the tools we love. GitHub, StackOverflow, and DigitalOcean all would have had at least $10k from me years ago. I get the reasons why, it's just frustrating to see obviously good companies grow just like you expect them to and 100x their valuation over a decade.

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You might need to offer more than $10k (or not, maybe enough fellow HNers are interested!) but 'investment clubs' could let you.

I gather it's a bit out of fashion (retail investing got easier, basically) but perhaps it's due a revival with a focus on private equity.

(The difference from an investment trust being that the club's members, the fellow HNers, vote on where to put their pooled money, rather than each mutually anonymously trusting the manager to do a good job, based on reputation or whatever.)

The issue isn't so much one of knowing how to invest, it's more the friction involved in investing in small companies. Random terms on sheets, weird cross-country concerns (like Canadian startups that want to maintain CCPC status), not being able to liquidate on demand.

What I want is something closer to a stock market for startups. But I get why that can't happen: Too many scams with small companies. Even today on places like TSXV there are tons of scams and it would only get worse.

If the market existed the bad would probably outweigh the good. I'm just sad because the good would have been great for me.

Right, I didn't mean that you didn't know how, just that it's high effort and capital requirement for such early stage companies; which used to be more true for publicly traded companies (phone calls, letters, physical share certificates) and investment clubs were/are a way of pooling resources. Family offices, but a club rather than a family, I suppose.

But it sounds like you want something more like VC-backed ETFs, with a pretty granular or even single-company focus, such that you agree with the underlying's focus, but don't have to deal with the lawyers etc. side of it.

Actually it's been a theme of Matt Levine's that the trend is toward ETF everything, ETFs of ETFs, 'nobody' dealing directly in the underlying.

I know ETFs are more popular with most people, but I'm a reasonably good investor. Average about 18% a year on a 50-50 mix of stocks and bonds, and that's before counting cryptocurrencies.

I absolutely knew that DigitalOcean was going to win as soon as I saw their UI, API, and pricing. I was almost as sure with GitHub.

What I like about dealing with the underlying in stocks is I can evaluate the product. Certain companies are no brainers when it comes to product (bought Tesla at $30, early Shopify, Apple after the iPhone came out, etc) and once I check out that their fundamentals don't leave them out of cash in a year or two I don't mind making the call. I also don't mind selling early. Buying hundreds of shares of Apple and selling call options at 10 or 15% above the current price six months out is a reasonable way of making a good return without getting greedy. If it swings south again I buy again.

That said, I haven't bought much in a couple years. The easy wins aren't there and the market as a whole was overvalued before covid and now it's just bananas. So I wait like a bear and make some piddly 1% return in a money market fund. Tempted to short the market, but I don't like shorting and puts are too expensive right now because of volatility.

ETF doesn't have to mean basket of shares though, there are already bond, short, mortgage, and all manner of ETFs. In theory I don't think anything stops a VC from investing in Digital Ocean's series whatever, and then launching an ETF derivative. I mean, maybe the series' terms, but probably mostly the lack of incentive.

In the UK (at least) there are venture capital trusts (VCTs) which give exchange traded access to 'venture-stage' private companies, but that's still a (small) basket of someone else's choosing rather than your own ideas and DD.

Basically I agree, I'd like it too. (I'd have had Stripe and Cloudflare (now $NET) some time ago for sure.) I'm just trying to think through how it could work, what it might look like. Crowdfunding rounds are obviously closest, but it's rare, at the companies' discretion even more than the decision to raise, and even says something about the sort of company it is.

100% agree with everything you said. I knew about non-broad basked ETFs but I think you knew that I knew anyway.

Crowdfunding looks nice, but I just want protection for the public at the same time as I want high-skilled technologists to be able to invest in obviously undervalued startups.

I actually really like this idea. The model sort of reminds me of a cooperative. There is a cooperative for Outdoor Clothing in Canada and it had a reasonable amount of success.

These types of organizations tend to be _very_ resilient and stable [0].

[0] https://en.wikipedia.org/wiki/Worker_cooperative

REI is a multi billion dollar co-op that is still going strong

MEC is struggling hard right now, unfortunately. COVID + Amazon + investment in more physical stores == Money troubles.

How will the rich and powerful grow if programmers like you are allowed to invest like you describe?

If you believe this then write to your congressional representative and tell them to repeal accredited investor rules.

What if they are one of the people that lost? Not every person gets a representative, only the bigger (but potentially small) portion of voters gets.

Most engineers can clear the accredited investor rules in their 30's. A million isn't what it used to be in the 80's.

Imagine thinking this is even close to accurate

Sorry, but it is accurate with many engineers I know. Most have pretty fat 401Ks by mid to late 30's. 401K millionaires are not uncommon.

Also, many west coast folks or those in high cost of living areas can clear the accredited investor rule based on income alone. ($200K income for 2 years in a row.)

You are aware that most engineers don't live and work in SF or NYC, right?

And even of the ones that do, most are not working at FAANG?

It's laughable that you think that just because you and your friends have the highest paying jobs, this somehow extrapolates to "most engineers."

As for the income rule, it's $300k, not 2.

Yes, I am aware. I am wrong about most. I will say that many engineers should be able to clear the accredited investor rule by their mid to late 30's. The bar is not that high.

And you are wrong about the income rule. It's $300k with a spouse. $200k as an individual. From https://en.wikipedia.org/wiki/Accredited_investor#United_Sta... : "a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year."

"Many" could mean anything, so it's impossible to argue for or against.

I mean, pretty much everyone in NYC, SF (maybe Seattle too?) makes $200k+. That's a decent number of people to be sure, but a fraction of all engineers in the United States. The average senior software engineer salary nationwide is just over $120k. (That average includes the high coastal salaries, obviously.) Ain't no one getting accredited on that, honey.

You're right about the income rule, thanks for the correction.

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