[gbelote]

> [...] you're missing an important fact: wealthy individuals have access to resources, like attorneys, accountants and financial advisers

This is less of a concern when non-accredited investors are investing alongside accredited investors under the same terms. I also think it's the duty of a platform to make sure unaccredited investors don't get unfair treatment.

> First, most Americans are currently not investing in the public markets[1], many because they don't have the money to.

True, but I'm not advocating that every American should invest in super-risky companies. Plenty of Americans (actually, folks from all over the world) definitely want to invest small amounts of money in companies they believe in and want to support. They try, but can't. If the investor limits magically went away tomorrow we'd see an order magnitude more money invested in startups on our platform.

Even though startup investing may not be right for everyone doesn't mean that most people should be legally prohibited from doing it. There are plenty of products I use in my life (personally and for business) that I would love to invest $100 in. I understand the risks, what's inherently wrong with me investing with 10k other people? There's a lot of potential issues with the _implementation_ of a platform (e.g. do investors get enough information? is there adverse selection?), but I don't think there's _inherent_ issue with all possible implementations.

> Second, there are plenty of publicly-traded vehicles that provide access to private market investments.

I didn't realize CSV Capital was publicly traded, that's great - thanks for pointing it out! Maybe I'll buy some shares.

> Are you referring to 506(c)?

No, I meant 506(b) earlier in 2013. The argument was that only companies desperate for money would resort to listing on a crowdfunding platform.

506(c) has a few problems that makes it a pretty weak and ineffective regulation. There isn't much upside in generally soliciting to accredited investors only to counteract the legal uncertainty with the way accredited verification was implemented.

[tptacek]

Plenty of Americans also want to invest in consumer products they believe in and support; a whole major consumer financial brand, The Motley Fool, was premised on consumers picking winners by investing in products they like. But it turns out that's not a very good idea, and virtually every retail investor is much better off investing in the market as a whole than they are in trying to pick stocks.

I'm asking: how could the situation be any better with companies that at best have a 1/10 chance of not abruptly ceasing to exist within 2 years?

Individual startup equity for retail investors is a bad financial product. We all know that to be true; it's weird that we're somehow able to pretend otherwise for the sake of argument.

[gbelote]

I disagree with the premise that the asset class as a whole is bad.

At the seed stage you're looking at returns of 50-5000x if you "win" so there's more margin of error in the 1/10 statistic.

To be clear: I think investing $5k in one startup (and only one startup) is dumb. I'm not saying that's what people should do. And there are legal limits to how much people can invest and requirements for platforms to educate (and ensure investors understand basic risks like failure rates and need for diversification). When you invest $5k across 50 startups that starts behaving like an index fund.

The caveat to the "big win" returns is that it's traditionally hard to get access to the companies that have a real chance at IPO. A small group of people with privileged access make an obscene amount of money and it's hard to break into that insider club due to structural issues with non-JOBS Act regulations.

The health of the asset class, IMO, is dependent on platforms' ability to attract those companies. For equity crowdfunding (when restricted to rich people) it's clearly in the realm of plausibility. The three major platforms all have at least one "Unicorn" under their belt. For unaccredited crowdfunding I'm optimistic given the information I've seen that this is doable, but if I'm wrong it'll be because the new regulations scare away the "good" companies. Not because retail investors are dumb or there's an inherit issue with democratizing access. There will be a law or amendment in the future that fixes any regulatory issue. I'm pretty certain this or something like it is the future if you look forward far enough.