HUh//? Please Explain this to me again, this time assuming I have no idea what it is you are talking about and I am 7 years old..
A lot of people who would like to crowdfund and/or invest-in bitcoin startups or even just established bitcoin businesses that want/need another round of funding are not allowed to apparently due to not having the qualifications of a "sophisticed investor" in the place where they live.
This in turn leads to an additional hoop a business would have to go through in order to be able to solicit/elicit crowdfunding or investment, because to IPO to unsophisticated investors or solicit/elicit crowdfunding from unsophisticated crowds they'd have to qualify themselves as a much more closely overseen category of businesses, some category considered safe enough for unsophisticated investors or crowds to invest in.
So I am thinking hmm maybe we could build a company that is itself a sophisticed investor, that is, an entity considered informed enough, and maybe also rich enough, or whatever one needs to be to be considered sophisticated enough, to fund startups without making the startups jump through hoops imposed by "authorities" the startup and the funding entity consider extraneous.
For example one account that I read about one plan for a kind of legislation that might happen or might be in effect seemed to be saying that if crowdfunding does get to be legal normal people - normal crowds - would still not be permitted to crowdfund or invest-in startups unless some "sophisticated" investor or investors first gobbles up some fraction of the opportunity themselves before the crowd is allowed to.
in fact maybe it'd be handy to create however many sophisticed entities such laws call for if the lawsa say its by number of sophisticed investors, that is, if just one sophisticated investor buying in first is not enough to open the gates for the crowds to come in.
But if such an entity could be promoted itself up to the status of fully public company, traded on famous old style stock exchanges like the NYSE or wherever, then hey maybe crowds could buy in to startups at second hand, by buying shares of such an entity. If the shares could each individually per share get to pick what they want their dividends to be paid in, then that would be wonderfully flexible.
Such an entity could fund many startups, and anyone, even unsophisticated investors, could buy shares of it and set their shares to be paid in equity of such startups.
So for example lets say we create Sophisticated Investor Corp and it invests in ten bitcoin startups. A person wanting to expose themselves to all ten startups could buy ten shares of SIC and set each one's dividend-denomination preference, like "my first share I want its dividends denominated in terms of how well startup one is doing, my second share I want denominated in terms of how well startup two is doing" type of thing.
MarkM, what where you on when you wrote up this post?
So you're saying:
-) startups have a lot of potential
-) startups need investors
-) usually this investments are too much for a private individual to bear
-) but pooling together in group buys could work
Yes no maybe?
I am saying that some places, such maybe as the USA, do not let ordinary people crowdfund and/or invest in companies that are not listed on exchanges that have very hard-to-get-licenses, that getting listed on such exchanges is harder than getting listed on, for example, crowdfunding sites, that even just getting to be a crowdfunding site is looking like it might get to be hard itself and if it does getting listed on them is likely to get harder, thus that it would be nice to be able to simply buy shares of a properly licensed properly jumped through hoops fully legal entity that pays dividends based on the performance of whichever startup(s) the shareholders choose, on a shareholder by shareholder basis.
Thus each shareholder would get to tailor which of the available startups they want their dividends to be based on.
Using something like the NYSE it seems possible the dividends would have to be paid in dollars instead of being paid in shares of startups (or in gold or in cans of beans or whatever) but still, even if they are paid in dollars the amount of dollars would be based on how well the specific departments / categories / startups / divisions of the corp are doing instead of forcing all shareholders to have to be exposed to all divisions/startups/projects the company funds.
Maybe a story would help.
Five startups get funded by Bitcoin Angel Investments Incorporated (BAII), which is a publicly traded corporation we create that is traded on the New York Stock Exchange.
I would like to get exposure to startups numbers one, three, and five.
So I buy three shares of BAII and set the dividend-denomination preference (DDP) of one to "equity in startup one", the DDP of another to "equity in startup two" and the DDP of my third to "equity in startup three".
Or if dividends cannot be paid in equity, then maybe BAII has to offer tranches of shares or categories of shares and I have to buy three types of shares, one whose dividends are based on how well startup one is doing, one whose dividends are based on how well startup three is doing, and one whose dividends are based on how well startup five is doing.
Is that any more understandable to you?
Part of the problem to be solved is that rich folks get to invest in lucrative startups that poor folk are banned by law from investing in.
Those poor folk are not allowed to because they are not qualified, they are not "sophisticated investors".
So the basic idea is lets make a company that IS a "sophisticated investor" but that unsophisticated people - the members of the typical crowd - ARE allowed to invest in.
Take the idea to an extreme and you could of course say this company I am speaking of is ultimately a stock exchange itself.
But the lawmakers do seem to be admitting that crowdfunding sites maybe need not be full stock exchanges, that maybe there is room for a tier of services that are not full stock exchanges but that nonetheless enable ordinary people to invest in startups.
Part of the problem to be solved is that rich folks get to invest in lucrative startups that poor folk are banned by law from investing in.
Another part of the problem is that startups are not allowed to run around soliciting investment/funding from people they are not related to in some way, with what ways of being related count being not very clear it seems to me. I can solicit investment from my dad but not from an old friend I have known through this forum for years, maybe? Or maybe we both have to be hero members to prove we both have had plenty of chance to get to know each other plenty well? How many years would I have to know you before you'd be allowed to invest and/or i'd be allowed to offer you an opportunity to invest? Etc. So maybe we can form a company we all know well so can invest in, and it in turn jumps through whatever hoops are needed to get to know startups well enough to invest in them, and pays us our dividends in accordance with our preferences as to which startups each of us thinks worth taking a risk on.
So that basically a minority shareholder in the investment company need not be exposed to any startups they don't think worth the risk, even if the majority of shareholders do think that startup worth risking.
-MarkM-
