Definitely! Why can't I buy $100 worth of stock in a startup along with 1000's of other people?
Some SEC rules or something?
EDIT: Then imagine how motivated those 1000's of others would be to promote a startup they owned a stake in.
Some SEC rules or something?
EDIT: Then imagine how motivated those 1000's of others would be to promote a startup they owned a stake in.
But that was part of the recent JOBS act. You'll be able to do that soon for good or ill.
I'm most interested in how they deal with the rights of these investors. Will they be able to demand to inspect books of startups they invested in? Will they have voting rights?
It could get dicey, especially with unsophisticated investors.
Essentially it's because of SEC. First of all you have (had) the 500 limit for investors, so any fundraiser where only, let's say 400 people, could give money would be rather shitty.
Then the other part was that if you wanted to invest in early stage startups, you have to be an accredited investor. That is you have to either make 200K a year for the last two years (or 300K together with a spouse) or have $1 million in the bank. So again, not too many people fill those requirements.
In terms of companies that were still attempting this, http://www.profounder.com/ is one of the bigger ones. They (sort of) made it work through some loopholes as far as I knew.