[philrapo]

It is much harder for investors to do their homework on private companies, because (as described in TFA) many private companies selectively disclose metrics that paint them in a positive light. And there are no requirements or standardized metrics of disclosure.

I think this is why regulators are concerned about the steep drop in "startups" going public. You have these huge companies with enormous valuations, and they arent subject to the disclosure and reporting requirements that regulators have designed for public companies...

The most ridiculous recent example was Morgan Stanley marketing Uber to high net worth individuals. [0] Potential investors were not even allowed to see the financials! You just had to take Morgan Stanley's word for it that the valuation was "reasonable".

[0] http://www.bloomberg.com/news/articles/2016-01-14/here-s-wha...

[mdorazio]

Well I think that makes a good place to put a hard rule if you're considering investing in a startup: don't hand over a single penny unless you can see their actual financials. Of course very few people are going to do this instead of just hopping on the startup bandwagon, but it's easy to not play the game.