1. VCs won't buy tiny quantities of equity from these hosts.
2. If they're expected to sell to other individuals, you've essentially recreated the stock market.
3. If they're expected to wait until Airbnb IPOs, well Airbnb now has even less reason to IPO. They can finance in such a way that they can sell equity, but no one else can ever sell equity.
Imagine if every Airbnb host had the option of having 5-10%
of their earning withheld and used to purchase equity.
Crowdfunding with equity can't come soon enough.
Also there is still a lot of risk involved for these private investors, this isn't just free money. Just ask all the Facebook private investors who bought shares for $40, when you or I could have bought them for $20 a year later post-IPO.
I'm not against crowdfunding, I think it is great. But to pretend that angel investing is some sort of easy money is ridiculous. Companies like AirBNB which are successful are incredibly rare. Most companies fail and return nothing. Valuations for companies have also gone way up and there is no way to know whether investing now is actually a good deal or not. That is the point of investing, you are hoping for additional returns by taking more risk.
You're no authority on "how investing works", so consider expressing your personal opinions in a less arrogant way.
It's hard to imagine why you think VCs not understanding Airbnb's potential means that the actual users of Airbnb didn't understand it. I absolutely believe many of the early hosts would have elected to have 5% or 10% of their earnings turned into stock certificates. And of course, I'm talking about future companies that fit the Airbnb profile.
Users will be wrong and lose money, but you're wrong if you think regular people can't predict successful companies earlier and better than VCs. They're the ones that actually pick who wins in the market after all.
There's already plenty of other big players like HA, VRBO, FK, TA, rent and countless others. There's even giants that doing this that are not fully devoted to short-term rentals and vacation stuff like CL.
That doen't even touch on the devoted timeshare and timeshare-related stuff. Or, how many convenient insurance companies can you think of that will underwrite policies for these shot-term renters?
There's just so much opportunity in this field....
Also, I hadn't heard that employee grants are not considered towards the investor limit, is it just that holding options doesn't make you an investor or is it more than that? Can you point me towards some reading material?
Edit: It looks like "Shareholder's of record" as defined in the JOBS Act might exclude employee incentive share programs (as long as those plans were exempt from registration under the Securities Act... not that I know what that means)
Edit2: See erichurkman's links.
As far as the shareholder limit, Cooley LLP has a decent overview of the JOBS Act's changes [1]. Holding an option grant never counted toward the 499 limit, but previously if you exercised your option grant (through equity compensation), you may have counted toward the 499 limit. Now, most option holders that exercise their grants are exempt from this shareholder count.
There are limitations on this exemption to make sure companies are not using it to actually solicit stock.
So long as the grant was under the exemption, if they exercise their grant, it should not count toward the shareholder limit.
When VA Linux IPO'd they let everyone who had contributed in some way to their open source distribution into the family and friends plan. I was one of them and managed to re-pay my mum for lending me the deposit on my mortgage.
Note that I don't think you can classify it as a bad example just because LNUX was a spectacular failure after the IPO. The F&F situation had nothing to do with their failure.
Sometimes it's just good to help the people who helped you build a business.
In what way would giving away shares to employees be the same as keeping them as an asset of the company?